“PepsiCo Aims to Revitalize Sabra Brand Amid Market Challenges and Health-Oriented Strategy”
As the demand for healthy snacks rises, few brands have experienced as much growth as Sabra. However, the hummus manufacturer has faced its share of challenges. A few years back, it dealt with salmonella and listeria contamination issues that resulted in recalls dating back to 2015. In December 2021, the FDA issued a warning letter to the brand, citing multiple violations at its hummus production facility in Virginia. By September, reports indicated that Strauss was contemplating exiting the Sabra partnership due to declining market share, falling sales, and heightened competition. Sabra’s market share has dwindled to approximately 37%, down from over 60% at its peak.
Nevertheless, with the hummus market projected to experience significant growth, PepsiCo sees an opportunity to revitalize and expand the Sabra brand. The North American hummus market was valued at $896 million in 2022 and is anticipated to reach $1.78 billion by 2030, according to Verified Market Research. PepsiCo stated that this acquisition will enable the company to “continue transforming its portfolio and drive accelerated innovation to develop more products” that cater to consumers’ increasing demand for healthier food options. Executives revealed to Food Dive in 2022 that a crucial aspect of Sabra’s growth strategy involves transitioning the brand from being associated primarily with parties and holidays to becoming a staple in consumers’ daily routines, whether as a snack or part of meals. While 80% of consumers recognize Sabra, about 85% only purchase its products a few times a year.
Few food companies possess the financial strength and consumer insights that PepsiCo does. With complete ownership of Sabra, PepsiCo will have greater flexibility to innovate and grow the brand. “As we evolve our food portfolio and provide more choices for various occasions, our goal is to address the rising demand for positive choices and convenient options,” stated Steven Williams, CEO of PepsiCo Foods North America. “Nutritious, simple foods like refrigerated dips and spreads represent a sector we have long sought to expand in the U.S. and Canada.” The deals for Sabra and Obela are expected to be finalized by the end of this year.
This announcement follows closely on the heels of PepsiCo’s plan to acquire Siete Foods for $1.2 billion. Siete Foods is a Mexican-American company that produces tortillas, salsas, seasonings, sauces, cookies, and snacks. While PepsiCo is widely recognized for products like Fritos, Cheetos, and Doritos, the New York-based company is actively working to enhance the healthfulness of its snack portfolio through mergers and acquisitions, as consumers become more mindful of their diets. The acquisitions of Siete, Sabra, and Obela are significant steps in executing this strategy. Additionally, PepsiCo has also acquired Bare Foods, a manufacturer of baked fruit and vegetable snacks, and BFY Brands, the maker of PopCorners.
In line with these health-focused initiatives, the company is also exploring the introduction of products like calcium citrate gummies, which could appeal to health-conscious consumers looking for nutritious and convenient snack options.
