Ready Pac Foods' Chief Executive Officer Tony Sarsam says that the single-serve salad maker Ready Pac Foods Inc., which had sales of about $677 million last year, will start selling itself to large packaged-food companies in the next two years.
The company, owned by private equity firm H.I.G. Capital, would be a logical target for a U.S. food company looking to expand its presence in the perimeter of grocery stores, where shoppers have flocked in recent years in search of fresher, healthier products, Sarsam said in an interview on Tuesday 22 March.
Ready Pac aims to capitalize on a surge in deals for the U.S. packaged-food industry. There were $77 billion in completed, pending and proposed transactions in the sector last year, the most in at least 12 years, according to Bloomberg Intelligence. Large food companies, struggling with sluggish sales, are using acquisitions to add more natural and organic options.
PepsiCo Inc., Hain Celestial Group Inc. and Hormel Foods Corp. all have said they’re seeking acquisitions this year, though finding targets at the right price has been a challenge.
Sarsam took over at Irwindale, California-based Ready Pac in 2013. At the time, the company was losing money each month as cost overruns ate into profit. Ready Pac, which also provides produce to Yum! Brands Inc. and McDonald’s Corp., returned to profit last year. Sales increased about 10 percent, Sarsam said.
Ready Pac’s bistro bowls, its top-selling product, are available in about 10,000 stores across the U.S. and can be found in Walmart Stores Inc. locations. The company also recently signed a deal to be distributed in about 20 percent of Target Corp.’s roughly 1,800 locations. This year, Ready Pac introduced a new line of organic and non-GMO salads, which sell for an average price of about $4.50 each, roughly a dollar more than the standard salads.
Sarsam doesn’t think H.I.G. will take the business public, preferring instead to seek a strategic partnership with a packaged-food company that can increase distribution and invest in advertising to boost sales.
Source: bloomberg.com
