ST. LOUIS — When Post Holdings employees arrive at the company’s headquarters, the food manufacturer’s storied 128-year history is on full display.
The decades-long evolution in packaging for three of its signature brands — Sugar Crisp, Fruity Pebbles and Honeycomb cereals — is spotlighted inside a black rectangular frame on the first floor. Workers showcase miniature toy trucks, special-edition cereal boxes, champagne bottles and other mementos that commemorate achievements and celebrations.
Rob Vitale, Post’s chief executive officer, has six black and white photographs hanging in his office revealing key moments in the company’s history, such as an image of the original factory and the house where the company was established in Battle Creek, Michigan, more than a century ago.
“I’m a history buff. So in one way, I look back a lot,” Vitale said during a 90-minute interview. “We’ve got one of the best corporate histories around [that is] particularly colorful.”
Despite Post’s close connection to the past, the food manufacturer isn’t one to live in it.
Under the leadership of Vitale and his mentor and predecessor Bill Stiritz, Post has transformed itself from a company selling only cereal into a sprawling CPG conglomerate manufacturing everything from peanut butter and mashed potatoes to liquid eggs and dog food.
Post has found success through an unconventional strategy of building and managing its businesses in a way that is more akin to a private equity firm than a publicly traded company with roughly $6 billion in annual sales. This approach, Post executives say, keeps the company nimble and better positions it to go head-to-head with much larger challengers in the fiercely competitive food space.
“One of the things that Bill taught me early on is to think your own thoughts,” Vitale said. “Don’t just go to what everyone else is doing and say, ‘Okay, because the rest of the pack is doing it that way, we’re going to emulate them. ’ ”
Grape-Nuts, one of the first ready-to-eat-cold cereals, moving down a production line in Battle Creek, Michigan.
‘The Wild, Wild West’
Post traces its roots to 1895 when C.W. Post started the Postum Cereal Company and two years later launched Grape-Nuts, one of the first ready-to-eat-cold cereals. Since then, Post has been owned by several large businesses following a series of mergers and spinoffs, including tobacco giant Phillip Morris and Kraft Foods.
In 2012, private label food manufacturer Ralcorp Holdings spun off its branded division to create today’s Post as a standalone company.
The debut marked the beginning of a new chapter for the Fruity Pebbles manufacturer, but one that left its executive team, led by CPG industry veteran Stiritz and Vitale, then its CFO, with little time to enjoy the company’s newfound independence. Post was the third-largest cereal maker in a struggling sector where it was pitted against category leaders General Mills and Kellogg.
“It was not a transaction for the faint of heart,” said Lowell Strug, the global head of consumer and retail investment banking at Barclays who has worked with Post on three acquisitions since 2018. “Spinning off as a pure play in a declining category, that could have gone horribly wrong.”
Post started life on its own with fewer than a dozen corporate employees.
Diedre Gray, now Post’s executive vice president and general counsel, said when the company moved its headquarters into the home of a defunct pharmaceutical firm, workers initially did not have trash cans at their desks and the office lacked printers.
“It was really the Wild, Wild West in here at that time, but it was pretty exciting, too,” she said. “We had this real history with the Post brand and the cereals. At the same time, we were totally a startup.”
Executives working at Post at the time of the spin off, many of whom remain at the company today, said they were aware that despite its recognizable cereal business, Post couldn’t stake its future on that alone. It needed to look for acquisitions to grow the company, and quickly, or it wouldn’t be long before Post would find itself as the target of an opportunistic buyer.
“We needed to do it because if we didn’t, we weren’t going to be a standalone company for very long,” said Jeff Zadoks, Post’s executive vice president and chief operating officer, who started the same day as Vitale in 2011. “We were third in a shrinking category. As a public company, that’s not a recipe for success. We had to be active.”
It was really the wild, wild West in here at that time, but it was pretty exciting, too. We had this real history with the Post brand and the cereals. At the same time, we were totally a startup.
Diedre Gray
Executive vice president and general counsel, Post Holdings
Since Zadoks joined Post, the company has completed more than 20 acquisitions. It has been one of the most active buyers during that period across the food industry — a notable feat in a sector where access to cheap capital and the urgency to move deeper into trendier categories has accelerated the pace of M&A.
Post’s Chief Financial Officer and Treasurer Matt Mainer said he was drawn to the company in 2015 by its pace of deal-making and the financial complexity of some of its transactions. “In the eight years I’ve been here, I’ve done more than most people do in a career,” he said.
Post Holdings’ key acquisitions from 2012 – 2023
Becoming an acquisition powerhouse
After the spin off, Post tried building scale in cereal where it had expertise. Early on, Stiritz reached out to PepsiCo to inquire about purchasing its Quaker Oats business, which included brands like Cap’n Crunch and Life.
When PepsiCo rebuffed its interest, Post searched for other opportunities in cereal and adjacent categories. But with only so many options available, it had to pivot to look for other acquisition opportunities.
Post benefited from Stiritz and Vitale’s close connections with investment bankers who made it possible for nearly “every opportunity in food” to be pitched to the company, Zadoks said. Executives scoured the market, assessing potential deals in a wide range of categories including vegetables, snacks, potatoes, peanut butter and beverages.
Zadoks recalled having reservations that the company wasn’t ready to digest some of the bigger acquisitions being considered until it had time to build out its own business and hire additional employees.
“There were some deals early on that, had we landed them, I was fearful we would have crumbled under the weight of those deals,” he said.
While Post eschewed large M&A deals, it quickly became one of the most aggressive food companies in the industry.
From the time of the spin off until the end of 2014, Post gobbled up nine businesses, including Premier Nutrition, a seller of high protein shakes and bars; portable energy offering PowerBar; a range of private label nut butters, cereal and granola; and Michael Foods, a manufacturer of egg products and refrigerated potatoes for the foodservice industry.
In the years that followed, Post remained aggressive by averaging about one deal each year.
The company finally expanded its cereal business through the $1.2 billion purchase of MOM Brands in 2015. Two years later, Post completed its first foreign acquisition with the addition of Weetabix, the top-selling cereal in the U.K., for nearly $1.8 billion.
Even the long-awaited cereal deals haven’t slowed Post’s appetite for M&A. In 2018, it entered refrigerated meals by acquiring Bob Evans Farms, a producer of refrigerated potatoes, pasta, pork sausage and other side dishes, for $1.5 billion.
And in April of this year, Post purchased Rachael Ray Nutrish, Kibbles ’n Bits and other pet foods brands as part of a $1.2 billion deal with J.M. Smucker, marking its first time selling products outside of human food.
Scott Harrison, a portfolio manager at Argent Capital Management in St. Louis, whose firm has owned Post’s stock since it was spun off, said the company’s successful history of creating value through M&A has “earned the trust of shareholders … who give them the benefit of the doubt.”
“You never know what category [Post] may enter,” Harrison said. “The fact that they would take on a new category and see an opportunity where others may not see that is not surprising. And it’s actually, in our view, it’s a strength.”
The acquisition binge has led to the creation of a business that has a commanding presence in many facets of the food landscape.
Post participates in eating out (foodservice) and food at home (cereal and refrigerated retail,) as well as branded and private label items. The diversified mix gives the food producer exposure to categories that may be in demand at any given moment and provides it with a buffer to other segments that are facing challenges.
In addition, Post’s cash-steady, slower-growing businesses, like cereal, complement areas such as refrigerated retail where it has traditionally experienced higher rates of growth and volatility. Logistics also is a major beneficiary of Post’s business model, with the company able to save money by transporting heavy foods (peanut butter and pet food) and light foods (cereal) on the same truck.
Even before Post closed the pet food transaction with Smucker, Vitale, who estimated he’s mulling over four to five potential deals at any one time, said he and his management team were already searching for their next acquisition. Rarely a week goes by, he said, without a pitch on a new company or brand Post should look into buying.
“We’re always looking for new opportunities. It’s exhilarating,” said Vitale, who pointed out that some transactions can take years to complete. “You have to resist it at times because it’s an addictive experience and you have to make sure that you don’t get caught up in the process and make a bad decision.”
Boxes of cereal on a store shelf at a Washington, D.C., grocery store in July 2023.
Christopher Doering/Food Dive
Embracing an unorthodox strategy
Post touts on its website that it’s “not your usual” CPG company — and for good reason. Unlike other food manufacturers, Post employs a different tactic for managing its cash and structuring its business.
“Too much equity gets trapped in these big [food] companies,” Vitale said, noting they often prioritize having top investment-grade credit ratings and paying generous dividends to shareholders.
Post, which doesn’t pay a dividend and carries a higher amount of debt than its competitors based on its net leverage, values cash-generating businesses over ones that provide a short-term bump to earnings. The company also doesn’t prioritize building scale in categories where it already operates.
Instead, it favors owning businesses that have similarities, or where synergies are created with its existing operations — a strategy highlighted by Post’s recent move into pet food. Along with shipping advantages, human and animal food use some of the same ingredients, allowing Post to increase its purchasing power.
The strategy gives Post easier access to cash that it can use for acquisitions, stock buybacks or paying down debt — a mix it can shift around depending on its needs at a particular moment, executives said. If Post requires cash for an acquisition, for example, the food manufacturer can slow or stop buying back its stock.
Post hasn’t made any big missteps. They have a strategy that seems plausible, and so far, they seem to be executing it.
Erik Gordon
Business professor, University of Michigan
Erik Gordon, a business professor at the University of Michigan, said Post is organized in a way that allows it to tap into benefits available to both public and private companies.
As a public corporation, Post has more opportunities to raise capital. At the same time, the private equity-like attributes embedded in its business model reveal a company that is focused on generating a prolonged period of sustained growth even if there are near-term disruptions.
“They seem to be careful in capital allocation,” Gordon said. Post “hasn’t made any big missteps. They have a strategy that seems plausible, and so far, they seem to be executing it.”
Post’s stock price, at $82 per share today, has soared about 200% from the time of its separation from Ralcorp, a rate of growth that excludes the recent divestiture of its nutrition business.
Sales during the same period have jumped from $1.03 billion in 2013, its first full fiscal year as an independent company, to nearly $6 billion last year. This total does not include about $2 billion in sales from businesses that were divested or separately capitalized during that time.
Post Holdings net sales jumped six-fold since 2012
Despite Post’s penchant for acquisitions, the food manufacturer hasn’t been shy about selling or divesting parts of a business if it can get a good price, or if the underlying asset, in its view, isn’t being fairly valued by the market.
In 2018, Post transferred its private label business to a new subsidiary called 8th Avenue Food & Provisions. It received $250 million from private equity firm Thomas H. Lee Partners in exchange for a 39.5% stake.
The following year, Post took public BellRing Brands, the manufacturer of protein shakes, powders, bars and other offerings.
There’s a certain amount of disincentive [in corporate America] to become smaller, even when becoming smaller is the most shareholder-friendly thing to do. We try to play past that. We’re not afraid to become smaller.
Rob Vitale
CEO, Post Holdings
After spending about $700 million on BellRing during its time owning the business, Post estimated it has generated after-tax proceeds of $2 billion and another $2 billion for shareholders through the IPO and subsequent spin off of BellRing in 2022.
“There’s a certain amount of disincentive [in corporate America] to become smaller, even when becoming smaller is the most shareholder-friendly thing to do,” Vitale said. “We try to play past that. We’re not afraid to become smaller.”
The exterior of Post Holdings’ headquarters in St. Louis, Missouri, on Aug. 9, 2023.
Michael B. Thomas for Industry Dive
A hands-off approach
Post is divided into five segments that are run independently. The largest, Post Consumer Brands, oversees cereal, Peter Pan peanut butter and pet food.
The other four are Weetabix; Bob Evans side dishes; its foodservice operation and its private label unit.
Nicolas Catoggio, president and CEO of Post Consumer Brands, said the ability to run his own division while tapping into the resources of the parent company was the primary reason he left a nearly 15-year stint as a consultant to join Post in 2021.
“This creates the perfect environment to feel supported,” Catoggio said. “For the most part, I run this business as my business. And I love it.”
Each operation has a management team that reports to Vitale, along with its own supply chain, IT department, human resources, marketing, legal and finance divisions.
Post could “really wring out costs” if it combined some of those functions across the company, but the decision would likely generate unwanted complexities that outweigh any potential savings, Vitale said.
“The downside is you now have a bigger organization, and bigger organizations tend to be less agile, less nimble, less responsible to both the consumer and the customer,” he added.
Few businesses within Post have benefited more from its hands-off approach than BellRing.
[Post] encouraged us to continue on the path [we were already on.] That has been key to our success and growth now as a publicly traded company on our own.
Darcy Horn Davenport
CEO, BellRings Brands
During its early days as a public company, one of Post’s first acquisitions was Premier Nutrition, the food and beverage protein maker that laid the foundation for what later became BellRing.
But Premier Nutrition, located in California, was growing much faster than Post’s mature cereal business. It also possessed a noticeably different culture. Premier Nutrition employees regularly brought their dogs to work, and each week the company would spotlight the life journey of a coworker, a stark contrast to the more buttoned-up mentality at Post’s headquarters in Missouri.
Premier Nutrition also was the only Post division to use an asset-light model that depended on co-packers to manufacture its products.
Darcy Horn Davenport, who was with Premier Nutrition as its vice president of marketing when the acquisition occurred, said the company was “definitely the small guy in all of Post’s divisions” with roughly $180 million in sales at the time of the purchase.
But rather than incorporate Premier Nutrition into one of its other holding companies to cut expenses and boost margins, Post allowed it to keep its existing departments in California, retain nearly all of its 50 employees and maintain its valuable co-packer model.
“We were nervous that exactly what we had seen play out across other big CPGs would happen,” said Davenport, now BellRings’ CEO. “But they kind of encouraged us to continue on the path [we were already on.] That has been key to our success and growth now as a publicly traded company on our own.”
Vitale remains convinced if Post had moved Premier Nutrition from California and forced it to follow in lockstep with the cereal maker’s way of doing business, it would “have been disastrous.”
“The gravitational pull of synergies would have destroyed the culture of Premier,” Vitale said. “Too many times I think acquisitions go poorly, not because the acquisition is a bad idea, but the synergy realization destroys much of what was good about the company [being purchased] to begin with.”
Several of the brands sold by Post Holdings, including Bob Evans, Peter Pan and Fruity Pebbles, at a grocery store in Washington, D.C.
Christopher Doering/Food Dive
Playing close to the edge
The synergy-realization philosophy has prompted Post to scuttle potential deals of businesses it was interested in acquiring. Several years ago, Post was evaluating whether to buy a company that would have expanded the food manufacturer’s breakfast offerings.
Vitale, who envied the niche this young business had carved out in the better-for-you food space, recalled a meeting to talk about a possible acquisition. Just before the discussion was about to start, four people from the young company entered the room, all of them dressed in flannel shirts, talking alike and the three men sporting long beards — evidence, Post executives said, of the strong culture permeating from the business.
While a purchase met many of Post’s criteria, the only way the larger food maker could have justified the price the company was asking for was by integrating it into the rest of its business to cut costs. Vitale recognized that kind of change would have destroyed the company’s culture — part of which made it an attractive acquisition target in the first place.
Post ultimately walked away from the deal.
“We approach things with enough humility to know that if we’re going to buy something because we’re attracted to it, the first thing we ought not to do is try to make it look like us,” Vitale said.
Hank Cardello, a food industry expert at Georgetown University’s McDonough School of Business and a former brand manager at General Mills, said Post has assembled a portfolio of “strong brands.”
The risk Post runs into, he warned, is that further deals spread the company too thin and make it difficult for the food manufacturer to stay focused.
Cardello said Post would be better off strengthening its presence across key portions of its business, such as cereal and pet food, where it can extract advantages through improved margins, ingredient procurement, production and distribution.
Earlier this month, Post announced it would complement its existing branded pet food business by spending $235 million to acquire a manufacturer and packager of private-label and co-manufactured products.
“If you like to do deals, great, but I’d focus on deals that buttress your position in core categories where you have expertise,” Cardello added. “Their long-term success, or financial success, would probably be helped by going deeper into their core categories.”
Harbir Singh, a professor at the Wharton School of the University of Pennsylvania, said Post needs to keep “renewing its portfolio” to keep it fresh. Following the spin off of BellRing, Singh said Post’s portfolio is missing a meaningful presence in nutritious, better-for-you products.
Still, Vitale said Post remains a company in motion that is not afraid to take risks, even if they backfire or create the inevitable second guessing.
He remembers deals, such as Bob Evans, that were consummated but could have created even more value if they were done differently. And while Vitale remains proud of Post’s M&A track record, he still laments deals the company didn’t make that have proven lucrative for their eventual buyers.
“I don’t have many regrets of anything we have done. There are numerous examples of deals that I wish we had done that we didn’t do,” Vitale said, declining to discuss in detail those missed transactions. “Our ‘should have’ portfolio [of companies we didn’t acquire] is pretty impressive.”
Post has even looked for different ways to engage in M&A. In May, Post unwound the blank check company it established during the height of the SPAC boom two years ago after failing to find an acquisition target in the CPG space. Post lost about $10 million on the bet, the amount of money it spent to organize and capitalize the SPAC.
“We don’t fear experimentation and failure. If you don’t screw things up, you’re not playing close enough to the edge,” Vitale said. “We always think about … what is the next move. I feel a tremendous amount of excitement to see how far I can take us.”
News Graphics Developer Julia Himmel and Visuals Editor Shaun Lucas also contributed to this story.
