Unilever is preparing a sale of its Ragu as big food names like Pinnacle Foods Inc. (PF), Hillshire Brands Co. (HSH), and Post Holdings Inc. (POST) line up for the rights.
Bids for Ragu — expected to go for as much as $2 billion — are due by the end of this week, according to a report by Bloomberg.
As of now, none of the potentially interested parties are going on the record to discuss the sale, including Unilever.
The bidders will be betting that with a bigger marketing budget and innovation in new products they can grow a brand that has stagnated, one of the people said. Under Chief Executive Officer Paul Polman, Unilever has focused on its health and beauty business while selling food brands. A new owner could try selling prepared foods with Ragu sauce, or using new packaging to give the sauce the appearance of being fresh, said Ken Harris, managing partner of Cadent Consulting Group.
Founded in Rochester, New York, in 1937 and acquired by Unilever in 1987, Ragu accounts for about 40 percent of Unilever’s $1.2 billion pasta-sauce sales, according to data trackerEuromonitor International and Liberum Capital. Sales have declined 18 percent since 2009, hurt by the encroachment of private-label sauces, which now account for about one-quarter of the market.
Ragu is the best-selling pasta sauce in the United States, with 27% of the market.
Prego comes in second, with 18% of the market share.
