Spam maker Hormel buying Muscle Milk

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The maker of Spam is bulking up on its protein with Muscle Milk.

Hormel Foods is paying $450 million to acquire CytoSport, which owns Muscle Milk sports nutrition drinks, bars and powders. The move builds on Hormel’s push to expand beyond its stable of packaged meats, which include Dinty Moore stews and its namesake chili, with different kinds of protein. Last year, the company also added Skippy peanut butter to its lineup.

Hormel CEO Jeff Ettinger said people are increasingly looking for portable, easy-to-eat products packed with protein. It’s why the company recently introduced Rev snack wraps that contain meat and cheese, and Skippy Singles, which are portion-controlled packs of the peanut butter.


RELATED: Food makers bet Americans want drinkable food


As for Muscle Milk, Ettinger said in a phone interview that the brand’s customers tend to be younger and have expanded beyond serious athletes over the years. He noted that the drink is advertised on college campuses, for instance, and that students often drink it as a replacement for breakfast or a mid-afternoon snack.

“There are so many meals and quasi-meals that are consumed on the go now,” he said.

Americans have been looking to boost their protein intake in recent years, and packaged food makers have been responding by adding it to a wide array of products. General Mills Inc. even recently rolled out a version of Cheerios with extra protein and offers versions of its Nature Valley granola bars with protein.

The demand for protein is showing up in the drinks as well. PepsiCo’s Gatorade has a “post-game recovery” drink with 16 grams of protein. And last year, Coca-Cola Co. bought a stake in the maker of Core Power, which is marketed as a post-workout recovery drink.

Muscle Milk, which does not contain any milk, is shelf-stable but is usually sold chilled in convenience stores, where it generates 30 percent of its total sales.

Hormel’s canned meats, meanwhile, haven’t exactly been a booming growth area despite their protein content. In the latest quarter, the company said sales of its grocery products were flat, with Spam suffering a decline. Its refrigerated foods such as Black Label bacon fared better, reflecting the trend toward foods people feel are fresher.

The company, based in Austin, Minnesota, said private-equity firm TSG Consumer Partners will sell its stake in CytoSport, which is based in Benicia, California.

CytoSport founders Greg and Mike Pickett, who are father and son, will still be involved in day-to-day operations. For 2014, Hormel said it expects sales of CytoSport to be about $370 million. The deal will add about 5 cents per share to its fiscal 2015 earnings, the company said.

The deal is expected to close within 30 days.

CANDICE CHOI and MICHELLE CHAPMAN, The Associated Press

Food makers bet Americans want drinkable food

Muscle Milk apparently isn’t just for athletes. It’s also for busy people who want to drink their meals.

Hormel, which is best known for its canned meats like Spam, said late Monday that it will buy the maker of Muscle Milk for $450 million. CEO Jeff Ettinger said Muscle Milk’s fans have expanded beyond serious athletes, with many customers now drinking it for breakfast or a mid-afternoon snack.

The demand for portable, easy-to-eat foods has been growing, and Hormel isn’t the only company hoping that can include liquid food that comes in the convenience bottle.

Some other examples:

  • Campbell Soup in 2012 announced it was buying Bolthouse Farms, which offers products including premium juices and bottled smoothies.
  • General Mills Inc. introduced a dairy-based drink last year called “BFast” that has whole grains and promises the nutrition of a bowl of cereal and milk.
  • Kellogg Co. also rolled out its “Breakfast To Go,” which is positioned as a drinkable cereal.
  • PepsiCo CEO Indra Nooyi has noted the company is looking at ways to “drinkify” snacks. The company’s Naked juices are already seen as falling into that area because of the various nutrients they provide.
  • PepsiCo’s Quaker Oats division also now offers a breakfast shake at select retailers that is positioned as oatmeal in a bottle — it boasts of 8 grams of whole grain oats, 10 grams of protein and 6 grams of fiber.

THE ASSOCIATED PRESS

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