ConAgra bought Ralcorp in order to position itself as the leading manufacturer of private-label food products. Over the years, Ralcorp had achieved sales growth by focusing on this segment, as consumers increasingly sought out cheaper alternatives to the national name brands. The merger will allow the combined company to gain scale in the wholesale market and should add to its overall profitability, after realizing the deal’s identified synergies.
The natural newcomer
Boulder Brands Inc (NASDAQ:BDBD) has a new name, but it has been around for some time through its Smart Balance brand of dairy and spread products. The company hit home runs with its recent acquisitions of Glutino and Udi’s, which has positioned Boulder as a leader in the natural foods category. A rapid increase in gluten-related ailments and an associated need for healthy food consumption has led to rising sales of natural food products.
In FY2012, Boulder reported a 34.8% increase in overall sales, with strong growth in its natural foods segment offsetting weakness in the Smart Balance business. The company has effectively doubled its size over the past two years, as its natural food segment has increased both its exposure and product offerings in the wholesale market. In addition, customers have given a warm reception to the company’s new products, including pretzel twists and breakfast bars.
Looking ahead, Boulder expects strong double-digit sales growth in FY2013, including nearly 50% in the natural food segment. It also forecasts rising profitability from the integration of its acquisitions, with at least $70 million in adjusted operating income during the period. While the company is a niche player in the processed food category, it appears well positioned to benefit from irreversible trends in healthy eating.
The bottom line
With limited shelf space at the nation’s grocers, investors need to focus on the food brands that are gaining space and prominent placement. These three companies have good positions in the supermarket and deserve a position on investors’ watchlists.
The article These Companies are Winning in the Grocery Aisle originally appeared on Fool.com and is written by Robert Hanley.
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