At first glance, Mars’ decision to pay a whopping US$36bn for Kellanova – the home of Kellogg’s (outside the US) and Pringles – may have raised eyebrows.

Should the deal go through (and despite some chatter there could be competition concerns, anti-trust officials are unlikely to block or seek to redraw the deal), the acquisition will be the largest in food for some time – and, by some estimates, the biggest M&A transaction full stop so far in 2024.

Mars’ move also comes at a time when there are questions about the long-term outlook for less-than-healthy food. For all the headlines being grabbed by subjects like GLP-1 drugs, more fundamentally, a growing number of consumers are making the link between what they eat and their health.

In recent years, the privately-owned maker of Snickers and Twix chocolate has itself sought to shore up its portfolio, using M&A to add healthier products to its stable.

Last year, Mars made another move into foods deemed ‘better for you’ by acquiring ready-meal and sauces company Kevin’s Natural Foods for a reported fee of almost $800m.

In 2022, the company snapped up US better-for-you snacks company Tru Fru. Two years earlier, Mars bought full ownership of Kind – a US maker of healthier snack bars (though still with flavours like Dark Chocolate Nut) – after acquiring a minority stake in the business in 2017.

Nevertheless, Mars has demonstrated an appetite to continue to invest in snacking and in chocolate; its move last year to buy Hotel Chocolat, a UK retailer of upmarket chocolate products, is a case in point.

The company’s move for Kellanova should be seen in this light. Both the Hotel Chocolat and Kellanova deals underline the ongoing strength of snacking as a trend and – more fundamentally – as a way of consuming food, while also highlighting what people snack on is evolving.

Hotel Chocolat has been a business built on consumers’ interest in more ‘premium’ chocolate and in its sourcing and origins. The decision to swoop for Kellanova – with Pringles as the flagship of its snacking portfolio – shows a desire to tap into demand for salty snacks.

Speaking to Just Food about trends in the US – and before news of Mars’ move for Kellanova – John Baumgartner, an equity analyst covering the sector for Mizuho Securities, suggested consumers were less concerned about the health implications of salty snacks compared to their sweeter counterparts.

“If you think about the snack food industry, if you look at per capita volume consumption for chocolate, for confectionery, you had seen volumes pretty much declining every year for a good five to seven years prior to Covid,” Baumgartner said.

During the pandemic, sales recovered, he noted, before adding: “Inevitably, you were going to hit a wall for some of these categories, where you revert back to trend.

“You're definitely seeing some of these snacking categories under more pressure than others. When we look at salty snacks relative to sweet snacks from our consumer survey work, we find that consumers view sugar as the most unhealthy ingredient and sodium not so much.

“You're also seeing consumers more and more aware of things like diabetes, the health implications of sugar intake and, because of that, you're seeing the salty snacks outperforming the sweet snacks.”

Mars isn’t alone among the world’s chocolate heavyweights in seeking to expand its snacking empire into saltier fare – look at Hershey’s recent M&A activity.

Late last month, Just Food sat down with Shaun Browne, the chairman of Houlihan Lokey’s consumer practice in Europe to discuss the trends driving M&A in the food sector. He believes companies not doing business in the less healthy parts of the market are unlikely now to enter those categories but, for those already there, they have to react.

“If you are not currently in unhealthy food why would you want to go into it? People are looking for growth and that tends to be in the healthier part of the food market. But nobody believes we are going to see eating snacks and crisps to cease,” he said. “If you are already in biscuits, crisps and cakes etc you can’t easily reinvent yourself but [you need to act] when you see competitive threats.”

Industry watchers will now be looking ahead at what might come next.

Internally, once the dust has settled on this deal, there are parts of the Kellanova portfolio that may be found a new home. It’s hard to see Mars, for example, hanging onto the plant-based business centred around the MorningStar Farms brand.

But, perhaps more importantly, how might Mars’ rivals react? The Kellanova deal and the prospective marriage of salt and sweet brought to mind the talk over the years about whether, one day, Cadbury and Oreo owner Mondelez International might join forces with Lay’s and Doritos maker PepsiCo. It was a deal proposed by activist investor Nelson Peltz more than a decade ago but an idea he gave up on when PepsiCo said it wasn’t interested.

“We have long thought that a merger between Frito-Lay and Mondelez would be the ultimate global deal to merge salty and sweet snacks,” AllianceBernstein analyst Alexia Howard wrote in a note last week when reports of Mars’ interest in Kellanova first emerged. There’s no sign at the moment of any interest at Mondelez or PepsiCo in such a deal.

Howard made the broader point the acquisition of Kellanova could lead to more deals in the US food sector specifically, which she focuses on.

“This deal could have broader implications for consolidation across the packaged food space: This is a larger scale deal than many we have seen in recent years, certainly since the merger between Kraft and Heinz in 2015. It’s perhaps not surprising that Kellanova may have become an acquisition target since it shed its poor-performing North American cereal business last fall since it is now a more attractive company with a more global footprint and far higher exposure to snacking.

“It’s possible that a deal of this magnitude could attract more activist investor interest in pushing for further consolidation across the packaged food space since US food remains a far more fragmented space than other staples sectors in the developed markets.”