Real Good Food (RGF) has acquired a specialist supplier of cake decorating products for £4m.

The food giant, which is a major distributor of sugar in the UK through its Napier Brown subsidiary, now owns Rainbow Dust Colours, a supplier of edible glitters, dusts, sprinkles and food paints to the sugar craft industry.

The company will make a £4m buy-up of the business, with an additional cash consideration of up to £3.5m, in the form of an earn-out based on gross margin achieved in the 12 months after the acquisition.

Founders of Rainbow Dust, Gary and Carol Brown, will join the RGF team, and it will continue to run as a standalone business within RGF.

Pieter Totté, executive chairman, said: “The increasing popularity of cake decoration has become a global phenomenon. We are excited by the growth prospects which this market offers and we will look to build on the knowledge and expertise that both Renshaw and Rainbow Dust possess to become a world leader in the sector. This acquisition is the first of a number of initiatives designed to refocus our corporate strategy and deliver increased shareholder value.”

The company also said the acquisition would have no effect on jobs at Rainbow Dust, although the headcount may increase in line with growth plans.

For the 12 months to 31 July 2014, Rainbow Dust reported turnover of £3.3m and achieved a trading profit before tax of £1.7m.

RGF also owns brands such as Whitworths Sugar, Renshaw and R&W Scott.