St.-Louis-based Post Holdings Inc. is bolstering its position as one of the top U.S. cereal makers by paying $1.15 billion to acquire privately-owned MOM Brands Company, a leader in the ready-to-eat (RTE) cereal value segment.
Based in Lakeville, Minnesota-based MOM Brands has a broad product portfolio, strategically targeting the value segment in branded RTE cereal, private label, and hot wheat and oatmeal. The company’s brands include Malt-O-Meal® brand RTE cereals, such as Frosted Mini Spooners®, Golden Puffs®, Cinnamon Toasters®, Fruity Dyno-Bites®, Cocoa Dyno-Bites® and Berry Colossal Crunch®, as well as a variety of natural RTE hot cereals, including MOM’s Best®, Better Oats®, Three Sisters® and its original, farina-based Malt-O-Meal® cereal.
Together, Post and MOM Brands will become the third-largest provider of RTE cereal with a diverse portfolio of complementary RTE and hot cereal products. MOM Brands will be merged with Post Foods, and the combined cereal business will be led by Richard Koulouris who will join the company on Feb. 9.
“For Post, this is the right move, at the right price, in the right category," said Rob Vitale, Post’s President and CEO. “After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths."
The RTE cereal battleground is getting fierce as cereal sales, which include ready-to-eat (RTE) cereals, hot cereals and cereal bars, continue to rebound from the diminishing sales experienced a few years ago. Market data from London-based Datamonitor reveal the global cereal market reached $41 billion in sales in 2013, with RTE cereals gobbling up 69 percent of the market share, followed by cereal bars (21 percent) and hot cereal (10 percent).
With this latest acquisition announcement, Post Holdings is putting Kellogg’s and General Mills on notice that it plans to continue its aggressive growth plan.
In April 2014, Post paid $2.45 billion to acquire MFI Holding Corp. (Michael Foods), a leading producer of value-added food products and service solutions to customers across the foodservice, retail and food ingredient channels with $2 billion in revenue. It holds leading market positions in attractive categories including value-added egg products, refrigerated potato products and cheese and other dairy case products. Brands include Papetti's®, All Whites®, Better 'n Eggs®, Easy Eggs®, Simply Potatoes® and Crystal Farms®. In addition to cereals, Post now holds market share in the snacks, pasta, nutrition and supplements sectors. The Michaels Foods acquisition allowed Post entry into more categories, including value-added egg products, refrigerated potato products, and other dairy case products.
In May 2013, Post completed the previously announced acquisition of the branded and private-label cereal, granola and snacks business of Hearthside Food Solutions. In September 2013, Post signed deal to acquire Dakota Growers Pasta Company, Inc., for $370 million in cash. In August 2013, Post agreed to acquire Premier Nutrition Corporation for $180 million in cash. The acquisition provided Post a platform in the growing active nutrition and supplements businesses.
Factors contributing to the growth of the U.S. breakfast cereal market include increased demand for convenience in breakfast products, new product development and increased marketing initiatives. But health and wellness is the most important trend driving innovation in the cereal category. (Download the free “Building Better-For-You Breakfast Cereals" Digital Issue to find out how food product designers are taking advantage of various resources—including ingredients, formulation strategies and information—to produce better-for-you breakfast cereals that don't skimp on taste or quality.)