Mergers and Acquisitions among makers of snack foods chip away at Frito-Lay

Bite-sized snacks are big business.

While Wall Street focuses its attention on makers of semiconductor chips and movers of casino chips to make its money, companies that manufacture snack foods are busy building their fortunes through potato chips, pretzels, and similar indulgences.

The US snack foods industry, which comprises some 500 companies the likes of Frito-Lay, Kettle Foods, Nabisco, and Pringles, is highly concentrated with the top 50 firms generating 90% of the revenue.

Selling chips accounts for the largest percentage of sales – about a third – industry-wide.

Recent merger and acquisition activity among independent snack foods makers proves that these little somethings mean big business.

The common thread among these M&A deals is a push to join forces with other independents as they jockey for position against bigger makers of snacks that enjoy a broader reach and deeper pockets to fund their growth.

Merging their operations gives their distribution networks traction and allows them to leverage several more popular brands.