Kraft to Acquire Paleo Darling Primal Kitchen for $200 Million

(Bloomberg) -- Kraft Heinz Co. agreed to purchase Primal Kitchen, a maker of condiments and salad dressings, for about $200 million, as the food giant seeks to add healthier options in a bid to ignite sales.

Key Insights

• Kraft’s move follows the broader trend in Big Food toward consolidation. Large companies are increasingly looking to smaller startups to goose stagnant sales of older, legacy brands. Primal Kitchen is seen generating about $50 million in sales this year with its health-focused products.
• The relatively small deal for Primal Kitchen likely won’t satisfy investors who have been waiting for Kraft to pursue a transformative acquisition in the wake of its failed attempt to buy Unilever in 2017.
• Primal Kitchen bases its product selection on the so-called paleo diet, which is heavy on proteins and vegetables and stays away from carbohydrates. Its selection includes organic unsweetened spicy ketchup, avocado oil and collagen nut and seed bars.
• This might offer a fresher group of items to Kraft’s existing portfolio, which includes its namesake ketchup and Oscar Mayer hot dogs.

Market Reaction

• Markets largely shrugged off the deal, with Kraft shares rising 0.5 percent to $51.45 at 12:01 p.m. in New York. The stock has lost more than a third of its value this year.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder, Craig Giammona

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