On Mondelez International’s second-quarter analyst call, Dirk Van de Put, chairman and CEO, said the acquisition of Clif Bar & Co. “will improve our position in the attractive and fast-growing snack bar category,” helping expand the company’s global snack bar business to more than $1 billion.

“We believe that the [snack bar] category is interesting,” said Van de Put. “It had a slowdown related to COVID because it’s heavily linked to mobility. But the category has come back in recent months.”

Mondelez completed the acquisition of Clif Bar for $2.9 billion with additional contingent earn-out consideration on August 1. Clif Bar’s brand portfolio includes Clif, Clif Kid and Luna.

“Each of these brands is strong and healthy with high advocacy and loyalty,” said Van de Put on the call. “Clif also enjoys high brand loyalty among the 18-to-24 age group.”

Van de Put said the flagship Clif Bar had the leading position in the U.S. protein and energy bar market, the fastest-growing category in the snack bar space. Overall, the acquisition makes Mondelez a more than $1 billion player in the $16 billion snack bar business.

The protein and energy segment is expanding in the high-single-digits versus global growth of more than 5 percent yearly in the broader snack bar business.

The U.S. snack bar business is $8 billion in size, according to Euromonitor 2021. Energy/protein bars make up 51 percent of the category in the U.S., followed by cereal bars, 38 percent; and fruit & nut bars, 11 percent.

Clif Bar has a scaled platform with about $800 million in annual sales and a 10-year compound annual growth rate (CAGR) in the high-single-digits.

Van de Put said of the flagship Clif Bar product, “for several years, it is the fastest growing in that bar market. The brand is strong across all age groups. It has organic ingredients, and it has a great taste.”

From a positioning standpoint, he said Clif Bar is widely recognized as a leader in well-being and sustainable snacking and aligns with Mondelez’s positioning.

Clif Bar uses no HFCS, nothing artificial and non-GMO organic ingredients. Said Van de Put, “The company’s purpose and culture are well aligned with our purpose of empowering people to snack right. We look forward to working with the passionate, dedicated Clif team to advance our shared goals.”

The acquisition further complements Mondelez’s existing bars business, which includes the refrigerated snacking business Perfect Snacks in the U.S. and performance nutrition business Grenade in the U.K.

Perfect Snacks, acquired in 2019, includes Perfect Bar, The Original Refrigerated Protein Bar and Perfect Snacks, organic, non-GMO, nut-butter-based protein bars and bites. Grenade, known for its Carb Killa high-protein bar, was acquired in 2021.

Adding Clif Bar to its portfolio, Mondelez’s snack bar business expands to more than $1 billion on an ongoing basis versus about $300 million in 2021.

Van de Put said, “This gives us an attractive position in a $16 billion market with revenues roughly split between U.S. and international.” Mondelez also gains a “significant $700 million-plus presence in the U.S. protein and energy space, which is expected to continue to grow over the coming years as a diverse range of consumers increasingly count snack bars as meal replacements, energy or a better way of snacking.”

Van de Put said he sees opportunities for Clif Bar to benefit from being part of the larger Mondelez platform, which also owns Oreo, belVita and LU biscuits; Cadbury Dairy Milk, Milka and Toblerone chocolate; Sour Patch Kids candy, and Trident gum.

Van de Put also said Clif Bar would benefit from the company’s marketing expertise, operations and financial discipline to create value. “There are clear and substantial cost synergies,” pointing to procurement savings, waste reduction and line efficiencies, and supply chain overhead optimization,” he added.

“In terms of growth, we see substantial opportunities to increase household penetration and distribution in alternative and e-commerce channels and existing outlets. There is also an opportunity to unlock growth through revenue growth management and enhanced in-store excellence. And beyond the U.S., there are clear opportunities to drive international growth,” said Van de Put.

Mondelēz will continue to operate the Clif Bar business from its headquarters in Emeryville, CA., with manufacturing operations in its facilities in Twin Falls, ID and Indianapolis, IN.

“We are excited about the announcement to acquire the Clif Bar business and the top and bottom line growth opportunities that lie ahead,” said Van de Put. “We also see material upside to the returns versus our low cost of capital.”

The transaction is expected to be top-line accretive in year two and create cost synergies by using Mondelez’s global and North American scale to expand Clif Bar’s sales distribution and gain further penetration in existing and new customers and channels in the U.S.

“We think the transaction price was a fair premium for a very-scarce, high-growth quality asset in North America, and we feel good about the value we’re getting there,” said Van de Put.

Van de Put said Clif Bar’s profitability in 2021 is “not representative” as pandemic-related disruptions impacted it. He also believes Mondelez has a “significant opportunity” to optimize overhead at the acquired business.

“They’ve been experiencing supply chain disruption,” said Van de Put. “And we’re seeing it in the first two quarters of this year, a much-improved profitability for the business. We feel that the business is returning to normal, and we can add the synergies that we see from our side.”

He further expects the earn-out provision in the deal to support “substantial top-line acceleration and margin expansion” for the Clif Bar business. “We believe that as we enter that acceleration, our returns would even go up. We hope we will see the growth that we have been planning for,” said Van de Put.

When the deal was announced, Sally Grimes, Clif Bar CEO, said, “Mondelēz International is the right partner at the right time to support Clif Bar in our next chapter of growth. Our purposes and cultures are aligned, and being part of a global snacking company with broad product offerings can help us accelerate our growth while staying true to our deeply ingrained Five Aspirations—sustaining our people, planet, community, business, and brands.”

Mondelēz has announced agreements to acquire Ricolino, Mexico’s leading confectionary company, from Grupo Bimbo and closed and fully integrated its acquisition of Chipita S.A., a Central and Eastern European manufacturer of snack-size cakes and pastries. This followed a year of global snacking growth in 2021, including the acquisitions of Grenade Gourmet Food Holdings, an Australian food company in the biscuit and cracker category and Hu, a snacking company in the U.S.

Mondelēz’s 2021 revenues were approximately $29 billion.

Photo courtesy Clif Bar