On October 1st, PepsiCo, a leading global food, snack, and beverage corporation, announced an agreement to acquire Siete Foods, a Mexican-American food brand, for $1.2 billion. This marked PepsiCo’s first major food acquisition in five years. Centerview Partners and Citi served as financial advisors to PepsiCo, while Lazard advised Siete Foods. The transaction is expected to close in the first half of 2025, pending regulatory approvals.
Siete Foods, founded in 2014, has quickly gained popularity for its line of authentic tortillas, salsas, sauces and more. Its products, which focus on dietary inclusivity with gluten and dairy-free options, are sold at major retailers like Target, Whole Foods, and CVS. The company’s revenue is projected to reach $500 million by the end of 2024, a testament to its impressive growth following a $90 million investment from private equity firm Stripes in 2019. PepsiCo, on the other hand, are a global powerhouse in the food and beverage industry, possessing a diverse portfolio that includes iconic brands such as Lay’s, Pepsi, and Gatorade and generated $91 billion in net revenue in 2023.
The strategic rationale for this acquisition is clear. With consumer preferences shifting toward wellness and healthier eating, PepsiCo aims to strengthen its offerings in the "better-for-you" category. Siete Foods’ focus on health-conscious products aligns with PepsiCo’s recent moves to expand its healthy snack lineup, which includes brands like Bare Snacks and Health Warrior. Additionally, the acquisition positions PepsiCo to tap into the growing multicultural food market, leveraging Siete Foods’ authentic Mexican-inspired products to cater to a new customer base, unlocking significant revenue synergies. PepsiCo’s global distribution network and marketing expertise are also expected to help Siete’s product offering reaching new markets.
The timing of this acquisition is particularly relevant, as PepsiCo grapples with slowing growth, particularly in North America. Net revenue growth declined to 4.5% in 2023 from 14.6% the prior year, and volumes for PepsiCo’s North American snacking business fell by 4% in the 2nd quarter of 2024. This has led to expectations that yearly revenue growth will not meet initial projections of 4%. However, the deal represents a push to reverse these trends, mirroring efforts by other packaged food companies who are turning to acquisitions to drive sales growth and counter slowing demand from rising food prices. A notable example of an acquisition in this market was Mars’ acquisition of Kellanova in August.
Regarding the financial details of the acquisition, no further information has been disclosed other than the acquisition price. Following the reports of the deal, PepsiCo’s share price briefly rose showing some signs of positive investor sentiment. However, over the last month their share price has declined, likely due to President-elect Donald Trump indicating the nomination of R.F.K Jr to lead the Department of Health, who is expected to impose stricter regulation on sugary beverages and processed snacks. This heightens the strategic importance of the acquisition for PepsiCo to expand their health-focused offerings.
In summary, this acquisition is mutually beneficial. PepsiCo gains access to high-growth health-conscious and multicultural food segments, addressing market trends and reversing slowing sales. Meanwhile, Siete Foods stands to benefit from PepsiCo’s resources to scale its operations and expand its reach.
Written by: Akhil Raghavan
Sources: Reuters, Financial Times, Press Releases, Benzinga
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