- TreeHouse Foods said it will reorganize from three divisions that are currently structured according to product category — baked goods, beverages and meal solutions — to two divisions that better reflect the market place. They are snacking and beverages, as well as meal preparation.
- The maker of private label foods and beverages also made a series of management changes. Among the most high profile is Kevin Jackson, who has joined TreeHouse as president of snacking and beverages. Jackson was most recently a senior vice president at J.M. Smucker. Mark Fleming, currently president of baked goods at TreeHouse, will serve as president of meal preparation.
- TreeHouse said the meal preparation segment will focus on productivity, efficiency and cash flow. The snacking and beverages unit will prioritize revenue growth, as well as research, development and commercialization tailored toward evolving consumer trends.
At first glance,TreeHouse appears to be in the sweet spot as the demand for private label products from retailers and shoppers shows no sign of abating. But TreeHouse, the combination of more than 40 mergers that add up to the nation's largest manufacturer of private label products, has spent much of the last two years closing plants, cutting jobs and jettisoning units in an effort to become a more focused, nimble company.
CEO Steve Oakland, who joined TreeHouse in 2018 from Smucker, has acknowledged that when he took over, the private label company was operating so inefficiently that despite being in the fast-growing private label space it wasn't able to take advantage of its scale to expand distribution.
"Quite frankly, because of the poor performance during this period of time, we lost some customers. We lost some business. We lost some bids. We probably lost some ties because we hadn’t proven that we could perform,” Oakland told Food Dive last year. "I think we didn’t give the customer trust in our ability to execute. We had gotten to the point where the complexity was impossible.”
TreeHouse has been gradually refocusing its operations. Last year, TreeHouse completed the sale of its snacks division to private investment firm Atlas Holdings for $90 million. It was later blocked by the Federal Trade Commission in selling its private label ready-to-eat cereal business to Post Holdings for $110 million because of antitrust concerns. TreeHouse has said it is looking for another buyer.
The two divisions left after the reorganization announced Wednesday should allow TreeHouse to better hone its operations for retailers on how consumers are preparing foods and where they are eating them. Instead of being organized by product, it will prioritize trends like snacking and beverages, and meal preparation.
In the press release, Oakland said, "The retail grocery landscape continues to evolve and be very competitive, and our customers are looking to solve two fundamentally different goals." Retailers want to demonstrate value in their private label offerings so they can invest to drive consumer traffic, he said. They also want to differentiate themselves and be more relevant to their shoppers.
Oakland has touted TreeHouse as being a supply chain for its customers. For the company to succeed, it needs to keep retailers happy and give them what they want when it comes to their private label offerings. The hope is that the reorganization will allow them to do that more efficiently.
Private label, once viewed as an outcast, is increasingly being populated by tastier and more flavorful options, and splashier packaging designed to attract consumers. It's a major reason why retailers such as Kroger, Albertsons, Target, Aldi and Lidl are finding success in private label — the products are reporting sales growth four times faster than national brands, according to a report from Coresight Research.
The Food Marketing Institute and IRI said in 2019 that 46% of customers say private label brands influence where they shop, up from 35% three years earlier. Private brands also are reaching a larger audience across demographics and generations. The segment generated $153 billion in sales in 2018, including edible and non-edible products across multiple retail outlets, according to the report. With these figures in mind, the pressure is on TreeHouse to create efficiencies within its own operations to grow sales and foster value for retailers who sell their products.
Oakland has worked hard to improve TreeHouse since he took over, and while the company appears to be in far better shape, the latest reshuffling shows there is still more work to do for the seasoned CPG executive.