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Kellogg buys RXBar for $600 million

Robert Channick, Chicago Tribune on

Published in Business News

CHICAGO -- Four years after launching in a suburban Chicago basement, RXBar, maker of a fast-growing line of protein bars, is being sold to Kellogg Co. for $600 million.

The sale, expected to close in November, will add a trending brand to Kellogg's snack portfolio while allowing Chicago-based RXBar to continue its rapid expansion, executives said Friday.

"We'll remain as a stand-alone business within Kellogg and just leverage the resources to expedite growth and keep doing what we're doing," said Peter Rahal, 31, RXBar's CEO and co-founder.

The millennial-led company, which makes "clean-label" protein bars with whole-food ingredients, has taken off quickly through retail and online channels, with projected sales of $120 million this year.

Building a following in gyms before expanding to major grocery chains nationwide, RXBar went from producing 1.5 million bars in 2014 to a projected 120 million this year.

"RXBar is an excellent strategic fit for Kellogg as we pivot to growth," Kellogg CEO Steve Cahillane said in a news release. "With its strong millennial consumption and diversified channel presence including e-commerce, RXBar is perfectly positioned to perform well against future food trends."

A graduate of Ohio's Wittenberg University, Rahal started RXBar out of his parents' basement in 2013 with childhood friend Jared Smith. He will stay on as CEO under Kellogg, reporting to Deanie Elsner, who leads the U.S. snacks business for the Battle Creek, Mich.-based food giant.

Rahal's culinary background was a homegrown affair, with both sides of his family history rooted in the juice business.

First whipped up in the Rahal family's kitchen, the bars have a base of egg whites, fruit and nuts and provide 12 grams of protein in about 210 calories. There are 11 flavors, along with a recently introduced kids line, wrapped in simple packaging.

The business ramped up and out of the basement quickly, producing about 400 bars a shift in the subterranean makeshift kitchen. It peddled fresh batches, packaged with a label designed with PowerPoint, to area gyms, initially on consignment.

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