In June 2021, Hickory Farms acquired Wicked Good Cupcakes, its third acquisition in almost as many years. The mother-daughter team who started in Boston and began shipping their cupcakes in mason jars across the country checked many strategic boxes for Hickory Farms.
"It's a great business," says former Hickory Farms CEO Diane Pearse. "It's clearly in a category that's not meat and cheese, and it's also clearly in a category that's not predominantly Christmas. People are giving it as birthday gifts, they're giving it at Mother's Day, Valentine's Day, so it really hits that sweet spot very well for us where it is extending us into a different season and clearly extending us into another product category."
Hickory Farms' first acquisition was done after Pearse had been with the company for about a year. The second was done in year two, and when that closed, she says the company was looking for what would be next. It was in the process of reaching out to companies that operate in the food gifting space, of which Wicked Good Cupcakes was one of them. But at the time, they weren't looking to sell the business. Additionally, there was ongoing integration work at Hickory Farms from the first two acquisition, so jumping in right away and doing a third one in the third year probably would have been difficult, she says.
So, instead of doing the acquisition at that point, Hickory Farms instead developed a relationship with Wicked Good Cupcakes, partnering on a combined gift in the fall of 2018 and 2019 — a sweet and savory gift crate that was done as a back to college school gift that combined traditional Hickory Farms sausage and cheese, and then a couple of the Wicked Good Cupcakes' cupcakes.
"In both years we sold out of every bit of inventory that we had," Pearse says. "It was a big success. It was the right combination. So, we knew in doing that that we actually had two brands that would fit together really well and we also knew what Tracy (Noonan, Wicked Good Cupcakes co-founder) and Scott (Noonan), her husband, were like to work with as partners."
That, she says, started the relationship. Wicked Good Cupcakes began as a supplier to Hickory Farms and were ultimately acquired in June 2021.
"The best part about all of this is that we did establish this relationship and when they were ready to actually sell the company they did not go through a process," Pearse says. "They did not hire a banker. They didn't do a number of bids to basically pit two acquirers or three acquirers against one another. They said, 'This is our business. We started it. We want it to be in a home that we'll be happy for it to be someone who's going to nurture it and take it to the next level.'"
So, when Wicked Good Cupcakes were looking to sell the company, they exclusively negotiated with Hickory Farms, saying however, if they couldn't come to terms, they would hire a banker and go through the process. That, ultimately, wasn't necessary.
"It was a win-win all the way around," Pearse says. "They were perfect fit for us. We had already tested them and they did not have to go through a lot of the stress of the actually going through a process."
Pearse, who stepped down from her position as CEO last month after six years in the position, spoke at last year's Chicago Smart Business Dealmakers Conference about Hickory Farms recent acquisitions, broadening its brand and how the Wicked Good Cupcakes deal came to be. Hit play on the video above to catch the full conversation.