In what one would deem a highly unique marketing campaign (which should perhaps be dubbed Snack Wars), Clif Bar’s co-CEOs, Gary Erickson and Clif Crawford, have recently challenged competitor Kind Snacks to start utilizing organic ingredients in the Company’s snack lineup, which includes a variety of bars made from whole nuts, fruit, and natural flavorings. In an open letter to Kind founder Daniel Lubetzky published in The New York Times this week, the Clif team even offered to donate up to ten tons of organic ingredients to Kind to kick start the process, as well as lend expertise to Kind should they wish to reformulate their products to incorporate organic components.
Savvy marketing campaign? Probably. Altruistic gesture? Seems a bit unlikely, but perhaps. This gesture / campaign highlights the ever increasing scrutiny placed on snack food companies regarding how ingredients are grown and sourced and how “good for you” the products are. Interestingly, the Kind team fired back and questioned Clif’s use of organic brown rice syrup as a sugar substitute in its products, while Kind focuses on the use of high-quality fruits and nuts in their simplest form, albeit not organic ones. This leads to an interesting debate for the consumer – forcing them to think about prioritizing organic ingredients versus “whole” high-quality foods (although certainly, these do not have to be mutually exclusive, as this particular exchange might lead one to believe).
Regardless, both companies have succeeded in capitalizing on consumer desires for wholesome and healthy ingredients in a convenient ready-to-eat format – Forbes estimates Kind generates approximately $800 million in revenue, and Clif Bar generates somewhere between $500 million to $1 billion in revenue according to Inc. – and have each found their own niche in the increasingly crowded snack food aisle. The major players in the food space have taken notice of the growing good-for-you snack bar space too – in 2017, Mars Inc. acquired an approximate 40% stake in Kind. Clif Bar has elected to remain private, although no doubt they’ve fielded numerous overtures over the years from potential investors and acquirers eager to make inroads into the sector.
As consumer investment bankers (and hungry snack bar aficionados), we continue to follow the Snack Wars with interest, as well as monitor entrants into the increasingly popular space, including new participants exhibiting at trade shows such as Natural Products Expo West and the SF Fancy Food Show. We have no doubt that M&A opportunities will remain plentiful for those healthy snack bar companies that can distinguish themselves in this attractive category going forward.