Kraft Foods is acquiring nutrition/energy bar marketer Balance Bar Company for approximately $268 mil., or $19.40 per share. While the food giant recently began selling Taste of Life salad dressing with vitamin E and Kraft Singles cheese slices with extra calcium, the addition of Balance Bar will significantly enhance Kraft's presence in the functional foods arena.

Kraft, the North American food operation of Philip Morris Companies, expects the deal to be completed by the end of February.

Based in Carpinteria, Calif., Balance Bar reported sales of $100.9 mil. in 1999, up 23.5% from $81.7 mil. in 1998. The firm has approximately 90 employees and markets Balance Bar, Balance Bar +, Balance Outdoor, Jenny Craig Bars and Total Balance powdered drinks and beverages. The Balance Bar line generates about 93% of company sales.

Arriving on store shelves now, the Jenny Craig bars are marketed under a licensing agreement with the weight loss center (¹ Also see "Balance Bar Jenny Craig Nutritional Bars Slated For March Launch" - Pink Sheet, 25 October, 1999.). All of Balance Bar's products are manufactured by outside suppliers.

Efforts by Kraft to grow the Balance Bar business could focus on expanded distribution, advertising and line extensions.

Balance Bar products currently are sold through grocery, mass merchandise and natural food stores nationwide. Balance Bar noted 36% of its total sales came through the natural food stores channel. Costco was Balance Bar's largest customer in 1999, generating 18% of sales. Trader Joe's accounted for 12% of sales and 5% came from GNC.

Kraft additionally is purchasing Boca Burger, a manufacturer and marketer of soy-based meat alternatives.

Other major food companies also are likely to move into the functional foods category, now populated by smaller food and beverage makers and, increasingly, OTC drug and dietary supplement companies.

A number of firms including Novartis and Rexall Sundown are planning to enter the field in 2000. Leiner is shipping True Rhapsody women's energy bars in March (² Also see "Leiner True Rhapsody Women's Energy Bars Shipping In March" - Pink Sheet, 22 November, 1999.).

Kraft Functional Foods Presence Expands With Balance Bar Purchase

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