In announcing its acquisition of the hip RXBAR nutrition bar brand for $600 million, Kellogg’s is hoping the “no B.S.” startup’s entrepreneurial spirit proves contagious and will spark innovation across its portfolio.
The Kellogg Company has dozens of SKUs for nutrition bars among its many brands—Special K and NutriGrain among them—but with this deal, it’s acquiring the fastest-growing nutrition bar brand in the U.S., one that prides itself on its line of “whole food protein bars with simple, real ingredients that are gluten-free, soy-free and dairy-free.”
RXBAR, which just launched new spots from Juniper Jones to highlight its “penchant for honesty and simplicity,” is in line with millennials and other consumers seeking better-for-you products, transparency and dietary innovation.
RXBAR is known for its full disclosure packaging, as the high-protein, natural-energy bar boasts simple ingredient lists and clean eating recipes that are literally spelled out on the front of each package, for example: “3 Egg Whites, 5 Almonds, 4 Cashews, 2 Dates, No B.S.”
Using that formula, the Chicago-based RXBAR CEO and Co-Founder Peter Rahal—who built the brand “gym by gym“—developed an eight-figure startup in just four years; its net sales will be about $120 million this year. It recently added a kid’s bar line, too.
“We carefully considered who the right partner would be for RXBAR’s future. We have always been committed to delivering the highest quality products that taste great, and being radically candid and transparent with our consumers, and these priorities remain. Joining Kellogg is not only a great cultural fit, but it provides us with the tools and resources to accelerate our growth so the brand can scale even faster than it is today,” said Rahal.
Kellogg couldn’t resist the brand’s potential, especially after just-retired CEO John Bryant made it a mandate to find new growth levers to pull Kellogg out of a slump that has afflicted many of its peers in the traditional CPG universe, particularly in the ready-to-eat cereal space.
“RXBAR is a unique and innovative company,” Kellogg’s new CEO Steve Cahillane stated in a press release. “Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome-snacks offering. RXBAR is an excellent strategic fit for Kellogg as we pivot to growth.
“With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends.”
RXBAR will operate independently as a standalone business within the Kellogg Company in an arrangement that is typical as CPG giants acquire fast-growing, innovative independents. This strategy will help with resources and scale to drive RXBAR’s further growth.
Rahal and co-founder Jared Smith were new to the food business when they launched RXBAR. The former was with a logistics startup and the latter at a mutual fund. But they saw “white space” in the bar market because they couldn’t find what they wanted for their personal nutrition needs, a situation that has led to the birth of many better-for-you startups.
“There wasn’t a natural protein bar with whole, quantifiable ingredients,” Rahal told brandchannel recently. “There wasn’t a clean protein bar. We identified a huge gap in the marketplace.”