- B&G Foods is “actively seeking” to sell its Back to Nature brand and has initiated a strategic review to identify other potential divestitures, CEO Casey Keller told analysts during the company’s third-quarter earnings call.
- Keller said the sale of what he called non-core businesses would generate cash to pay down debt and reduce leverage, while shaping the company’s portfolio “for future focus and strength.”
- A sale of Back to Nature or other brands in B&G’s sweeping portfolio would mark a significant shift for the New Jersey-based company that has been built up through acquisitions.
B&G Foods traces its roots to the Bloch and Guggenheimer families, which started selling pickles in Manhattan in 1889. More than a century later, New York investors formed B&G Foods to acquire Bloch & Guggenheimer, and the strategy to grow by purchasing other brands began.
During just the last few years, B&G has purchased household staples like Green Giant and Crisco to complement existing brands such as Cream of Wheat and Ortega. The acquisition strategy built a large portfolio that is mostly food, but includes some outliers, such as fabric spray Static Guard.
B&G has shown signs recently of looking to change course by focusing its portfolio and paying down debt. Using money from divestitures, B&G would likely be able to improve its bottom line by lowering interest payments.
CFO Bruce Wacha told analysts B&G is in the process of reviewing its portfolio to ensure the brands fit with the strategy it has for each of its four business divisions. In June, B&G created these units — specialty; frozen and vegetables; meals; and spices and seasonings — to improve focus and drive growth.
The ongoing review, Wacha said, will both influence the brands it wants to divest and determine those the company wants to buy going forward.
B&G purchased Back To Nature and SnackWell’s snacks for $162.5 million from Mondelēz and Brynwood Partners five years ago. Wacha said the purchase of Back to Nature made sense at the time, when B&G was building its snack portfolio. It may not make sense to own it anymore, “given our current focus,” he said. Snacking, he said, is a small business for B&G, in which it hasn’t built meaningful capacity.
“We now believe that there are better owners for Back to Nature than B&G Foods,” he said.
The company’s snacking ambitions were likely altered when it sold Pirate Brands, the maker of better-for-you snacks — including Pirate’s Booty, Smart Puffs and Original Tings — to Hershey for $420 million in 2018. At the time, the brand was one of B&G’s seven largest and a major part of its snacking segment. For now, many of its brands fall into categories more conducive to the home such as baking, condiments and dressings, sauces and soups.