Campbell Soup Co. sells Emerald Nuts to Flagstone Foods as sales of snack nuts slip

30-May-2023 - Last updated on 30-May-2023 at 17:24 GMT

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The divestment for an undisclosed amount, announced May 30, allows Campbell Soup Co. to more fully focus on its "power brands," including salty snack behemoths Goldfish Crackers, Snyder's of Hanover, Lance, Cape Cod, Kettle Brand and Snack Factory's Pretzel Chips, which combined with Late July and Pepperidge Farms helped grow Campbell's snack segment's organic net sales 15% and dollar consumption 17% year-over-year in the company's second quarter.

The company's second quarter was a "pivotal moment in kind of the validation of the strategy on snacking for us as a company,​" CEO Mark Clouse told investors during the company's Q2 earnings call. At the time, he explained, Campbell was focused on "great marketing support, the right innovation and … a supply chain that's stepping up to meet the growing and expanding demand."​

While he called out the success of Snyder's and Lance, which Campbell acquired in 2018 at the same time as the Emerald nuts business, he was mum on Emerald's performance in the most recent quarter.

In announcing the sale to Flagstone Foods, Campbell revealed that the Emerald business generated net sales of $66m in fiscal 2022 and $46m for the nine-month period ending April 30, 2023. This is a small fraction of the company's $8.6b in net sales in fiscal 2022 and of the $900m+ in expected annual net sales for Goldfish the company touted during its second quarter earnings report.

Campbell's decision to exit the snack nut segment also comes at a time when Circana data shows the segment's sales sagging while other prominent snack segment sales climb high single and low double-digits.

According to Circana​, snack nut dollars fell 2% in 2022 alongside a 6% decline in units and a 4.1% drop in volume. The drop in units and volume could be chalked up to inflation and consumers pulling back as sales across categories rise, and is in line with other snack categories that saw similar drops, including potato chips, which saw units fall 0.4% and volume drop 0.8%, and other salted snacks (excluding nuts), which saw units and volume drop 2.9% and 3% respectively. However, unlike snack nuts, both of these segments saw dollars climb 14.7% and 16.9%, respectively, according to Circana.

Just as logical as Campbell's decision to shed the brand is Flagstone's to pick up Emerald given it is one of the largest manufacturers and distributors of private label snack nuts and trial mixes in North America.

With three snack processing plants in the South and established distribution network, Flagstone should be able to easily incorporate Emerald into its business with potentially higher margins than Campbell's was able to achieve given the latter has no other play in the snack nut segment.

It also will benefit from the strong brand recognition that Emerald brings, including a nearly 20-year history of innovation and consumer recognition of its iconic grab-and-go 100 calorie packs and assorted glazed nut products.

"Emerald has been providing high-quality branded snack nuts since 2004 and is now the go-to option for consumers seeking better-for-you snacking on the go. Adding Emerald Nuts to our portfolio establishes as new avenue for Flagstone to service our customers with innovative snack products and unites two industry leaders with a shared commitment to the highest levels of product quality and innovation,"​ Flagstone Foods CEO Harry Overly said in a statement.

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