Kellogg buys protein-bar maker in US$600m deal

USA – Kellogg Company, the breakfast-cereal giant, has made a deal worth US$600 million to buy the protein-bar maker Chicago Bar Company LLC, the company that produces the RXBAR line of products.

The company, a producer of a line of clean-label protein bars made with whole food ingredients is the fastest growing nutrition bar brand in the United States, according to Kellogg.

RXBAR will continue to operate independently as a standalone business, and will be able to leverage Kellogg’s scale and resources to continue driving its growth.

With a new CEO Steve Cahillane, from vitamins maker Nature’s Bounty, and who was just announced last week, the company plans to pursue a more health-conscious strategy – and this acquisition fits into this strategy.

Kellogg’s snack business has faced challenges of late, with one of its strong brands Special K losing its mojo in the market, dropping Kellogg’s shares of the breakfast cereals market to 15% this year.

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“RXBAR is a unique and innovative company. Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering. RXBAR is an excellent strategic fit for Kellogg as we pivot to growth,” said Kellogg Company CEO Steve Cahillane.

“With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends.”

Each RXBAR provides 12 grams of protein in 210-220 calories, with a base of egg whites, fruit and nuts encased in unique packaging.

The bars come in 11 different flavors, with additional seasonal and limited-time varieties, and are distributed in the U.S.

They are consumed before and after workouts, in between meals, or as a quick, on-the-go breakfast.

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The company also recently launched RXBAR Kids, which contain the same core ingredients as RXBARs, but in kid-friendly flavors and portions.

RXBAR’s net sales are expected to rise to US$120 million in 2017.

“The RXBAR team has built an incredible business, with impressive growth and profitability. Our focus will be on helping to drive the brand’s continued growth,” said Kellogg North America President Paul Norman.

The acquisition is subject to customary closing conditions and is expected to close by the end of 2017.

RXBAR fits into the rising need by young consumers for convenient, healthy snacks, according to a recent study by Mintel.

The study found that nearly 70% of Millennials surveyed in the United States wished cereal “kept me fuller for longer” and 45% said it gave them a sugar rush.

In addition, 56% of them thought cereal needed to be more portable and 39% said it was inconvenient because they had “to clear dishes after preparing it.”

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