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Hormel Foods to acquire CytoSport and its Muscle Milk Sports Nutrition Products

Hormel Foods to acquire CytoSport and its Muscle Milk Sports Nutrition Products

Muscle Milk maker CytoSport is being acquired by Hormel Foods for a tasty $450 million.

The acquisition, which is expected to close within 30 days, aligns well with Hormel’s focus on protein while further diversifying its portfolio, said the company.

“Muscle Milk products will serve as a growth catalyst for our specialty soods segment, providing this division with a leading brand in the high-growth sports nutrition category,” said Jeffrey Ettinger, chairman of the board, president and chief executive officer at Hormel Foods.

In a call with investors this morning, Ettinger explained that sales of Muscle Milk are generated in multiple channels, with sales outside of the US (predominantly Canada, Australia, Germany and the UK) currently less than 10% of total sales.

“The acquisition of CytoSport expands our offerings of portable, immediate, protein-rich foods, and broadens our appeal with younger consumers. Muscle Milk premium protein products further enhance our balanced business model,” he said.

CytoSport was founded in 1998 by the Pickett family. Total 2014 annual sales are expected to be approximately $370 million.

High hopes

When asked by an investor to comment on data from Nielsen that indicated that Muscle Milk’s growth has slowed, Ettinger said that the category is still growing nicely. “Muscle Milk is the leading brand category in ready-to-drink with about 20% market share,” he said. “We absolutely think we can grow it at rates that are superior to our company-wide 5%.

“The protein area is beyond ready to drink. It’s a category we’re aware of, we’ve witnessed the growth,” he added. “The value is in the brand [for Muscle Milk]. Maybe there are line extensions, or maybe it’s doing a better job of proliferating into the bars or other forms.” 

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