Frontera Foods, the Chicago-based gourmet Mexican food company started by chef Rick Bayless, has been purchased by ConAgra Foods, the packaged food giant known for such brands as Slim Jim, Banquet and Reddi-wip.
The acquisition, which closed Monday, moves the Frontera, Red Fork and Salpica grocery brands under the ConAgra banner, but does not include any of the Frontera-branded restaurants. Terms of the deal were not disclosed.
The homegrown 20-year-old chips and salsa company is the first acquisition for ConAgra since it moved its headquarters from Omaha to Chicago in June, and it meshes with ConAgra’s ambitions.
“It is our strategy to reshape our ConAgra portfolio to be more premium and more contemporary,” said Sean Connolly, ConAgra’s president and CEO. “It’s a terrific fit with our existing portfolio.”
For Frontera, the deal will allow its product line and distribution to expand, but Connolly pledged the manufacturing process and quality will remain the same.
Frontera Foods was launched in 1996 by Bayless and Manny Valdes, a former Kraft Foods executive, to produce regional Mexican food products using all natural ingredients. Products include salsa, tortilla chips and seasoning mixes. Both Bayless and Valdes will stay on as advisers, helping to develop new products from the Frontera test kitchen several blocks away.
Albert Valdes, currently chief operating officer of Frontera Foods, will lead the business as part of ConAgra Foods.
Bayless, a well-known celebrity chef, operates several Chicago restaurants including Frontera Grill, Topolobampo and Xoco.
Manny Valdes would not disclose sales figures but said Frontera Foods has generated double-digit annual sales growth since its inception. However, it has been unable to keep up with growing demand in recent years as it has evolved into a national brand. Things came to a head last year, as Frontera experienced a major salsa shortage in advance of the Cinco de Mayo holiday.
“We were faced with a situation where we were only meeting about 60 to 80 percent of our demand,” Valdes said. “That raised some red flags internally. We came to the conclusion that we needed to make some significant investments in manufacturing.”
The sauces are manufactured in Houston, while the chips are made by El Milagro in Chicago at a South Side plant.
In evaluating their options, Valdes and Bayless decided the best course was to partner with a company that already had the capacity to grow the business. That led to a January meeting with Connolly and months of discussions before ConAgra agreed to buy Frontera.
“We are looking to ConAgra to help us get really good food into more homes across the United States in a way that we just don’t have the capability to do it,” Bayless said
Valdes and Bayless told the 14 employees of Frontera Foods on Monday morning that the company was sold, and that all would be retained under new ownership. The company will remain headquartered at its North Clark Street office, with both the Houston and Chicago manufacturing plants remaining online.
Connolly said ConAgra will look to grow Frontera through expanded distribution, while respecting “the tremendous culinary integrity” of the brand. That means no messing with the manufacturing process, at least for now.
“At this point in time we are not planning on making any changes to the manufacturing of the product,” Connolly said. “But we will be looking to innovate new products that offer additional growth opportunities, and as we do that, we anticipate being able to use many of the manufacturing capabilities that ConAgra has in its network.”
The Frontera acquisition adds a fresh brand to ConAgra’s corporate shelf.
One of the largest packaged food conglomerates in North America with $11.6 billion in annual sales, ConAgra started in 1919 as Nebraska Consolidated Mills. Renamed ConAgra in 1971, the company built its portfolio through acquisitions, with signature brands including Marie Callender’s, Healthy Choice, Hebrew National, Orville Redenbacher’s, Hunt’s and Peter Pan.
ConAgra has slimmed down since Connolly, 51, took the helm in April 2015, looking to build a more contemporary portfolio and a healthier bottom line. In February, the company sold its private label business to TreeHouse Foods for $2.7 billion, and in May agreed to sell its Spicetec Flavors & Seasonings business to Givaudan for about $340 million.
This fall, ConAgra will complete the spinoff of its frozen potato business, Lamb Weston, which generates nearly $3 billion in annual sales supplying french fries to fast-food chains.
As part of its transformation, ConAgra relocated its headquarters to Chicago in June, moving into 170,000-square-foot office space on the 13th floor of the Merchandise Mart. Valdes said ConAgra’s move to Chicago was instrumental in striking the deal with Frontera, because it allows them to stay in close proximity as advisers.
For Bayless, parting with Frontera Foods is bittersweet, but he is prepared to let the chips fall where they may under a much larger corporate umbrella.
“We’ve built this line from a dream to this big company now that does beautiful salsa, sauces and chips,” Bayless said. “There’s a little bit of trepidation and sadness in the whole thing, but we feel we need to take the next step with it and see it grow to its full capacity.”
rchannick@chicagotribune.com
Twitter @RobertChannick
