Campbell Soup (CPB) announced today that it has agreed to buy Pacific Foods for $700 million in cash in a move designed to further respond to shifting consumer tastes in the food aisle.
Pacific Foods, a 30-year-old company with more than $200 million in annual sales, makes organic broth and soup and other products like plant-based beverages like almond milk.
“This evolution of the consumer wanting nutritious products has really played right to what we’re really good at,” Pacific Foods CEO and founder Chuck Eggert tells Fortune.
In its release Campbell touted the Pacific Foods’ position as a “natural foods industry pioneer that has strong health and well-being and organic credentials, particularly with younger consumers.”
“It allows us to expand into faster-growing spaces,” Campbell Soup CEO Denise Morrison tells Fortune in an interview.
The deal is taking place amid a food industry in complete transition. In recent years Campbell and its Big Food brethren have gobbled up smaller natural food upstarts to respond to consumers who are eschewing processed fare. With $43 billion in sales and a growth rate of about 8.4% last year, according to the Organic Trade Association, organic food is one of the few places that the consumer packaged goods industry has experienced growth. How these goods are being sold is also in flux as the pending tie-up between Amazon (AMZN) and Whole Foods Market (WFM) will remake the retail landscape.
Campbell missed analyst estimates in its last quarter in part due to soft demand for its products. Morrison said on the earnings call that the company “experienced significantly lower consumption across all of our categories.”
Morrison has been one of the more aggressive CEOs in trying to reshape the company’s portfolio in response to changing consumer demand. The Pacific Foods deal is Campbell’s fifth acquisition in five years; it’s also snapped up Bolthouse Farms, organic baby-food company Plum Organics, biscuit maker Kelsen, salsa and hummus producer Garden Fresh Gourmet all in the last five years. “We’ve been talking about seismic shifts now since 2011,” she says. “We think this is a marketplace change that we’ve expected and embraced.”
The company also has backed a venture capital fund and has invested in startups like meal kit company Chef’d and nutrition test kit company Habit.
Pacific Foods will become part of Campbell’s Americas Simple Meals and Beverages business, which also includes the company’s iconic soup brand, V8, Swanson, Prego, and Plum Organics.
Campbell is signaling that it plans to continue its strategy of leaving its acquisitions alone; it says Pacific Foods will continue to be run out of Tualatin, Ore. “We definitely view the company as an Oregon success story,” Morrison says.
Eggert will stay on as a supplier through his farms—an operation the family started 17 years ago. Eggert told Fortune that one of the reasons he decided to sell the company is because he wanted to focus on expanding the organic supply chain.
“The supply side of organic is more complicated than selling,” he says.
