New Udi's gluten-free bread, Pinnacle Foods
Pinnacle Foods plans to launch a new Udi's bread in 2018 that will feature bigger slices.

BOSTON — Competition in the gluten-free bread category has had a negative effect on the Udi’s brand, but Pinnacle Foods, Inc. hopes to reclaim market share through a “no compromise” strategy, as in no compromise on taste, health, convenience or value. The company plans to launch a new Udi’s bread item in January, said Mark L. Schiller, chief commercial officer and executive vice-president.

Mark Schiller, Pinnacle Foods
Mark Schiller, chief commercial officer and executive vice-president of Pinnacle Foods

“Now there’s been a proliferation of gluten-free offerings in the category as manufacturers are attracted by the high-growth potential of this lifestyle, but the products that have been launched often fall very short on this no compromise goal, particularly in bread, the largest segment,” Mr. Schiller said Sept. 6 at the Barclays Global Consumer Staples Conference in Boston. “Now Udi’s is about to solve this significant consumer problem. In January of 2018, we plan to change the paradigm with the launch of a new gluten-free bread that is absolutely sensational: bigger slices, perfect for sandwiches, better texture and mouthfeel, and an absolutely delicious taste. It’s a revolutionary product that’s tested better than other gluten-free offerings and tested on par with gluten-full offerings.”

Pinnacle Foods, Parsippany, N.J., became owners of the Udi’s brand when it completed the acquisition of Boulder Brands, Inc. in January 2016. The integration of Boulder has come in above expectations so far, which should lead to $37 million in total synergies by the end of 2018, or $7 million better than the original estimate, said Mark A. Clouse, chief executive officer and director of Pinnacle Foods, at the Barclay event.

Mark Clouse, Pinnacle Foods
Mark Clouse, c.e.o. and director of Pinnacle Foods,

“We utilized our scale to drive down costs, whether it be through lower rates or more full truckloads, ingredient and packaging purchasing, simply sharing warehouses, or bundling with our brokers for better rates,” he said.

The Boulder acquisition has increased Pinnacle’s presence in frozen foods.

“We've grown our frozen (business segment) sales 37% over the past 3 years, adding nearly 4 points of market share and a 67% increase in distribution while improving profitability for Pinnacle and retailers,” Mr. Clouse said. “The best news is we’re just getting started. I believe we’re in a unique position to really lead the continued transformation in frozen given our brands, our commitment and our track record of performance.”

Pinnacle Foods frozen foods
Pinnacle Foods has grown its frozen business segment sales 37% over the past 3 years.

Other recent acquisitions have involved health and wellness items.

“As the portfolio has evolved, we’ve seen a significant expansion of our health and wellness offerings through innovation and acquisition,” he said. “In fact, we’ve added seven additional health and wellness brands over the last four years, growing our health and wellness presence to over 55% of the portfolio.”

Mr. Schiller said the company is well-positioned for future acquisitions.

Pinnacle Foods portfolio share
Pinnacle's portfolio of brands raked in $3.1 billion in net sales in 2016.

“However, we maintain our commitment to having a strong organic plan, where M.&A. is an accelerator and not required to deliver our algorithm,” Mr. Schiller said. “As always, we’re going to maintain an active approach looking at businesses in North America, ones that are in adjacent categories with leading share positions, transactions that are synergy-rich and allow for fast and efficient integration, and given our portfolio, we believe we have great optionality both in health and wellness and in center of store, particularly in frozen.”

On-line sales could be another avenue for growth. Mr. Schiller said Pinnacle Foods expects sales outside of grocery and traditional mass merchandisers to double, led primarily by e-commerce growth.

“It’s going to be important to understand how retailers and consumers want to receive products so we can build an efficient supply around it,” he said. “We will need to assess which products sell best in this channel.”