B&G hopping on non-G.M.O. bandwagon
Feb. 13, 2014
by Monica Watrous
PARSIPPANY, N.J. — B&G Foods, Inc. joins the growing number of companies courting the G.M.O.-conscious consumer. Within the coming months, the company plans to reposition its Polaner All-Fruit preserves as a product line made without bioengineered ingredients.
“The Polaner brand had the added burden of very weak category trends, which we attribute to changing consumer eating habits around breakfast, similar to what is being seen in cold cereal,” said David Wenner, president and chief executive officer, during a Feb. 12 earnings call with analysts.
Traditional preserves, he added, typically are made with corn syrup and high-fructose corn syrup, which may contain bioengineered ingredients, but Polaner products are sweetened only with fruit juice concentrates.
“We’re hopeful that this point of difference will be in tune with consumer concerns about G.M.O.s,” he said.
Organic, he added, is a hot button in the snacks category, as well as a way to gain entry in such retailers as Whole Foods and Costco. In addition to overhauling packaging and product displays and expanding its acquired New York Style brand last year, B&G achieved distribution in Costco stores with the debut of an organic pita chip.
“The fact that we got the distribution in Costco was primarily due to the fact that we were able to execute quickly on something Costco wanted in terms of an organic pita chip,” Mr. Wenner said. “So, where we see it’s important and we think it’s important in some aspects of snacks, we are going to go down that road. The same thing with G.M.O.; where we think it’s an important aspect of the product and it differentiates us meaningfully from our competition, we will go down that road.”
The company said it has not seen much demand for organic in dry grocery products, but as it continues to expand aggressively into snacks, it will look for opportunities to capitalize on organic and non-G.M.O trends.
Health and wellness are driving innovation across B&G’s portfolio. Last year, the company added a gluten-free variety of Cream of Wheat. A relaunch of the Old London brand is set for the second quarter of 2014 with the introduction of Melba Toast with contemporary flavors and ancient grains.
An expansion of Pirate Brands also is slated for the first half of the year, with increased distribution in warehouse clubs and new snack products beyond the brand’s original puffs. From the Rickland Orchards brand of Greek yogurt-enrobed bars, which B&G acquired last October, organic trail mix and organic treat rice bars have debuted in the warehouse club channel.
“The recently acquired snack brands brought with them a good number of aggressive, talented people who are now part of the B&G Foods team and are bringing new energy to our offices on a daily basis,” Mr. Wenner said. “The innovative thinking has spread to our grocery brands and should generate interesting results there as well.”
Acquired brands helped the company achieve record sales during the year, despite industry-wide volume weakness.
Net income for the year ended Dec. 28, 2013, totaled $52,343,000, equal to 99c per share on the common stock, down 12% from $59,260,000, or $1.20 per share, in fiscal 2012, reflecting a 2013 loss on extinguishment of debt and acquisition-related transaction costs.
Net sales increased 14% to $724,973,000 from $633,812,000 in the previous year. Strong sales of recently acquired brands, led by New York Style, Old London, Pirate Brands, TrueNorth and Rickland Orchards, offset a 0.6% decline in the company’s base business.
Fourth-quarter income nearly doubled to $18,792,000, or 35c per share, from $9,559,000, or 18c per share, due in part to a loss on extinguishment of debt in the prior-year period.
Driven by strong sales of Pirate Brands, Rickland Orchards and TrueNorth, net sales for the quarter advanced 22% to $211,547,000 from $173,706,000 in the fourth quarter of the previous year.