Dive Brief:
- PepsiCo is buying Mexican-American food maker Siete Foods for $1.2 billion, the snack and beverage giant said in a statement. The transaction is expected to close in the first half of 2025.
- Siete Foods, founded in 2014, produces tortillas, salsas, seasonings, sauces, cookies and snacks. Its products can be found in grocery stores, club stores and organic food retailers largely across the U.S.
- The acquisition by PepsiCo further expands efforts by New York-based company to improve the healthiness of its snacking portfolio as consumers more closely watch what they eat.
Dive Insight:
PepsiCo’s snacking roots are built on household staples such as Doritos, Fritos and Cheetos. But the company has spent several years lowering the amount of saturated fat, salt, sugar and other less healthy ingredients in many of its brands. It’s introduced innovations such as Kettle Cooked Lays and others with better ingredients, such as a Sun Chips variety made with black beans.
At the same time, PepsiCo has turned to M&A to supplement its snacking portfolio. In 2018, it purchased Bare Foods, which makes baked fruit and vegetable snacks. A year later, it added PopCorners maker BFY Brands to the mix.
Siete makes heritage-inspired Mexican-American foods for a variety of dietary needs and preferences. It sells tortillas made with almond flour, vegan beans and grain-free puffs made with lentils. As consumers continue to stock up on healthier products, Siete stands to be a major beneficiary.
The addition of Siete not only builds out PepsiCo’s better-for-you portfolio, but it also allows it to tap into growing demand for culturally authentic products. Mexican cuisine is the third most popular in the U.S., according to Datassentials, and growing in popularity, particularly among younger adults.
"PepsiCo believes in the spirit and authenticity of the Siete brand,” Ramon Laguarta, PepsiCo’s CEO, said in a statement. “We look forward to expanding our multicultural portfolio with these incredible products and even more consumers discovering and enjoying Siete."
The food space has been hit hard by consumers pulling back on what they buy and how often they make purchases amid a prolonged period of inflation.
Laguarta told analysts in July that prices for certain products, like unsalted potato chips or tortilla chips, will likely need to be adjusted to make them more attractive to consumers. Some offerings also will see increased levels of marketing.
In addition, PepsiCo and other companies are facing pressure from private label. Siete’s unique flavor profile and product mix will provide PepsiCo with a differentiated, on-trend brand that will help it better withstand these outside pressures.
The Siete deal comes nearly two months after Mars announced the purchase of Pringles maker Kellanova for $36 billion, the biggest deal in the food space in years. The merger will transform the candy icon into a leading seller of chips, crackers and other treats — giving it greater scale in the competitive snacking space and providing more heft to go up against juggernauts such as Mondelēz International and PepsiCo.
