B&G Foods bulks up on Green Giant frozen items as company sales jump 7.4%
- B&G Foods had net sales of $388.4 million in the second quarter, an increase of about $27 million from the same period a year ago, the company said in a statement.
- The owner of brands such as Mrs. Dash, Pirate's Booty and Ortega said earnings before interest, taxes, depreciation and amortization were $74.4 million, a decrease of $3.8 million from a year ago. B&G said the decline was due primarily to industrywide increases in freight costs and the timing of price increases, which were not fully implemented until late in the quarter.
- “We had very strong top line growth in the second quarter, with our net sales up 7.4% and our base business net sales up 3.1%, which is outpacing our initial expectations for the full year,” stated Robert C. Cantwell, president and CEO of B&G, said in a statement.
Acquisition-hungry B&G has been bulking up its business across the food industry, and so far those purchases appear to be paying off. Once the purchased brand has been folded into the company, B&G identifies ways to freshen the product. After purchasing Green Giant in 2015 from General Mills for $765 million, B&G added several innovative products — including veggie tots and riced veggies — that have turned the brand into one of B&G's most consistent money makers.
The company said net sales of Green Giant frozen products during the quarter rose 19.7%, the fifth consecutive quarter of double-digit growth. Pirate Brands also was strong, with net sales up 54.6%. B&G cited favorable results in other key brands, including Cream of Wheat, Ortega and Victoria.
B&G has not shied away from deals, and it's expected to continue to be a big focus for the company. Last month, it bought McCann's Irish Oatmeal from TreeHouse Foods for $32 million in cash.
“We’ve always been a highly acquisitive company,” Bruce Wacha, B&G's CFO, recently told Food Dive. “Our early roots in private equity ownership laid the foundation for how we manage as a public company. We have an enduring commitment to de-levering and then with that, a disciplined acquisition strategy.”
But most of its brands are found in the center of the store where processed items are being shunned in favor of fresher, better-for-you items. So having a product like Green Giant at a time when frozen foods sales are growing could be crucial in helping offset any challenges B&G might face in other areas.
With more than 50 brands in its portfolio, B&G is bound to have problems. In the second quarter, it posted drops in net sales for Green Giant shelf stable products (-19.8%,) Las Palmas (-10.2%) and Bear Creek Country Kitchens (-8.1%).
B&G reiterated that it expected net sales of approximately $1.73 billion to $1.75 billion. Cantwell said the business expected price increases and additional benefits from its cost savings to take hold in the second half of the year. He also said increases in freight costs, which have been a problem across the food industry overall, have begun to moderate.
The acquisition strategy used by B&G has largely been a good one. Still, there is a risk that with so many brands in its portfolio, it spreads itself too thin and can't innovate as well as it has in the past. The company could look to do more to cross-promotion with brands it already has, like Buena Vida Chili Powder and Las Palmas' chili sauces, peppers and beans with its Ortega taco shells. Another avenue that has proven successful is to expand its presence in frozen foods. B&G could use the expertise it has amassed with Green Giant to grow another potentially unloved but iconic brand. B&G is not immune to the challenges facing Big Food as consumer tastes change, and it can't afford to be complacent.
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