There’s been quite a bit of consolidation up and down the value stream of the barbecue industry this year. We’ve seen Weber and Blackstone announce a business combination, retailers merging, and even action in consumables like rubs and sauces.
That trend continued this week with Bloomberg reporting that massive sauce and seasoning company McCormick & Company is in talks to buy Sauer Brands Inc. for over $1 billion. Sauer’s most known brand is Duke’s mayo, but their rubs and seasonings for grilling are also popular.
McCormick currently has revenue of over $6.5 billion annually and has a well-known grill seasoning portfolio. Their Grill Mates brand can be found almost everywhere and their Stubb’s barbecue sauce brand is one of the most popular sauces in the country.
Sauer is current owned by investment firm Falfurrias Capital Partners. Their strategic investment dates back to August 2019, so they’ve already reached a five-year investment horizon with the brand.
It was reported back in April that they were exploring selling the company. At that time they had annual EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $120 million and were looking to sell at a valuation of around ten times EBITDA.
It was rumored that Falfurrias purchased Sauer for $300 million. To grow the Sauer brand, they acquired Chicago Custom Foods (CCF), maker of Kernel Season’s popcorn seasoning, in April of 2020 and Mateo’s Gourmet Salsa in September 2021.
McCormick is a logical buyer for Sauer, especially with Duke’s mayo being the leader and complementary to their offerings. McCormick is also no stranger to acquisitions. Below are some highlights of their recent acquisitions over the past ten years.
- Acquired Stubb’s in 2015 for $100 million. Stubb’s had projected revenue at the time of $30 million. McCormick’s proforma earnings had Stubb’s adding $10 million to EBITDA by 2017.
- Acquired Reckitt Benckiser’s Food Division (“RB Foods”) in 2017 for $4.2 billion. RB Foods is best known for French’s Mustard and Frank’s RedHot Hot Sauce, and Cattlemen’s.
- Acquired Cholula Hot Sauce in 2020 for $800 million. Cholula had expected sales of $96 million in 2020.