Tag Archives: Acquisitions

PepsiCo Buys Bare Snacks

Consumer taste trends are moving to healthy and natural foods.  Organic and non-GMO healthy snacks are a growing industry segment that is particularly appealing to Millennials and Generation Z.

What should a company do to take advantage of the new industry and market segments? While companies can develop new products, market adoption of the new products can take valuable time, and development itself takes resources and money away from a company’s established products. A faster way to enter a new market with a new product is through acquisition. Case in point is PepsiCo’s recent purchase of snack manufacturer Bare Foods Co. to help bolster Pepsi’s health snack offerings.

Bare Snacks was founded in 2001 by a family-owned organic apple farm in Washington. It began by selling baked apple chips in local farmers’ markets. Today, the Bare line of fruit and vegetable snacks are sold at Starbucks, Costco, Whole Foods, Kroger, Target, and more. The products are made from simple ingredients that are baked (not fried) and are officially non-GMO verified. Bare Snacks is a certified B-Corp and reflects its values statements in its products: simplicity, goodness, be real, and live fully.

Bare and Pepsi – an unusual, but winning combination.

Group Activities and Discussion Questions:

    1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
    2. Which strategy did Bare Snacks use?
    3. Which strategy did PepsiCo using?
    4. Show Bare Snacks Web site: https://baresnacks.com/
    5. Show PepsiCo Web site: http://www.pepsico.com/
    6. Compare the two sites, products, and messages.
    7. Divide students into teams. Have each team select one of the four different strategies and explain why that strategy could be used to market Bare Snacks
    8. Have each team determine the marketing mix (4Ps) to support their strategy choice.

Source: Brandchannel.com (25 May, 2018). PepsiCo adds Bare Snacks to Frito-Lay Portfolio.

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Kellogg Buys RXBAR

Consumer taste trends are moving to healthy and natural foods.  Nutrition and energy bars are a still-growing industry segment that is particularly appealing to Millennials. Yet, many of the older, established CPG firms struggle to attract and retain sales from that market segment. What should a company do? While it can certainly develop new products, market adoption of the new products can take valuable time and development itself takes resources and money away from a company’s established products.

A fast way to enter a new market with a new product is through acquisition. Kellogg recently took just this approach and acquired the very trendy RXBAR nutrition bar brand for a cool $600 million. The four-year old company currently has built its sales up to about $120 million and has added a children’s bar line, also.

RXBAR is known for a “no B.S.” innovative spirit. The brand highlights its commitment to whole food, protein bars that contain simple ingredients. The bars are gluten-free, soy-free, and dairy-free, tapping into a growing food product segment. RXBAR has a distinctive package that clearly states ingredients on the front of each package. For example: “3 Egg Whites, 5 Almonds, 4 Cashews, 2 Dates, No B.S.”

Group Activities and Discussion Questions:

    1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
    2. Show RXBAR Web site: https://www.rxbar.com/
    3. Video about the company story: https://youtu.be/aMFwfKThixA
    4. Which strategy did RXBAR use?
    5. Which strategy is Kellogg using?
    6. Divide students into teams. Have each team select one of the four different strategies and explain why that strategy could be used to market RXBAR.
    7. Have each team determine the marketing mix (4Ps) to support their strategy choice.
    8. Debrief the exercise.

Source: Buss, D. (2017, Oct. 9). Kellogg looks to “no B.S.” RXBAR for growth and inspiration. Brandchannel.com

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Amazon Buys Whole Foods’ Grocery Stores

By now you have likely heard about Amazon’s planned acquisition of Whole Foods for $13.4 billion. The combined companies will span the breadth of online shopping, and add 460 physical outposts in hundreds of communities across the United States.

The grocery business today accounts for approximately $800 billion in annual spending in the U.S. Yet, in its current form, Amazon has not been able to make a major inroad to selling groceries online. The Whole Foods purchase would give Amazon direct access to consumers, and their information, as they shop in stores for their foods. On average, groceries are purchased five times per month.

It seems somewhat incongruent that a 23-year old company funded on shopping over the Internet is now investing heavily in brick-and-mortar stores. Yet, Amazon has been opening some stores in select locations – bookstores and food-to-go. The combined companies would become the fifth largest grocery retailer, but only account for 3.5% of grocery spending in the U.S.

Where – and how – will you shop for groceries?

Group Activities and Discussion Questions:

  1. Discuss with class: Why did Amazon purchase Whole Foods?
  2. Which retailer(s) will be most pressed by this acquisition? Why?
  3. Discuss how grocery retailers will compete with the combined Amazon/Whole Foods.
  4. Is the Whole Foods acquisition a good move by Amazon?
  5. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  6. Which strategy is Amazon using by purchasing Whole Foods? Why?

Source: New York Times, Wall Street Journal, other news sources

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