- B&G Foods said net sales rose 4.7% to $432 million during its first quarter compared to $412 million in the same period a year earlier. Back to Nature, purchased last October, was responsible for much of the increase, contributing $20 million in net sales.
- The manufacturer of Ortega taco shells and Victoria's sauces said net income during the period ended March 31 fell to $20.5 million from $32.8 million. Much of the drop was the result of higher interest expenses.
- Financial growth for the remainder of the year will focus on modest price growth, reductions in inventory, and creating efficiencies in freight and distribution costs, Robert Cantwell, B&G's CEO, said during an earnings call.
B&G has made a name for itself by expanding the company through acquisitions and boosting the prominence of brands, such as Cream of Wheat or Green Giant, that have fallen out of favor — a strategy that has doubled the company’s size in just three years.
The company also has focused its efforts on creating new products using classic brands they purchased, and that innovative strategy has paid off — B&G saw its fourth consecutive quarter of double-digit growth in net sales of Green Giant frozen selections, driving by the popularity of new Veggie Sprials, Riced Veggies, Veggie Tots and Mashed Cauliflower. B&G Foods has been rejuvenating the Green Giant brand it acquired from General Mills in 2015 for $765 million.
“We are offering consumers new ways to consume vegetables at home, and they are responding positively,” Cantwell told reporters.
Other B&G brands that performed well include Cream of Wheat, with a net sales increase of 11.2%; Ortega (up 4.1%,) and Victoria (an increase of 11%.) The performance was offset by Pirate Brands, which saw a nearly 18% drop in net sales from a year ago, largely due to the timing of promotional activities, Cantwell said. Maple Grove Farms of Vermont, Mama Mary’s and Green Giant shelf stable also saw decreased sales, with the later posting a 6.9% decrease in net sales.
With finances where they’re expected to be, the company has already implemented modest price increases to help offset rising freight costs.
“We know freight costs have increased for everyone who puts something on a truck,” Cantwell said. “We’ve built that into our budget. We hope we are wrong.”
The company raised prices across the board, and did not pinpoint a certain product or brand. The average price increase is about 10 cents per item.
This year, the company will look for ways to cut freight costs, including using rail or encouraging customer pickup when delivery costs are too high. B&G also is looking for ways to consolidate or improve warehousing rather than renting temporary space. And a new distribution site planned for California in the last quarter of 2018 is expected to save the company $5 million a year in freight costs once completed.
In the past, Cantwell said while B&G would continue to look at other acquisitions that come up in the better-for-you and snacking categories popular with consumers, it was most interested in purchasing well-established brands like Pirate's Booty, the line of baked snacks the company bought in 2013.
As it heads into the remainder of 2018, B&G seems willing to slow its pace of acquisitions and to focus on the nuts and bolts of running a CPG business – smart and timely marketing, efficient distribution and cuts on internal costs in order to keep pricing in line with competitors.
The food company has certainly found a hit with its frozen veggie packages, perhaps appealing to cost-conscious customers and millennials who still want healthful, whole foods.The growth of the new Green Giant line seems to indicated R&D can be as important as M&A in the competitive food business.