Hearthside Food Solutions founder and chairman shares his insights with Candy Industry regarding the mega deal involving VSI and Post Holdings’ PowerBar facility.
Not sure if any of you recall a news item last month that reported on Hearthside Food Solutions (HFS) acquiring VSI, Europe’s largest sports/energy bar manufacturer. In that same news brief, HFS also announced it had purchased Post Holdings, Inc.’s PowerBar plant in Boise, Idaho.
Perhaps you’re not into snack, energy or functional bars. After all, we’re supposed to be focused on all things confectionery. But in case you hadn’t noticed, the term confectionery now encompasses a greater band width than ever before.
A most telling example of that was seen at the Sweets & Snacks Expo (And yes, the name change from All Candy Expo to Sweets & Snacks Expo wasn’t done without reason), when two major manufacturers, Mars and The Hershey Co., introduced their new snack bar products: goodness knows snack squares and Brookside Fruit and Nut bars, respectively.
For both companies, the move takes them into the snack bar segment, which continues to grow. HFS’s blockbuster acquisitions, however, take it into yet another realm, the nutrition, diet and functional bar sectors. In my interview with Rich Scalise, HFS’s founder and chairman a couple of weeks ago, he singled out those subsegments of the overall bar category as high growth, in other words, high single-digit, double-digit growth, areas.
“It’s a multibillion segment,” he told me. And while HFS is the largest co-manufacturer of snack bars in North America, it had not yet ventured into this health-related bar segment, which encompasses sports, functional, diet and nutrition niches.
As Scalise explained, these bar products required more manufacturing flexibility since they often involve multiple layers, real chocolate and different types of coatings. And while HFS had plenty of capabilities regarding snack bars, it didn’t have production lines that met those requirements.
And that was one of the reasons the company purchased VSI. But it wasn’t just for the production facilities, which VSI has three. Rather, it was VSI’s technological expertise and its research and development capabilities that also attracted Scalise.
“VSI’s technology and its R&D department excel anything I’ve seen in the United States,” Scalise said. “They have the knowledge and capabilities to develop unique formulas and processes for customers in the nutritional, energy and diet bar categories. Our intent is to take that innovation so that we continue producing those products for their [VSI] customers in the States as well as seek out new customers.”
Acknowledging that the snack bar segment has — to a certain extent — “mainstreamed protein and fiber, Scalise was quick to point out that consumers purchasing sports, diet, functional and nutrition bars are different.
Well-versed in producing baked or cold-formed snack bars, the health-related snack bars are a different animal. Consider it akin to producing regular gummies compared to vitamin gummies. OK, it’s not quite that exacting, but similar. As Scalise noted, it’s a couple of levels above traditional snack bar production.
Buying VSI, however, proved to be only the first piece of the puzzle. In doing so, HFS never intended to have products shipped from Europe to the United States. Rather, it was hoping to either build a new facility or acquire one.
As it so happened, Post Holdings announced it was going to close it Boise facility, which turned out to be just what HFS was looking for. Serendipitous? Well, Scalise admitted that it doesn’t hurt to be lucky sometimes in pursuing a strategy.
“It’s a very well-equipped facility,” he said, and perfectly suited to produce the health-related bars VSI produces and develops. Add to that an experienced work force — Scalise indicated the company is focused on rehiring the management team and then former workers — and the plant should be ready to go in no time.
With VSI’s technology and R&D prowess as well as having a facility already in place, HFS will be able to pursue small and midsized companies already in the health-related bar segments.
“Our mission is to be fast, flexible and value adding,” Scalise said. The dual acquisitions allow the company to now cater to large and small customers across the entire bar category universe in the United States.
It also allows HFS to expand its reach into Europe. As he pointed out, the company knows how to produce snack bars efficiently. And its larger U.S. customers already operate in Europe.
So I expect you’ll be seeing a bit more excitement in the health-related bar segment soon, which is always good for the category and consumers.