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3 Major CPG Companies Are Investing in Nutrition Bars

3 Major CPG Companies Are Investing in Nutrition Bars

By: Nima Rajan

Posted on: in News | Food News

The functional nutrition bar category has been expanded by many new players over the years. With all this variety, consumers are starting to find preferences that are outside of major CPG brands. In order to make up for the decrease in bar sales this year, Kellogg, Hearthside Food Solutions and General Mills are investing in expanding their portfolio of nutritional bars.

Dollar sales in the snack bars category went up 0.34 percent compared to last year’s in the 52 weeks ended Oct. 8, reaching a total of over $7 billion. According to market research group IRI, dollar sales for nutritional bars went up 1.6 percent while granola bar sales decreased by the same percentage. Breakfast bar/cereal/snack bar sales also decreased by 0.16 percent. These numbers indicate the growing consumer interest in healthier choices. The nutritional bar category has a lot of sales potential and food manufacturers are taking notice.

Kellogg Co.

Battle Creek, Michigan-based CPG giant, Kellogg Co. entered into an acquisition agreement with RXBAR on Oct. 6. Chicago Bar Co., LLC, manufacturer of the egg-white based protein bar, agreed to the deal for $600 million.

RXBAR has 11 varieties of nutritional bars made from six or fewer ingredients. With 12 grams of protein, no gluten, soy, dairy or added sugars, RXBAR is able to appeal to a variety of consumers.

“Adding a pioneer in clean label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering,” said Steve Cahillane, Chief Executive Officer of Kellogg. “RXBAR is an excellent strategic fit for Kellogg as we pivot to growth. With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends.”

Although Kellogg is known for their Special K and Nutri-Grain bars, they have experienced a decease in sales for their primary nutrition bar products. In the 52 weeks ended Oct. 8, Kellogg’s Special K protein bars had a 7.5 percent decrease in sales compared to the same period a year ago. Their Kashi brand bars experienced a 26 percent decline in sales during the year ended Oct. 8.  The company hopes their new acquisition will help them in increasing their profits in this category.

Hearthside Food Solutions

In late October, Illinois-based food manufacturer Hearthside Food Solutions acquired Standard Functional Foods Group (SFFG). Hearthside believes that this move will help fortify them as they enter the functional bar industry.

As a sub-unit of the privately held Tennessee-based Standard Candy Co., SFFG was created in 1999 as a manufacturer of nutritional and functional bars. Currently SFFG services many major food companies and brands.

“In addition to new network capacity, geographic reach and production capabilities, SFFG brings leadership in R.&D. with their ability to design, formulate and commercialize the increasingly complex nutrition and energy bars customers are demanding,” said Rich Scalise, chairman and chief executive officer of Hearthside.

General Mills

Currently, CPG giant General Mills is not looking to acquire any nutritional bar companies. Instead, they are looking to invest in growing their Fibre One brand. Their high fibre granola bars are expanding into the protein bar category. With the brand having experienced a 21 percent decrease in sales in the year ended Oct. 8, Fibre One is looking for ways to appeal to consumers through nutritional value and great taste.

“We’re emphasizing what the brand is known for: making fiber taste great,” Jonathon J. Nudi, group president of North America Retail, said during a July 12 investors’ day conference. “We’ll be adding more drizzle to our brownies and more nuts to our protein bars. We’re launching a new permissible treat with protein nut bars. These bars contain 10 grams of protein but only 5 grams of sugar with no artificial colors, flavors or sweeteners, perfect for consumers looking for hard-working calories and great taste.”

All three companies have invested in the functional/nutritional bar category because of its high sales potential. Today’s consumer has a busy lifestyle and they look for convenience foods that not only satisfy but are nutritious as well. The market can expect to see a lot more of functional bar varieties in the future.

 


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