Plum Organics

Flurry of M&A activity around organic baby food

It is not often that, in global terms, there are three major pieces of M&A in the same sector in the space of three weeks. The sector in question is organic baby food.

US soup giant Campbell Soup Co is the latest purchaser in a hat-trick of deals in the organic baby food market, with the surprise acquisition of buy Plum Organics.

Campbell is to acquire a business that itself grew via M&A just this year when Plum Organics bought unrelated UK peer Plum UK.

The soup and snacks group has joined multinational peers, Danone and Hain Celestial, in using acquisitions to either enter or expand in organic baby food.

Just a few weeks ago, Danone, which has an international infant formula and conventional baby food business, made its first move into the organic baby food category with the purchase of US business, Happy Family.

A fortnight before that deal, Hain Celestial, which has the Earth’s Best organic baby food brand in its portfolio, snapped up UK brand Ella’s Kitchen.

Why this interest in organic baby food? Simply, it’s a fast-growing category, even in mature markets for baby food.

In the US, for example, while baby food sales fell in 2012, sales of organic lines jumped almost 16% last year, according to data from The Organic Trade Association.

There are other factors. There could, for instance, be the chance, particularly for Hain and Campbell, to use their existing production in soup or meals to add new products to the Ella’s and Plum stables.

And all three companies will benefit from increasing their presence internationally to varying degrees. In Ella’s, Hain, which has been rapidly building its UK business in the last two years, has a brand that also has a presence in Scandinavia.

Plum is a business that sells in the US and the UK, which helps diversify Campbell’s business geographically as well as by category. It works both ways; Campbell’s manufacturing presence in Australia could make that market an obvious new territory for the Plum brand.


UK: Rise of the organic food babies

Three out of four British babies are being fed organic food because of parents’ concerns about pesticides and contamination. According to a report in the UK Daily Mail newspaper, sales of organic food have topped £1-billion for the first time.

Demand for naturally-grown products is growing at more than 10 per cent a year, according to a study from the Soil Association, while sales of organic baby food sales were particularly strong – up 20 per cent in the year to April.

Affluent new parents – particularly those in their forties – are leading the food revolution.

The claims organic food is healthier, tastes better and is more ‘natural’ than conventional crops are controversial.

The Soil Association, which sets standards for organic farming, has published scientific reviews showing benefits such as higher vitamin levels and cancer prevention. But advertising watchdogs have banned such claims on the basis that there is insufficient scientific evidence to back them up.

Association director Patrick Holden said: “The figures are hugely significant. Clearly, parents are deciding that nutritionally and in food safety terms organic is the best strategy.

“We are currently talking about 75 per cent of babies being fed organic. The signs are that, if these trends continue, you are looking at 100 per cent of manufacturers switching to organic in a few years.

“This is a key group of British consumers. If families are making these decisions for their babies, that is a trend that will manifest itself throughout the market. They will want organic food for toddlers and in school meals, for example.”

He added: “Future growth will depend on whether there is a growing public awareness among the population about farming and how food arrives on the plate.”

“The future for organic food is potentially very bright. Shoppers are clearly showing that they want local food. A major challenge and opportunity now exists for schools and restaurants to provide organic options, so that children and their parents can continue to eat healthy food outside the home.”

Daily Mail: Read the full article