USA- Utz Brands, Inc., a prominent U.S. manufacturer of salty snacks, is making significant strides in its growth strategy by acquiring key suppliers to enhance its product offerings and streamline its supply chain.
The company recently announced its decision to purchase Festida Foods, a major manufacturer of tortilla chips, for US$41 million.
This acquisition is part of Utz’s broader initiative to solidify its presence in the snack food market and improve operational efficiencies.
The announcement, made on September 5, 2024, detailed how the acquisition of Michigan-based Festida Foods will bolster Utz’s supply chain for its popular On The Border tortilla chip brand and expand its geographic reach, particularly in the Midwest.
“This strategic combination will help accelerate growth and expand margins over the long term,” stated Utz’s CEO, Dylan Lissette. The deal is expected to close before July 2025.
Utz’s recent acquisition spree follows its merger with Collier Creek Holdings, which took the company public last year.
Since then, Utz has made several acquisitions, including the purchase of Truco Enterprises for US$480 million, which significantly enhanced its national footprint.
The acquisition of Festida is particularly noteworthy as it allows Utz to bring production in-house, providing greater control over manufacturing and distribution.
“By having production for the fast-growing tortilla chip in-house, Utz has more leverage to grow the brand and expand Festida’s production capacity to its other brands,” Lissette explained.
The strategic focus on acquisitions is part of Utz’s long-term vision to optimize its supply chain and enhance its brand portfolio.
The company knows that adding new brands is not enough; it must also nurture existing ones to create synergies in sourcing ingredients, production, and shipping.
This approach is expected to yield significant cost savings and operational efficiency benefits.
In addition to acquiring Festida, Utz is divesting certain brands and subsidiaries to streamline its operations.
The company has agreed to sell its Good Health and R.W. Garcia brands to Our Home, which focuses on Better-for-You snacks.
This transaction, valued at US$182.5 million, will allow Utz to focus on its core brands while benefiting from co-manufacturing agreements with Our Home.
“We expect these transactions to deliver on our supply chain transformation and value creation initiatives,” said Howard Friedman, CEO of Utz, highlighting the financial benefits of the divestiture.
These strategic moves come as Utz reports its first-quarter earnings, expecting increased revenue.
In 2020, the company reported revenue of US$964 million, up from US$768 million the previous year.
The focus on acquisitions and divestitures is expected further to enhance Utz’s financial performance and market position.
Utz Brands, founded over a century ago, has a rich heritage in the snack food industry. The company’s commitment to quality and innovation drives its growth strategy.
As it navigates this transformative period, Utz aims to create a more efficient and flexible network to support its expansion plans across the U.S. and deliver on its margin targets.
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