shift in consumer preference for organic causes hormel to buy the applegate farm brand

posted May 29, 2015

Hormel Foods Corp. agreed to buy Applegate Farms LLC for about $775 million, a move that would give the maker of Spam a foothold in the organic-meats category.

Closely held Applegate’s annual sales are expected to be about $340 million this year, Hormel HRL, -0.39%  said in a news release Tuesday announcing the deal.

A deal would follow other transactions over the past year involving protein companies. In 2014, Tyson Foods Inc. TSN, -0.66%   paid $7.7 billion for Hillshire Brands Co., which makes Jimmy Dean sausages, and Post Holdings Inc. bought egg and dairy-goods company Michael Foods Group Inc.

A change in consumer eating habits is underpinning consolidation in the sector. Americans are moving to more protein-heavy diets and eschewing carbohydrates, while seeking more organic products.

Hormel has been diversifying its portfolio of food brands to capitalize on growing protein demand and higher-margin foods. The company last year paid $450 million for CytoSport Holdings Inc., maker of Muscle Milk-brand protein shakes and powders, and in 2013 it acquired the Skippy peanut butter brand from Unilever PLC for about $700 million. To visit this webpage, click here!