Campbell Soup Co. is adding something new to its mix: On Monday it announced it had purchased Sovos Brands, which makes the fan-favorite sauce brand Rao’s as well as premium frozen-food company Michael Angelo’s and the yogurt brand Noosa, for about $2.7 billion.
Campbell’s noted that Sovos has grown rapidly in the last few years and said the acquisition bolsters its offerings in the meals and beverages category. It said the move also means wider distribution and more shelf space for the Sovos products.
Rao’s, which originated from the popular Italian restaurant in New York of the same name, was a big get for Campbell’s. The soup company noted that Rao’s — which has grown to include a line of sauces, pastas and soups — was responsible for nearly 70 percent of Sovos’s sales in 2022. The brand’s marinara sauce is beloved by many chefs and home cooks who typically wouldn’t opt for a jarred sauce, and it was the top finisher in two Washington Post taste tests of jarred marinara sauces. Campbell’s does not offer a competitor in the “growing ultra-distinctive Italian sauce category,” the company noted in its news release.
The deal is expected to close by the end of December, Campbell’s said. Campbell’s stock was trading at $44.60, down 1.2 percent from Friday, while Sovos stock was up 25.6 percent to $22.62. “The acquisition comes at a considerable cost, but we believe it is a strategic move that strengthens Campbell’s product portfolio with fast-growing brands,” CFRA Research analyst Arun Sundaram told Reuters.
While analysts praised the deal, some fans worried that the purchase of Rao’s by the major company best known for canned chicken soup might mean a decline in quality. “I will riot if they change this sauce in any way,” one tweeted. “Here comes the high fructose corn syrup,” another wrote.
