- Hometown Food, a new Chicago company of Brynwood Partners, completed its acquisition of a portfolio of brands from J.M. Smucker for $375 million this week, the private equity firm said in a statement. The deal was first announced in July.
- The portfolio of brands includes all Pillsbury shelf-stable baking and dessert products and the use of the iconic Pillsbury Doughboy, as well as Funfetti, Hungry Jack, White Lily, Jim Dandy and Martha White brands.
- Shortly after the acquisition closed, Hometown Food announced Daniel Butler, a longtime Kraft Foods executive and former Wilton Brands executive, as its new CEO. The company, which plans to employ about 50 people in Chicago, also hired three other senior leaders with experience in the food space.
Hometown Food wants to do what Smucker couldn’t — but it won’t be easy.
It has been a rough year for Smucker with Pillsbury and other brands in its portfolio. Smucker's fourth quarter earnings missed Wall Street expectations, with sales falling to $1.781 billion from $1.784 billion a year earlier. The Ohio company attributed the lackluster results to weak demand for its peanut butter, baking products and oils. In March, Smucker announced it was considering selling its stagnant baking brands. These brands represented 5% of the company's revenue in 2017, down from 10% in 2014.
Snapping up brands discarded by a large company like Smucker can be risky, signifying that they are outdated, too expensive to refresh or fall short of the growth that big businesses are looking for. That could be why Brynwood is bringing in an experienced group of veterans to lead Hometown Food.
Butler’s experience at a CPG firm like Kraft Foods, coupled with his leadership overseeing similar products as CEO of Wilton Brands, a company that sells cake decorating and baking products, could help by allowing him to use his industry knowledge to immediately immerse himself in running Hometown Food and growing these iconic but unloved brands. The company continued with this hiring trend by adding three more senior food executives to run the small company.
Tim Young, who worked at Oak Brook-based TreeHouse Foods, will serve as chief financial officer; David Meltzer, formerly with Richelieu Foods, a private-label pizza and salad dressing manufacturer, will join the company as executive vice president of sales; and Dan Anglemyer, a Kraft and Mondelez veteran, will start as chief marketing officer. Each of these individuals bring experience that could benefit Hometown Food. It is essential for a new company to have staff with experience in the challenging food and beverage space that know how to navigate the marketplace, keep up with competitors and handle ever-changing consumer tastes.
Brynwood and these executives have the opportunity to operate this business privately and quietly build the company, an advantage the publicly traded Smucker did not have. Before this acquisition, Brynwood had invested in Sunny Delight and Balance Bar so it may already has some knowledge and insight about what it takes to operate a food and beverage product.
It may consider taking a page from B&G Foods, an acquisition-hungry company that regularly takes discarded brands like Green Giant, a maker of canned and frozen vegetables purchased from General Mills in 2015, and reinvigorates them. B&G added 25 frozen vegetable SKUs in 2016, including riced veggies, veggie tots, mashed cauliflower and roasted vegetables. This year, Green Giant added veggie spirals, an alternative to pasta.
It's apparent that Byrnwood is looking to expand its reach in the food and beverage space. Henk Hartong III, chairman and CEO of Brynwood Partners, told Food Business Network that “we have done so successfully in past portfolio company investments, we will aggressively seek to identify and make add-on acquisitions where they fit our strategy.”
Although it will likely be a difficult feat, Brynwood has given itself the tools it needs to revitalize these brands and justify its investment. But now comes the hard part, navigating the ever-changing food space and hoping that it can avoid having to ditch Pillsbury, Martha White and other brands like Smucker did.