Consumer packaged goods company Kraft Heinz has announced the sale of its Planters brand to Hormel Foods for $3.35 billion. The sale comes as the company is attempting to focus its attention on growing brands and pay down its massive debt pile.
However, Kraft Heinz isn’t alone in its recent struggles. Many major packaged goods companies have lost ground in recent years, in large part due to the growing power of big box retailers in negotiations with brands and the increasing focus on healthy eating by consumers.
This sale is a major part of the company’s attempt to adjust to these forces. While Planters accounted for $1.1 billion in sales for Kraft Heinz, the company is hoping that following the sale, investing some of the proceeds in the company’s P3 brand and Lunchables will fuel renewed growth.
On the other hand, Hormel (which is the parent of other iconic brands such as Skippy peanut butter and Spam), is expecting to benefit from the realization of $50 million in synergies by 2024. The realization of these synergies are dependent on the effective integration of Planters into Hormel’s One Supply Chain and Project Orion system.