Napa Valley Kitchens and Fantastic Foods acquired

Napa, CA-based Homegrown Natural Foods, Inc. has entered into agreements to acquire both Napa Valley Kitchens, Inc., and Fantastic Foods, Inc. Homegrown, a majority stakeholder in Annie's Homegrown Inc., a brand of packaged natural macaroni and cheese products, now adds Napa Valley Kitchens' Consorzio brand, the pioneer of natural 10-minute marinades, salad dressings and flavored olive oils, and Fantastic Foods, an innovator in soup and meal cups, to its corporate line-up. With these acquisitions, Homegrown becomes a growth player in the natural food industry, currently valued at $11 billion, according to data from Packaged Facts, published by U.S. Health and Natural Foods Market, May 2000.

Under the agreements, which are expected to close following receipt of regulatory approval and fulfillment of certain other conditions, Homegrown will acquire and operate the companies as wholly owned subsidiaries. On a fully consolidated basis, Homegrown will have projected sales of approximately $50 million per annum. While the total food business is showing moderate 1% to 2% annual growth, the natural foods sector is growing at 15% to 20% annually. Tucker Anthony Cleary Gull research and Packaged Facts data predict that the natural food industry will double over the next three years.

"Consorzio and Fantastic are well loved brands that meet consumers' demands for great tasting, convenient natural foods," said John Foraker, Homegrown's co-founder and CEO. "Our goal at Homegrown is to build these acquired brands and make them available to more consumers, while remaining true to the product quality and brand heritage created by each company's founders."

Food industry analysts project Homegrown's move will make it a significant player in the natural foods category.

"Homegrown's strategic acquisitions are notable in this traditionally, highly fragmented natural food industry," said Carole Buyers, natural food analyst of Tucker Anthony Capital Markets. "All these brands deliver on current consumer purchase priorities. They are better-tasting products made with familiar 'real food' ingredients that consumers would find in their own cupboard—and they are available broadly in local natural and grocery supermarkets. The halo benefits of brand recognition add to the luster."

Edited by Scott Hegenbart