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Frank's RedHot owner buys Cholula in $800 million deal

November 24, 2020. Summarized by summa-bot.

McCormick is adding a bit more spice to its portfolio with hot sauce Cholula.

New York (CNN Business)McCormick is adding a bit more spice to its portfolio with hot sauce Cholula.

The company is acquiring the brand from L Catterton, the private equity firm, in an $800 million cash deal, it said Tuesday.

The hot sauce market has been growing steadily.

US sales of hot sauce grew an average of 9. 7% every year for the past four years, according to Nielsen.

With the purchase of Cholula, McCormick (MKC) is building something of a hot sauce empire.

With Cholula, the two brands make up about 30% of the US hot sauce market, according to Euromonitor International and Nielsen data provided by Cholula.

Frank's and Cholula are popular in different markets and attract different consumers, McCormick said.

Cholula, the hot sauce typically sold in a slender bottle with a wooden cap and an image of a smiling, dark-haired woman on its label, is made in Mexico and has been available in the United States for about 30 years.

L Catterton, whose portfolio includes restaurant chain Noodles & Company and fitness upstart ClassPass, bought Cholula for an undisclosed amount in April 2019.

The company's net sales are roughly $96 million per year, according to McCormick's release about the deal.

The company expects Cholula's sales to keep growing.

The spice company plans to help expand Cholula's e-commerce sales and expand its distribution, and to enhance its restaurant business — a crucial growth engine for the company.

About 40% of consumers discover Cholula at restaurants, according to McCormick.

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