Milling & Baking News - September 17, 2013 - 16

Business 

B&G Foods moves full steam
down snack foods track
BOSTON — It has been nearly a
year since B&G Foods, Inc. made its
first snack acquisition, purchasing
the New York Style and Old London
brands from Chipita America, Inc. for
about $62.5 million. With two more acquisitions under its belt since May, the
company now expects snacks to contribute about 19% to sales, a significant
spike for a company that as recently
as 2011 was known primarily for its
Ortega brand of Mexican taco shells
and Cream of Wheat hot cereals.
In acquiring the New York Style
and Old London brands, B&G Foods

believes it is taking over a brand that
was mismanaged.
“This is a business that the prior
owners who bought it in 2008-09
consolidated plants and really built
what we would call a ‘superplant’
in North Carolina,” Bob Cantwell,
chief financial officer and executive
vice-president of finance for B&G
Foods, said during the Barclays Backto-School Conference held Sept. 4 in
Boston. “They spent over $100 million
on machinery in this plant. They had
huge expectations for this brand. This
brand was twice the size it was today
when they bought it. They really just
hurt this brand dramatically. They just
didn’t know how to manage a brand
in the United States.”
As a result, B&G was able to buy the
business at a price far beneath the cost
to build the North Carolina plant.
“We have this under-utilized, really state-of-the-art plant that is a firstclass baking and packaging operation
that we can put a lot of snacks into
as we build a snack business,” Mr.
Cantwell said. “And we think there’s
a lot of upside on the sales.”
16 / September 17, 2013 Milling & Baking News

Mr. Cantwell said the New York
Style business is about half the size it
was five years ago, but
since B&G acquired the
business last fall the decline has stopped. This
month the company
initiated a full relaunch
of the brand, including
new packaging. He believes the brand should
be able to compete with
other key category players.
“This is a product line
that is sold in the deli
department of stores,” he said. “This
is a deli snack business like Stacy’s
and Pretzel Crisps. And really, Pretzel
Crisps and Stacy’s grew as this thing
— they expanded sales in the deli substantially, but really took away from
this brand because nobody was watching the store.
“So there’s brand new packaging.
Consumers are very loyal. Consumers who buy this are very loyal to this
product, and it just hasn’t been paid
attention to. And there were a lot of
issues when we bought the business,
and it really took us nine months to
stop the decline and really make this
plan for this push, starting now. So we
see good things in the fourth quarter.”
Even more is in store for the brand
in 2014, when Mr. Cantwell said B&G
plans to add sweet offerings, called
Sweet Swirls, to go along with the current bagel chip and pita chip products.
To jumpstart the Sweet Swirls launch
B&G will turn to a familiar name:
Cinnabon. B&G has licensed the Cinnabon name for use in its Cream of
Wheat cereals since September 2010.
Along with Cinnabon baked snack
crisps B&G initially will offer a chocolate variety of Sweet Swirls.
“We have a lineup of other new
products that we’re going to launch
against this brand and let people
know we are truly paying attention as
we go forward,” Mr. Cantwell said.
‘Diamond in the rough’
A second snacks brand that B&G is
counting on is TrueNorth. The brand
initially was passed over as an acquisition target several years ago when the
brand’s founder, PepsiCo, Inc., was
looking for a buyer. At the time PepsiCo reached out to B&G the latter was
not interested in the snacks business.

Now, after acquiring the TrueNorth
brand from DeMet’s Candy Co. this
past May, B&G sees the business as a
“diamond in the rough.”
“(PepsiCo) ended up selling it to
(Brynwood Partners V L.P.) who put
it in one of their candy businesses,” Mr. Cantwell said.
“And they managed it. They
didn’t do anything with it,
but they kept it flat. Again,
we think there’s a lot of real
opportunity on this, as we
build a snack organization
to really try to sell this.”
TrueNorth nut cluster
varieties include almond
pecan crunch, chocolate nut
crunch and cashew crunch.
“It’s a very good nut cluster product,” Mr. Cantwell said. “It’s
all-natural. It is gluten-free. It is what
people would want to eat once they’ve
had this. It doesn’t sell in a lot of places today. It’s a huge club business. It
has ended up in a lot of where candy
has sold, because it’s been sold by a
candy distributor. A huge opportunity
on this brand.”
Walking the plank to success
The most recent acquisition made
by B&G in the snack segment is also
the one that already was performing
the best. B&G bought Pirate Brands
in July for approximately $195 million from VMG Partners, Driven
Capital Management, Robert Ehrlich
and others.
Founded in 1987, Pirate Brands consists of three separate brands: Pirate’s
Booty, Smart Puffs and Original Tings.
Pirate’s Booty accounts for about 90%
of Pirate Brands’ net
sales, but all are positioned as all-natural,
gluten-free
healthy
choices for adults and
children.
“We think the Pirate’s
Booty name is a great
name,” Mr. Cantwell
said. “It’s been growing at over 20% a year.
There’s a lot more
growth to it and a lot
more ability to take that
Pirate’s Booty name
outside of its existing
product line.”
Currently about 90% of what is sold
in the Pirate’s Booty line in various
sizes is an “aged white cheddar” corn
and rice puff, but other opportunities
exist for the brand.
“It could be kids’ crackers in shapes
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Milling & Baking News - September 17, 2013

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