B&G Foods sharpens focus on brand growth

by Eric Schroeder
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BOSTON — A focus on sales growth in its tier 1 and tier 2 brands has helped generate a consistent track record of growth and profitability at B&G Foods, Inc., said Bob Cantwell, chief financial officer and executive vice-president of finance for the Parsippany, N.J.-based company.

Mr. Cantwell spoke at length about B&G’s three-tiered brand approach during a presentation at the Barclays Back-to-School Conference Sept. 4 in Boston.

He described tier 1 brands as those brands that B&G is trying to spend the most money behind. They are the brands the company believes have the most opportunity. Examples of tier 1 brands include Ortega, Mrs. Dash and Baker’s Joy.

In the case of Ortega, B&G has introduced a product called Fiesta Flats flat bottom taco shells that has been well accepted.

“It is like a taco boat,” Mr. Cantwell said. “It is very unique. Nobody else has it.”

The company has introduced Ortega Fish Taco seasoning mixes and has launched its Ortega seasoning mixes — traditionally in packets — in canisters. B&G also is taking the Ortega brand to the growing “skillet sauces” category.

“Skillet sauces seem to becoming a bigger category,” Mr. Cantwell said. “A lot of the big guys have launched skillet sauces, and we just think this is a Mexican skillet sauce theme, and we just think we need to be there under the Ortega label.”

Another tier 1 brand B&G has marketed aggressively is Mrs. Dash.

“Mrs. Dash is a salt-free seasoning,” Mr. Cantwell explained. “It had various flavor profiles in salt-free, a number of s.k.u.s (stock-keeping units). We are now launching, really, more of a meal solution packet, which McCormick has done very successfully. A lot more of a mix of spices that is a one-use. You put it in; you’re making your beef stew, or you are making your meatloaf, and it’s all the seasoning you need. You just need the vegetables in the meat. That has been accepted well.

“We’ve also launched a lot more packets in the Mexican side under Mrs. Dash. We’re really trying to get that no-salt seasoning where we have had other products. So we have most of these products under the Ortega name. We have now made them salt-free and put them under Mrs. Dash.”

Mr. Cantwell defined tier 2 as B&G’s “stable brands.”

“Some of those are higher margin than tier 1 brands,” he said. “Harder to grow, but very flat to up a little bit. But huge cash flow metrics.”

The company’s Maple Grove Farms of Vermont syrup business and Emeril’s pasta sauces fit the bill as tier 2 brands.

“As we go into our tier 2 and tier 3, we get very tactical,” Mr. Cantwell said. “The Maple Grove business has grown consistently for us. It’s a tier 2 brand. We continually have to update — it’s a maple syrup business; it is a pancake syrup business. It does a decent business in specialty salad dressings, along with a number of other things. We’re continuing updating the flavors of salad dressings, pushing new products out.

“Emeril Lagasse has developed a nice little space in pasta sauces. It didn’t have a white sauce. White sauce is actually very large as you get into the middle of the country. You go to a Wal-Mart in the middle of the country, it’s more white sauce than red sauce. We just didn’t have it. We actually have a very good white sauce line now under the Emeril Lagasse label.”

B&G also has looked at licensing agreements as a way to drive growth, Mr. Cantwell said. For example, an agreement with Crock-Pot has given B&G “immediate marketing,” he said.

“People get, when you put Crock-Pot on the label, what it might be,” he said. “They kind of understand Crock-Pot means seasoning for Crock-Pots. So we launched a line of seasonings under Crock-Pot. That continues to grow for us. And it’s growing very nicely. It’s not going to be a huge business, but it’s a nice little add-on business. It was very easy to do. It was very easy to take a lot of recipes we had from the co-packer — we don’t make those ourselves; somebody else makes those — and used the Crock-Pot name to get it in distribution. So we’re always looking for licensing arrangements like this. It is kind of how we launched the Emeril Lagasse line — really used that name to sell it in. Crock-Pot is a different version of that, but it’s working in a very nice way.”

Although he didn’t mention specific brands, Mr. Cantwell said tier 3 brands are those in which B&G doesn’t spend a lot of money on, typically lower-margin brands. He said a lot of tier 3 brands are Northeast regional brands.

Excluding snacks, tier 1 brands have accounted for about 49% of year-to-date sales at B&G, with tier 2 accounting for about 31% and tier 3 about 20%. Including snacks, tier 1 base business sales make up about 39% of B&G sales, with tier 2 at 26%, tier 3 at 16% and snacks at 19%.

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