Del Monte Buys Milk-Bone from Kraft

Del Monte Corp. will buy the Milk-Bone brand from Kraft Foods for $580 million, pumping its pet-food portfolio on the heels of its $705 million purchase of Meow Mix.

The Milk-Bone and Meow Mix buys are part of Del Monte’s “Project Brand” initiative to focus on high-margin, branded products. Del Monte is exiting private-label (selling its private-label soup and baby food business to TreeHouse Foods for $275 million) and building its portfolio with brands that have similar go-to-market platforms. San Francisco-based Del Monte’s already owns pet food brands 9Lives, Cycle, Gravy Train, Kibbles ‘n Bits, Nature’s Recipe, Reward and Skippy as well as seven pet snacks brands including Pup-Peroni and Snausages.

Meow Mix “provides an excellent platform from which we can leverage Del Monte’s strong U.S. retail go-to-market platform and proven innovation skills to transform the competitive position of our pet products portfolio,” said Del Monte CEO Richard Wolford in a statement.

The Meow Mix deal with current owner The Cypress Group is expected to close by August; the Milk-Bone deal is expected to close soon after earning regulatory approval.

Milk-Bone garnered $180 million in net revenue last year. About 230 staffers will move with the brand, including Milk-Bone’s business team in East Hanover, NJ; operations staff at the Milk-Bone plant in Buffalo, NY; and technicians at the Sherburne Pet Food Testing Center in Sherburne, NY.

“Milk-Bone, with its strong brand position in the fast-growing and dynamic pet snacks category, will significantly strengthen our overall competitiveness in the pet business,” Wolford said in a statement.

Kraft is selling Milk-Bone as part of its on-going strategy to pare its portfolio to its top-selling brands.

“Milk-Bone is a great brand, but has very different retail channel dynamics than other Kraft brands,” said Kraft President-North America Dave Johnson in a statement. “With the sale of Milk-Bone, we’re better able to focus our time and resources on opportunities that provide us with greater potential for long-term growth.”

Northfield, IL-based Kraft sold its $30 million Stella D’oro business to Brynwood Partners in December (Xtra, Dec. 27), and Kraft Canada announced in January that it is selling a combined $300 million business (vegetables, beans, soups and pasta) to CanGro Foods (Xtra, Jan. 3). That sale includes the Canadian licensing rights for Del Monte products including canned fruits and vegetables; Kraft keeps licensing rights for Del Monte beverages.