The cereals that have filled millions of breakfast bowls worldwide since the 1890s found themselves boxed up in new company, Post Holdings, when private-label-cereal-giant Ralcorp Holdings spun it off in 2012. The maker of Grape-Nuts, Toasties, Honey Bunches of Oats, Raisin Bran, Shredded Wheat, Bran Flakes, Pebbles, and Alpha-Bits is the third-best-selling breakfast cereal brand in the US (after Kellogg and General Mills). Post's manufacturing facilities are located in the US and Canada. Since its separation from Ralcorp, Post Holdings has moved beyond the breakfast table, adding snacks, active nutrition products, and pasta through acquisitions. However, breakfast cereal still accounts for about 95% of sales.
Post operated five business segments in fiscal 2014 (ended September), including: Post Foods, Michael Foods, Active Nutrition, Private Brands, and Attune Foods.
The company's flagship Post Foods business, which generated 40% of overall revenue in FY2014, makes ready-to-eat cereal products. The Post business is the third largest seller of ready-to-eat cereals in the US, controlling an 11% market share.
Its Michael Foods segment contributed another 28% to overall revenue, and includes the business of MFI Holding Corporation (acquired in mid-2014). The segment makes and/or distributes its products from three divisions: egg products, refrigerated potato products, and cheese and other dairy case products. It also markets a wide variety of refrigerated grocery products such as bagels, butter, cheese, ethnic foods, and muffins.
Active Nutrition segment (12% of revenue) markets protein bars, shakes, and powders under the Dymatize and Supreme Protein brands and nutritional joint health supplements under the Joint Juice brand.
The company's Attune Foods business (4% of revenue) includes all-natural cereals and snacks, such as probiotic bars and organic graham crackers. Attune Foods also includes the Golden Temple, Peace Cereal, Sweet Home Farm, and Willamette Valley Granola Company brands as well as a private label granola business, Hearthside Food Solutions.
In 2015, Post holdings said it would consolidate its Post Foods and Active Nutrition businesses to create a new Consumer Brands Group segment, which focuses on branded products.
More than 85% of the company's products are sold to customers in the US. Post manufactures its ready-to-eat cereals at facilities in Battle Creek, Michigan; Jonesboro, Arkansas; and Niagara Falls, Ontario. Attune Foods makes its foods in Eugene, Oregon.
Sales and Marketing
Post Holdings deploys a variety of consumer-targeted marketing campaigns across television, digital and print advertisement, coupon offers, co-op advertising with certain retail customers, and co-marketing arrangements with complementary consumer product companies. It also utilizes traditional billboard, print, digital, and social media advertising, as well as grass-roots advertising using sampling events and business drops.
Retail giant Wal-Mart Stores is the company's largest customer, accounting for 11% of sales in fiscal 2014 (ended September) and 20% of sales in each of the prior three years. Michael Foods serves foodservice distributors, restaurant chains, and major retail grocery chains, with its largest customers being Sysco and US Foods, which accounted for 17% and 13% of sales, respectively. Attune Foods products are sold in natural and specialty grocery stores, such as Whole Foods and Trader Joe's.
The Post Foods business sells its products through an internal sales staff and broker organizations. The unit occasionally sells Post Food products to internet, food service, and military channels and may utilize certain broker and distribution services to sell outside of the US. Post Foods mainly sells to grocery, mass merchandise, supercenters, drug store, and club store customers.
Overall, to keep its brands on consumers' shopping lists, Post Holdings spent $121.8 million on marketing and advertising in fiscal 2014 (ended September), compared with $118.4 million and $126.4 million in fiscal 2013 and 2012, respectively.
While Post's sales mostly languished below the $1 billion mark for several years as it struggled to grow its matured cereal business, things began turning around in 2014 as it diversified its products with acquisitions.
Post's sales skyrocketed by 133% to $2.41 billion in fiscal 2014 (ended September) thanks to added sales stemming from its recent acquisitions of Michael Foods and several nutrition companies. Its Post Foods segment saw a 2% decrease in net sales despite volume growth of 1.4% as consumers flocked to lower priced foods. Post's volume increases were mostly driven by the Pebbles, Honey Bunches of Oats, Golden Crisp, and Honeycomb brands, while its Grape-Nuts, Post Shredded Wheat and Good Morenings brands saw volume declines.
Despite higher revenue in 2014, the company reported a net loss of $343.2 million for the year as it ramped up its hiring to support its growth plans, incurred more acquisition related costs, and paid more in stock-based compensation costs.
Cash from operations rose sharply as its cash earnings after accounting for acquisition assets grew for the year.
Post Holdings has continued to move beyond breakfast cereal into higher-growth categories, including snacks, sports nutrition, supplements and weight loss. The company's frequent acquisitions of other food companies in recent years, including its largest-ever acquisition of Michael Foods, which gave it the Simply Potatoes, All Whites, and Crystal Farms brands -- helps emphasize this strategy of diversifying its menu to cater to shifts in consumer tastes toward increased consumption of protein and away-from-home snacks.
As part of its strategy to ultimately become a diversified consumer goods company, Post Holdings likes to acquire companies that expand its product offerings. In 2015, Post bolstered its breakfast line through its MOM Brands acquisition, while in 2014 it stretched out of its comfort zone by entering the peanut butter and pasta food markets with its acquisitions of the American Blanching Company and the Dokota Growers Pasta Company, respectively. Expanding more into the nutrition business, Post Holdings in 2014 bought the well-known PowerBar and Musashi brands, after acquiring the Golden Boy Foods and Dymatize Enterprises businesses in 2013.
In addition to diversifying into higher-margin categories, Post plans to get back on the upswing primarily through focusing on sales to large customers, such as Wal-Mart. Increased marketing efforts via the Internet and social media can also be expected.
Mergers and Acquisitions
In mid-2015, Post significantly added to its breakfast product portfolio through the purchase of MOM Brands, the owner of Malt-O-Meal, Mom's Best Naturals, and other brands, for $1.15 billion.
In November 2014, the company purchased the private label peanut butter manufacturer American Blanching Company.
In June 2014, Post in its largest acquisition to date purchased Michael Foods, whose brands included Simply Potatoes, All Whites, and Crystal Farms, for $2.45 billion.
Looking to add pasta to the menu, in January 2014 Post acquired Dakota Growers Pasta Company from Viterra Inc. for $370 million in cash. Dakota Growers Pasta manufactures dry pasta for retail and institutional customers. Following the sale, Dakota Growers Pasta was managed independently from Post Holdings' other businesses.
In September 2013, Post acquired Premier Nutrition Corp. (PNC) for $186 million in cash. PNC markets and distributes protein beverages and foods under the Premier Protein brand, and nutritional supplements under the Joint Juice brand. The purchase provided Post a platform to grow in the active nutrition and supplements businesses. Post-sale, PNC is independently managed and located in Emeryville, California.
In May 2013, Post purchased the branded and private-label cereal, granola, and snacks business of Hearthside Foods Solutions from Wind Point Partners for $160 million in cash. The sale included the Golden Temple, Peace Cereal, Sweet Home Farm, and Willamette Valley Granola brands.
Prior to the spinoff, Post represented Ralcorp's branded cereal segment, which was in decline. (Ralcorp acquired Post from Kraft Foods in 2008 for about $2.7 billion, but its success with the brand was sporadic.) In the end, Ralcorp decided to launch Post on its own to focus on its own burgeoning private-label food business.