Hormel buys Justin's Nut Butter for $286m: 'It attracts a younger, more health conscious on-the-go millennial consumer'
Justin’s – which markets four nut butter-based snack lines – spreads, squeeze packs, peanut butter cups and snack packs – was founded in 2004 by Justin Gold, who began with a food processor and some nuts in his kitchen and went on to create a multi-million dollar natural foods empire.
However, Gold, who brought in former Celestial Seasonings president Peter Burns as Justin's new president and CEO in late 2014, hinted a year later that he would entertain offers from larger firms to help build scale in the US and move into export markets, so the acquisition does not come as a complete surprise.
He added: “My goal has always been to build something truly special and Hormel Foods is the right partner to make this an enduring and far-reaching brand.”
Justin’s will continue operating out of its offices in Boulder, Colorado, as a subsidiary in Hormel's grocery products segment, said Hormel CEO Jeffrey Ettinger on the company's second quarter earnings call this morning:
"The acquisition comes with... a strong management team, access to new customers and several manufacturing agreements."
We expect Justin’s to grow at low double-digit rates
President and chief operating officer Jim Snee added: "We know that it [Justin's] attracts a younger, more health conscious on-the-go millennial consumer... Looking forward, we expect Justin’s to grow at low double-digit rates from a starting point of approximately $100 million in fiscal 2017 net sales.
"Justin’s enhances our scale in the nut butter category complementing our Skippy brand positioning very nicely. The Justin’s brand gives us a great platform in natural and organic specialty nut butter spreads, the fastest growing portion of the nut butter category. Justin’s also further balances our portfolio of brands towards younger, more health conscious and on-the-go consumers with their pioneering squeeze packs, a portable snack that comes in all seven of Justin’s nut butter flavors.
"We intend to leverage key Hormel Foods resources and supply chain, finance and R&D while leaving their mission and vision unchanged."
We'll leave their mission and vision unchanged
Based in Austin, Minnesota, Hormel Foods' brand stable includes Chi-Chi's, Dinty Moore, Farmer John, Herdez, Jennie-O, Lloyd's, Muscle Milk, Skippy, Spam, and Stagg.
The firm, which added Applegate, Skippy peanut butter, Wholly Guacamole and CytoSport to its portfolio in recent years in a bid to diversify, posted net earnings up 20% to $215.4m on sales up 1% to $2.3bn in the second quarter of 2016.
Justin Gold - who wanted be an environmental lawyer but changed his mind after completing an environmental studies degree - opted for a change of scenery in 2002 and moved from Pennsylvania to Boulder, Colorado, where he waited tables, and did a lot of mountain biking.
As a vegetarian trying to ensure he was getting enough protein, he also began throwing nuts in his food processor, adding everything and anything from maple syrup to honey, cinnamon and vanilla.
Pretty soon his room-mates started helping themselves, liked what they found, and started scoffing his stuff with impunity. So Gold began scrawling his name on his jars (Justin’s) to tackle the thievery. It didn’t work, but it got his entrepreneurial juices flowing. If his friends liked them this much, maybe other people would too?
In 2004, he was doing a roaring trade at Boulder Farmers Market, then local Whole Foods stores, and 12 years later, Justin’s branded products are available throughout the US and Canada at retailers from Starbucks to Whole Foods Market, Safeway, Kroger, Wegmans, Vitamin Cottage and Sprouts.
