News broke yesterday that Conagra Brands will buy Pinnacle Foods, tying together two midsize American food brands. The big companies selling food in America have been having trouble, and it’s worth considering if this may be the first step in what may be a necessary consolidation of the industry. The WSJ Logistics Report explains:
Big Food is getting even bigger. Conagra Brands Inc. will pay $8.2 billion to buy Pinnacle Foods Inc., doubling down on frozen foods and taking a new step toward resetting food supply chains in a fast-changing market. The deal would create a conglomerate with about $11 billion in annual sales, the WSJ’s Annie Gasparro reports, and a pull together a wide swath of brands found in most American pantries. The deal comes as the food industry is consolidating as companies combat the growing clout of grocery-store giants like Walmart Inc. and Kroger Co., which have pressured food makers to reduce prices and invest in their supply chains. Higher shipping costs have added to the pressure. General Mills Inc., which has struggled with soaring transportation and commodity costs, says it will eliminate 625 positions after projecting an earnings shortfall in its recently ended fiscal year.
The deal will make the combined Conagra/Pinnacle second in frozen foods only to European-giant Nestle by bringing together brands like Healthy Choice and Birds Eye. Annie Gasparro reports further here.
