Dive Brief:
- Pinnacle Foods reported fourth quarter earnings Thursday, which included a 2.4% revenue increase to $722.5 million, and earnings jumped to $79.2 million up from $36.1 million last year. For the year, revenue ticked up slightly to almost $2.7 billion while earnings fell to $212.5 million from $248.4 million the year before.
- Pinnacle completed its acquisition of Boulder Brands in January. CEO Bob Gamgort outlined on an earnings call with analysts the company's plan to streamline the Boulder Brands portfolio and invest in faster growth for the products that remain.
- Pinnacle's North America retail business, split into the Birds Eye Frozen and Duncan Hines Grocery segments, saw a 3.3% increase in net sales, helped along by the company's Gardein acquisition and higher net price realization. Individually, Birds Eye Frozen sales grew 8.3%, while Duncan Hines grocery sales dropped 3.1%.
Dive Insight:
Before the Boulder Brands acquisition, Pinnacle was mainly known for processed foods brands like Duncan Hines and Wish-Bone and frozen food brands like Bird's Eye and Aunt Jemima Frozen Breakfast. With its acquisition of Gardein in 2014 and now the Boulder Brands additions, Pinnacle is moving into the natural and organic category and assuming its position as owner of two leading gluten-free brands. Pinnacle's plans for Boulder Brands will push the products into both natural and traditional retail channels alongside its other current legacy brands, according to The Denver Post.
Having a dedicated better-for-you foods segment in Boulder Brands could open the doors to more brand acquisitions in this space that continue expanding this category of Pinnacle's portfolio. If successful, Pinnacle will have demonstrated how sectioning off "healthy" food brands in a separate segment, rather than mixing them in with its own legacy brands, can be beneficial for strategic acquisitions and expansion.
Pinnacle has been known for turning around under-performing businesses, and Boulder Brands is the company's next project. Around the time of the acquisition, Boulder Brands was combatting setbacks that included its CEO's resignation, layoffs, and lackluster earnings. As a larger manufacturer, Pinnacle has resources and experience that could enable Boulder Brands to reach its potential. Pinnacle already proved this ability through growth of the Birds Eye Frozen segment despite the frozen foods industry as a whole battling falling sales.