Del Monte Foods purchased Kitchen Basics, a line of ready-to-use stocks and broths, from McCormick & Co., boosting the CPG’s retail presence in a category popular with at-home cooks.
The purchase of Kitchen Basics, shared exclusively with Food Dive, supports Del Monte’s growth strategy as the 136-year-old company focuses on innovating and broadening its iconic brand portfolio. It also expands the geographic reach of its stocks and broths business, currently led by College Inn, while providing additional scale to help Del Monte grow the category across its North American footprint.
The terms of the deal were not disclosed.
“Del Monte Foods has gone through a positive transformation over the past five years,” Greg Longstreet, its president and CEO, said in a statement. “As we plan for the next decade of growth, we’re committed to strengthening our branded product portfolio to meet consumers’ changing needs.”
McCormick declined to comment on the divestiture.
Kitchen Basics was founded in 1996 and purchased 15 years later by McCormick for $40 million. At the time of the acquisition, the brand had annual sales of approximately $25 million. Current sales totals were not made available. Today, Kitchen Basics has an extensive portfolio of conventional and organic stocks and broths in varieties including traditional chicken and beef as well as newer items such as creamy bean and vegetable.
The acquisition of Kitchen Basics comes as people spend more time using products such as broths and stocks to make their own meals and finding ways to eat healthier during the pandemic. Globally, the stocks and broths market, which includes offerings from Campbell Soup’s Swanson and Pacific Foods, Unilever’s Knorr and upstart brands such as Kettle & Fire, is expected to climb from $3.4 billion in 2020 to $4.1 billion in 2027, a compound annual growth rate of 2.9%, according to data from Research and Markets.
The uptick has provided a meaningful tailwind for CPGs like Del Monte, best known for its canned fruits and vegetables, Contadina canned tomatoes and other shelf-stable products.
While some consumers are venturing back out, there is an expectation that trends that gained momentum during the pandemic will remain, providing further demand for Kitchen Basics and similar brands on the market.
For much of the past several years, Del Monte has focused on innovating and rolling out new products under the leadership of Longstreet, who took the helm in 2017 after more than a decade at Hormel Foods.
In an effort to better tap into consumer trends such as snacking, convenience and healthy eating, in 2019 Del Monte introduced frozen and refrigerated products for the first time and moved into other parts of the grocery store, such as the deli.
Its Contadina brand has introduced pizza bites, for example, while Del Monte has rolled out veggie bowls and pocket pies under its Veggieful banner that contain better-for-you ingredients like ancient grains, cauliflower, broccoli and artichokes as well as plant-based steak and chicken. It also has latched onto the popularity of boba shop-inspired beverages with the debut of its Joyba Bubble Tea.
The deal for McCormick marks a rare divestiture for a Maryland-based company that has focused on broadening its already robust portfolio of flavors, spices, seasonings and condiments through a series of acquisitions.
McCormick’s growth includes the $800 million addition of hot sauce maker Cholula in 2020 and the Reckitt Benckiser’s Food Division for $4.2 billion three years earlier, adding the iconic French’s mustard and Frank’s RedHot brands to the fold. And early last year, McCormick purchased natural flavorings provider FONA International for $710 million, boosting its reach into categories such as performance nutrition and health and wellness.