Kraft Heinz Co. last week signed a definitive agreement last week to purchase Primal Nutrition, LLC for $200 million. The three-year-old startup markets healthy condiments and other products under the Primal Kitchen brand.
Primal Nutrition makes sauces and salad dressings, along with condiments such as mayonnaise and avocado oil. It also has a growing business in healthy snacks and other areas. At retail, it’s a strong player in e-commerce and brick-and-mortar natural food stores. Primal is expected to generate about $50 million in net sales in 2018.
“The proposed partnership with Primal Kitchen is consistent with Kraft Heinz’ vision to be the best food company,” said Paulo Basilio, U.S. zone president of Kraft Heinz. “The Primal Kitchen team has built an amazing portfolio of … health-enhancing, real food pantry staples. Primal Kitchen is an authentic, premium and growing brand that fits perfectly with our core condiments and sauces categories.”
“Primal Kitchen was launched to offer health-conscious consumers the best choices in condiments, sauces, dressings and healthy snacks, said Mark Sisson, Primal’s co-founder. “While growth to date has exceeded all industry expectations, our partnership with a leader like Kraft Heinz offers an unrivaled opportunity to reach millions more of the consumers who have been seeking products like ours.”
Under Kraft ownership, Primal will become part of Springboard, a platform created to partner with founders and brands that are expected to disrupt the food industry. While Primal will take advantage of its parent’s assets and infrastructure, it will continue to operate as an autonomous company under current leadership in Oxnard, CA.
The acquisition continues the ongoing trend of large companies acquiring niche players to combat the loss of market share to similar (if not the same) innovative, nimble entities. Recent examples include Campbell Soup Co.’s December 2017 acquisition of Snyder’s-Lance;Hershey Co.’s simultaneous purchase of Amplify Snack Brands, and General Mills’ February deal for Blue Buffalo.
In the last year, the sales at small consumer packaged goods manufacturers grew by about 5.8%, much faster than the 0.9% growth rate among the largest CPG brands, according to OneSpace.com. Average market share for large brands has declined 7.2% over the last three years while the market share of small brands has risen 6.5%.