(Reuters) - PepsiCo (NASDAQ:PEP) will buy Siete Foods parent Garza Food Ventures for $1.2 billion, the Frito-Lay owner said on Tuesday, beefing up its snacking portfolio amid a shift to private-label brands among cost-conscious consumers.
The company, backed by actor Eva Longoria, is known for grain-free tortilla chips and taco shells. It also makes products such as enchilada sauce and Mexican wedding cookies.
Siete's products are distributed across 40,000 retail outlets in the U.S., including at Target and Whole Foods.
The Texas-based company, founded in 2014 by Veronica Garza, is owned and run by seven members of the Garza family.
Consumers have turned to more affordable private-label brands for their snacking needs after several quarters of price hikes by packaged food makers to soften the blow from higher input costs.
Meanwhile, deal-making in the packaged food industry has also been robust. Snickers maker Mars bought Pringles maker Kellanova in a nearly $36 billion deal in August.
PepsiCo has been working to diversify its price tiers, and offer new flavors under popular brands such as Lay's, Doritos and Cheetos to help enhance their appeal.
Volumes for its snacking business in North America fell 4% in the most recently reported quarter in July. The company is scheduled to report its third-quarter earnings next week.
The transaction is expected to close in the first half of 2025.
The Wall Street Journal first reported on Monday that PepsiCo was in advanced talks to buy Siete Foods.
PepsiCo's shares were up nearly 1% in late-morning trading.