Campbell Soup expands reach in Italy with acquisition of Rao’s sauces owner Sovos Brands
USA – Campbell Soup, one of the largest processed food companies in the US, is expanding its wings in the Italian food market by agreeing to acquire Sovos Brands, maker of popular Italian food brands like Rao’s sauces and Michael Angelo’s frozen entrees for US$2.7 billion.
The purchase, the largest in five years for the CPG giant, adds a high-growth, market-leading premium portfolio of brands to diversify and enhance Campbell’s Meals & Beverages division, providing a substantial runway for sustained profitable growth.
Campbell’s President and CEO Mark Clouse said: “We’re thrilled to add the most compelling growth story in the food industry and welcome the talented employees who have built a nearly $1 billion portfolio.”
“…. The Sovos Brands portfolio strengthens and diversifies our Meals & Beverages division and paired with our faster-growing and differentiated Snacks division, makes Campbell one of the most dependable, growth-oriented names in food.”
Todd Lachman, Founder, President, and Chief Executive Officer of Sovos Brands, Inc, commented that the transaction is expected to create substantial value for our shareholders, resulting in a 92% increase from the company’s 2021 IPO price.
During its third quarter ended April 30, Campbell said sales in its meals and beverages division, which includes soups, V8, and SpaghettiOs, were impacted by pricing and tougher competition. Organic net sales decreased by 1% in the period.
Despite challenges across the industry, premium products that replicate the restaurant experience and give shoppers something unique have remained a bright spot despite consumers opting to cut back their spending on food amid a run-up in prices.
“Rao’s is the premium, market-leading sauce and it strengthens and diversifies our Meals & Beverages portfolio, complementing the core, mainstream portfolio,” the company told CNN.
“It also provides an opportunity for expansion to adjacent categories like frozen meals, dry pasta, premium ready-to-serve soups.”
In fiscal 2022, Sovos Brands generated $878.4 million in sales. Rao’s brand is the company’s largest, with US$580.1 million in sales in 2022.
During the past few years, Sovos Brands had extended Rao’s into such additional categories as frozen entrees, frozen pizza, pasta, and soups.
During the first half of fiscal 2023, which ended July 1, Sovos Brands recorded a net income of $13.2 million. First-half sales ticked up to US$470.4 million from US$407.4 million the year before.
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