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Diving overview:
- PepsiCo has acquired Mexican-American food manufacturer Siete Foods for $1.2 billion, the snack and beverage giant said in a statement. The transaction is expected to be completed in the first half of 2025.
- Founded in 2014, Siete Foods produces tortillas, salsas, condiments, sauces, cookies and snacks. The products can be found in grocery stores, club stores and organic food retailers across the United States.
- PepsiCo’s acquisition further expands the New York-based company’s efforts to improve the healthiness of its snack portfolio as consumers watch more closely what they eat.
Dive Insights:
PepsiCo’s snack roots are based on household staples like Doritos, Fritos and Cheetos. But the company has spent years reducing the amount of saturated fat, salt, sugar and other less healthy ingredients in many of its brands. Innovative products such as Kettle Cooked Lays and others using better ingredients such as the Sun Chips variety made from black beans were introduced.
At the same time, PepsiCo turned to M&A to complement its snack portfolio. In 2018, it acquired Bare Foods, which makes baked fruit and vegetable snacks. A year later, it added PopCorners maker BFY Brands to the mix.
Siete creates heritage-inspired Mexican-American food to suit a variety of dietary needs and preferences. They sell tortillas made from almond flour and grain-free puffs made from vegan beans and lentils. As consumers continue to stock up on healthier products, Siete will be a major beneficiary.
The addition of Siete not only builds a better portfolio for PepsiCo, but also allows it to capitalize on the growing demand for culturally authentic products. According to Datassentials, Mexican cuisine is the third most popular dish in the United States and is growing in popularity, especially among young adults.
“PepsiCo believes in the spirit and authenticity of the Siete brand. We look forward to expanding our multicultural portfolio with these amazing products and helping more consumers discover and enjoy Siete,” PepsiCo CEO Ramon Laguarta said in a statement.
The food industry has been hit hard by prolonged inflation as consumers reduce what they buy and how often they buy it.
Laguarta told analysts in July that prices on certain products, such as unsalted potato chips and tortilla chips, would need to be adjusted to make them more attractive to consumers. For some products, the level of marketing is also higher.
Moreover, PepsiCo and other companies are under pressure from private brands. Siete’s unique flavor profile and product mix will provide PepsiCo with a differentiated and on-trend brand that will help it better withstand these external pressures.
The Siete deal comes nearly two months after Mars announced it was acquiring Pringles maker Kellanova for $36 billion. This is the biggest deal in the food industry in years. The merger will transform the candy icon into a leading seller of chips, crackers and other snacks, giving it greater scale in the highly competitive snacking space and greater strength against giants like Mondelēz International and PepsiCo.
