JM Smucker is currently assessing the interest in Voortman Bakery, a business unit it acquired from Hostess Brands last year for $5.6bn. The company is working with Goldman Sachs to explore potential opportunities for Voortman Bakery in the food and beverage industry.
Voortman Bakery is part of JM Smucker’s sweet baked snacks arm, which was established as a result of the Hostess Brands acquisition. The deal also included popular brands like Donettes and Twinkies. Hostess Brands acquired Voortman Bakery for around $320m in 2019 from private-equity firm Swander Pace Capital and management.
In the year ending in April, JM Smucker reported that its sweet baked snacks unit generated net sales of $637.2m, contributing to the group’s overall net sales of $8.18bn. This division posted a segment profit of $138.2m, with company-wide segment profit totaling $1.94bn.
Analyst Robert Moskow from TD Cowen commented on the stability of Voortman product sales, with sales remaining steady at $190m at retail over the past 52 weeks. However, other Hostess sales have seen a 2% decline, indicating potential challenges in achieving growth targets for fiscal year 2025. Moskow emphasized the importance of introducing innovative products and finding the right balance between trade promotions and margins to drive volume.
Many investors believe that JM Smucker may have overpaid for Hostess Brands and could struggle to meet their long-term organic growth target of 4%. Success in the future will hinge on the company’s ability to revitalize the Hostess assets and navigate the competitive food and beverage market effectively.
Overall, the examination of Voortman Bakery’s potential sale highlights the dynamic nature of the food and drink business landscape, underscoring the importance of strategic decision-making and innovative product development in the industry.
