Flowers Foods to acquire Simple Mills for $795m

On January 8, 2025, Flowers Foods, Inc., a leading producer of packaged bakery foods in the United States, announced its intention to acquire Simple Mills, a prominent natural foods company specialising in healthy snacks, for approximately $795 million in cash. The acquisition is expected to close in the first quarter of 2025, subject to customary regulatory approvals and closing conditions.

About the Companies

Founded in 1919 and headquartered in Thomasville, Georgia, Flowers Foods operates bakeries across the country, producing a wide range of bakery products. Among the company's top brands are Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, and Tastykake. In 2023, Flowers Foods reported net sales of $5.1 billion.

Simple Mills, established in 2012 by Katlin Smith, is a market-leading natural brand offering premium healthy crackers, cookies, snack bars, and baking mixes. The company's mission is to revolutionise the way food is made to positively impact people and the planet. Simple Mills' products are available nationwide across more than 30,000 natural and conventional stores. In 2024, the company generated net sales of $240 million, representing a 14% growth compared to the prior year.

Strategic Rationale

The acquisition aligns with Flowers Foods' strategy to enhance its growth prospects and diversify its product portfolio by adding a scaled, healthy snacking platform. Simple Mills' market-leading products, which are outpacing category growth, bolster Flowers' position in the attractive healthy snacking segments. The partnership is expected to enable future growth by expanding distribution, accelerating innovation, and gaining access to new segments and categories.

Potential Challenges

While the acquisition of Simple Mills presents significant growth opportunities for Flowers Foods, several specific challenges may arise:

Market Penetration and Consumer Behaviour: Despite Simple Mills' success in the natural channel, its household penetration in categories like crackers and cookies remains below 10%, with less than one-third of the distribution points compared to leading brands. Expanding market share in these segments will require significant effort to alter established consumer purchasing habits and preferences.

Supply Chain Integration and Ingredient Sourcing: Simple Mills utilises unique, nutrient-dense ingredients such as nut, seed, and vegetable flours. Integrating these specialised supply chains with Flowers Foods' existing operations may present logistical challenges, including securing consistent quality and supply of these ingredients at scale.

Shareholder Perspectives

The boards of both companies have approved the transaction. Upon closing, Simple Mills will operate as an independent subsidiary of Flowers Foods and continue to be led by founder and CEO Katlin Smith and her leadership team. This structure aims to preserve the brand's integrity and maintain its growth trajectory

Conclusion

The proposed acquisition of Simple Mills by Flowers Foods presents opportunities for growth and diversification within the healthy snacking market. Success will depend on effectively integrating operations, preserving Simple Mills' brand ethos, and navigating the competitive landscape. The transaction is anticipated to close in the first quarter of 2025, marking a significant step in Flowers Foods' strategic expansion.

Written By: Ben Harris

Sources: Flowers Foods Press Release, Food Navigator-USA, Food Dive