Dive Brief:
- J.M. Smucker plans to sell its Cloverhill and Big Texas brands, as well as certain private-label products, to JTM Foods for $40 million as the Jif peanut butter owner looks to focus on growing the recently-acquired Hostess brand.
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Smucker estimated full-year net sales from the divested sweets brands and private label products to be $60 million. Approximately 400 employees will move to JTM, with the all-cash transaction expected to close in the fourth quarter of the company’s fiscal year ending April 30.
- Smucker, which inherited Cloverhill and Big Texas as part of its $5.6 billion purchase of Hostess Brands in 2023, said the sale would help it cut costs and reduce complexity across its manufacturing network. Cloverhill and Big Texas make pastries including honey buns, danishes and cinnamon rolls.
Dive Insight:
Smucker has been actively overhauling its portfolio recently to increase growth and focus on its core brands including Hostess, Uncrustables and Cafe Bustelo.
Last October, it sold Voortman, a manufacturer of premium, branded wafers and sugar-free and specialty cookies that also was part of the Hostess purchase, for $305 million in cash. This comes after prior divestitures of Sahale Snacks, a maker of fruit and snack mixes, and several pet food offerings to Post Holdings.
Smucker’s sweets business generated about $316 million in sales during the second quarter, the Ohio company said in November, totaling roughly 14% of its overall business. The company bought Hostess for $5.6 billion in 2023 as it looks to broaden its presence in the snacking category with a focus on convenience.
The CPG food space has been grappling with a slowdown in consumer spending as inflation curtails how much people are willing to spend on food, including snacks like Hostess’ Twinkies and Donettes. The sale of sweets brands that are not key to the CPG giant’s future, or as well known to consumers as Hostess, will allow Smucker to prioritize innovating, marketing and growing the offering it doled out billions of dollars to buy.
“This divestiture reflects our continued commitment to portfolio optimization to prioritize resources to support the execution of our Sweet Baked Snacks strategy, focused on growing the Hostess brand, and advancing our leadership in the sweet baked goods category,” Dan O’Leary, Smucker senior vice president and general manager of sweet baked snacks and pet, said in a statement.
