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Diving overview:
- PepsiCo is purchasing the remaining half of the Sabra and Obela dips and spreads brands it does not already own from Strauss Group. Israeli food manufacturer said PepsiCo is paying $240.8 million for the remainder of Sabra and $3 million for the remainder of Obela.
Pepsico and Strauss formed Sabra as a joint venture in 2008, with each company owning 50% of the business. They replicated that model four years later with PepsiCo-Strauss Fresh Dips & Spreads International, which makes Obela. The joint venture operates in Australia, New Zealand and Mexico.
- The transaction helps PepsiCo expand its Better Foods portfolio while gaining greater control over Sabra and its innovation, production, marketing and growth. Obella. Sabra has U.S. retail sales of nearly $400 million.
Dive Insights:
As consumers flock to healthy snacks, few brands have benefited as much from this uptick as Sabra.
But despite its success, the hummus maker has a dark past. The recall began in 2015 after suffering from salmonella and listeria contamination a few years ago. In December 2021, the brand received a warning letter from the FDA highlighting multiple violations at the Virginia plant that makes its hummus.
In September, Strauss was reported to be considering exiting the Sabra venture due to loss of market share, declining sales and increased competition. Sabra’s market share is about 37%, compared to more than 60% at one point.
Nonetheless, with the hummus market expected to surge, PepsiCo has an opportunity to rebuild and further grow the Sabra brand. The North American hummus market was valued at $896 million in 2022 and is expected to reach $1.78 billion by 2030, according to data from Verified Market Research.
PepsiCo said the deal will allow it to “continue to transform its portfolio and drive accelerated innovation to develop more products” that meet consumer demand for healthier foods.
Executives told Food Dive that a major part of Sabra’s growth plans for 2022 hinges on moving the brand beyond its roots into a product served at parties and holiday gatherings and a product more people eat in their everyday lives as a snack or meal. At the time, 80% of consumers were aware of Sabra, but about 85% of them only purchased the product a few times a year.
Few food companies have the financial resources and deep understanding of consumers as PepsiCo. Fully owning Sabra gives PepsiCo more freedom to innovate and expand the brand.
“As we evolve our food portfolio and give people more choices on more occasions, our goal is to create positive choices and on-the-go eating options,” Steven Williams, CEO of PepsiCo Foods North America, said in a statement. “It’s about meeting the growing demand,” he said. . “Nutritious, simple foods like refrigerated dips and spreads represent a space we have long wanted to expand into in the U.S. and Canada.”
With Sabra Obella It is expected to close by the end of this year.
The deal comes nearly two months after PepsiCo announced it would acquire Siete Foods for $1.2 billion. This Mexican-American food manufacturer produces tortillas, salsas, condiments, sauces, cookies, and snacks.
PepsiCo is known in the food world for Fritos, Cheetos and Doritos, but the New York-based company has moved aggressively to improve the healthiness of its snack portfolio through M&A as consumers watch more closely what they eat.
Buy Siete, Sabra and Trading Obela is an important move in executing that strategy. PepsiCo also acquired Bare Foods, a maker of baked fruit and vegetable snacks, and BFY Brands, maker of PopCorners.
