Stubb’s sauce maker sold in $100 million deal

5:17 p.m Wednesday, June 24, 2015 Business

When Stubb’s barbecue sauce first landed on grocery shelves in 1992, founder C.B. Stubblefield was still making it himself, using a 60-gallon cooker and a paddle boat oar for stirring.

On Wednesday, Maryland-based food industry giant McCormick & Co. said it has agreed to buy Austin-based One World Foods Inc., seller of Stubb’s barbecue sauces, for $100 million in cash.

McCormick & Co. CEO Alan Wilson called Stubb’s an “authentic, craft brand with an enthusiastic and loyal customer base.”

Wilson said his company hopes to build up the Stubb’s brand by expanding distribution both domestically and internationally.

Acquiring the Stubb’s line, which includes marinades, rubs and skillet sauces, “rounds out the range of grilling products” that McCormick’s sells, Wilson added.

Stubb’s, which is sold across the U.S. and in 24 other countries, had yearly sales growth of more than 20 percent in both 2013 and 2014, the companies said. Sales are expected to reach $30 million this year.

Its headquarters will remain in Austin, McCormick & Co. said.

The deal is expected to close by the end of July. It does not include the Stubb’s music venue and restaurant in downtown Austin.

Austin business leaders said the deal reaffirms Central Texas as a center for both high-tech and consumer goods innovation.

“This shows that Austin is on the radar of these huge brand names because we’ve got great quality companies being developed here,” said Charisse Bodisch, senior vice president of economic development for the Greater Austin Chamber of Commerce. “Big companies are looking at us for creativity and new products, and that says so much about who we are.”

Stubblefield first got into the barbecue business in 1968, opening a restaurant in Lubbock that lasted until 1985. By 1986, he’d relocated to Austin and opened Stubb’s Legendary Bar-B-Q off Interstate 35.

Within about a year of hitting store shelves regionally in 1992, demand for Stubb’s original and spicy sauces had become so great that Stubblefield had to hire some helpers. A selection of marinades followed in 1994, shortly before Stubblefield died in 1995.

The company’s growth continued after his death, with Stubb’s sauces and marinades becoming available in England in 1998. A 2011 deal with Walmart, that world’s largest retailer, made Stubb’s products available nationwide for the first time.

For McCormick, Stubb’s provides access to a loyal customer base and a bigger slice of the fast-growing sauce market.

“There’s a massive trend of large companies buying local brands because they’ve found it’s easier to buy a brand than try to build one,” said Shari Wynne Ressler, founder of SKU, an Austin-based consumer products incubator. “Local brands have the heart and spirit and the grass roots support, and there’s a realization that you can’t just go out and recreate that. Many have tried, and they’ve spent a fortune and failed.”

Ressler said she believes Stubb’s could be the first in a wave of Austin consumer product companies being acquired by larger players.

“We’re becoming a place that national companies across multiple industries want to buy into,” she said. “They want the authenticity. In the food and beverage business, I think we’re going to start seeing larger deals.”

For Stubb’s, which has 25 employees, becoming part of McCormick’s 10,000-person workforce will allow it to tap into global sales, marketing and product development resources, said Clayton Christopher, co-founder of Austin-based Sweet Leaf Tea and Deep Eddy Vodka. Sweet Leaf Tea was acquired by Nestle Corp. for an undisclosed amount in 2011.

“They’ll be able to expand in ways that wouldn’t have been possible on their own,” Christopher said. “Of course, while it’s exciting to see the check arrive, you’re nervous to see if they’re going to take care of the brand and love it the way the entrepreneurs have. But in this case, it’s a great thing for Stubb’s, and it’s exciting for Austin too.”

View full experience