Reuters — Snack food company B+G Foods said it would buy General Mills’ Green Giant frozen foods and Le Sueur canned vegetables brands for about US$765 million to expand its distribution network and enter the frozen foods market.
Growth in the frozen vegetables category has been sluggish in recent years as consumers shift to fresher items. This has led to companies scaling back marketing spend on frozen foods.
B+G plans to double the amount General Mills has been spending on marketing the Green Giant brand, B+G CEO Robert Cantwell said on a conference call.
“In General Mills, Green Giant was an important brand, but they had a different direction… It makes more sense under B+G’s ownership and we’re going to pay a lot more attention to it,” Cantwell said.
Green Giant, with a portfolio of more than 160 products, is the second-biggest frozen foods brand by market share in the U.S.s and the largest in Canada.
New Jersey-based B+G, which sells Cream of Wheat porridge, Vermont Maid syrups and Pirate’s Booty popcorn, said it expected the acquired businesses to generate annual sales of about $550 million and add 60 cents per share to its profit (all figures US$).
The two brands had net sales of about $585 million in fiscal 2015, General Mills said.
General Mills, like other big packaged food companies, has been looking to shed less-profitable brands to cut costs and focus on faster-growing brands.
Reuters reported last week that General Mills was in late-stage talks with B+G to sell Green Giant, whose mascot is the Jolly Green Giant.
The sale raises the question of whether General Mills might be considering more extensive portfolio changes to reduce exposure to older legacy brands, Sanford Bernstein Alexia Howard wrote in a note.
General Mills said it would continue to operate the Green Giant business in Europe and select other markets under license from B+G.
— Reporting for Reuters by Ramkumar Iyer in Bangalore.