ONTARIO, CALIF. — When Nellson’s nutrition bar plant in Irwindale, Calif., was approaching capacity, the company set its eyes on an expansion that would serve its customers and fuel growth. As a co-manufacturer of nutrition bars and powders, Nellson works with a wide range of customers from large multinational corporations to emerging entrepreneurs. When the company’s leaders looked to the future growth of the bar industry and customer needs, redundancy was the top priority when it came to expansion.
“We really wanted to have a network approach to our business where we could move volume easily back and forth between plants,” said Jamie Better, chief executive officer.
Nellson manufactures nutrition bars at two facilities in Montreal in addition to its Irwindale facility.
“To do that, we need the same mixing and packaging technologies to ensure consistency of product and packaging quality,” he said.
While redundancy may be a bad word in some circles, at Nellson it became a theme as it planned its new facility. Not only did the bar producer want to mirror its existing plants’ capabilities, but it also wanted to implement the line segregation model that existed in the other facilities. Line segregation supported food safety and allergen control, efficient sanitation, optimized scheduling flexibility, and enabled customer confidentiality. The company invested in independent support infrastructure for each line which created a plant-within-a-plant operation.
“That wasn’t possible the way Irwindale is set up,” Mr. Better explained.
Of course, any company looking at an expansion wants that next space to be one it can grow into. Because the bar market sees such promising growth, Nellson needed to make sure its customers had confidence that it could manage their growth as well.
“When we looked at all of our objectives and thought about trying to do that at a facility operating at near capacity, it was abundantly clear we would need to build a new facility,” Mr. Better said.
Nellson said goodbye to its Irwindale facility and hello to a 300,000-square-foot one in Ontario, Calif.
The winding road
Nellson started in 1962 as a candy company, but in the 1980s, it made the switch to nutrition bars.
“It was an emerging opportunity, and I think the owners at the time saw it as the future for the business model they had developed,” said Bart Child, senior vice-president, commercial development.
Known for years as a co-manufacturer, Nellson produces no brands of its own.
“We feel that it’s important for us to focus on others’ brand success and not our brand’s success, so we’ve elected to stay away from opportunities that conflict with that,” Mr. Child said.
As a co-manufacturer, the company has grown through acquisitions as well as the organic growth of the bar industry and its customers. In 1998, Nellson diversified its nutritional service platform with the acquisition of a functional powder business before being bought in 2013 by New York-based Kohlberg & Co., a private equity investment firm.
“Since Kohlberg’s acquisition, the business has been dramatically transformed, tripling in size through acquisitions and organic growth as well as the investment of $100-plus million in new capabilities,” Mr. Better said.
The Ontario plant is just the latest in a series of what he calls strategic initiatives aimed at expanding the business in the nutritional space.
Designed for the customer
As a co-manufacturer, Nellson positions itself to be ready for any needs customers might have. That means highly flexible facilities that can make a wide range of products in a variety of packaging configurations and in long and short runs. It means having redundancy across plants and within a plant to handle product surges, breakdowns and expansive distribution. It means having new technology and R.&D. space to develop break-out products in an increasingly crowded marketplace. And it means having the room to grow.
Nellson aimed to meet these needs in its Ontario facility.
“We wanted to create a competitive asset that would have the capability to produce large volumes but also the flexibility to respond to changing market needs,” Mr. Child said. “Consumers want new products all the time, so it’s important for us to have the capability of handling surge demand and the flexibility to adapt to different customer needs.”
Redundancy and flexibility go hand in hand in this facility. Its capabilities mirror the Montreal plants and then some.
“A lot of our customers sole-source from Nellson for their manufacturing needs, so they feel more comfortable if we have multiple sites that can service them in the event there is a surge in demand or issue at another plant,” Mr. Better explained.
The Ontario plant houses both types of mixing technology Nellson uses in its Montreal facilities — the only plant in Nellson’s network with this range of capability — to maximize production flexibility and enhance product capabilities.
The lines are segregated in a plant-within-a-plant model with each line having its own sanitation room, boiler, utilities, heating and cooling. This allows the lines to operate 100% independent of one another.
“We can run each line on different schedules, and in the event we have a problem on one line, it doesn’t impact the rest of the lines in the plant,” Mr. Child said.
In this model allergens can be contained, and sanitation doesn’t shut the entire plant down.
“Line segregation was critically important,” Mr. Better said. “The lack of segregation was a real limiting factor at Irwindale as the whole plant needed to be shut down for sanitation.”
While redundancy and a bi-coastal bar network will help Nellson assure customers it can meet their growth and distribution needs, flexibility has always been the co-manufacturer’s bread and butter. Being able to manufacture a wide variety of bars at high quality in multiple pack-outs is critical to remaining competitive.
“We have a combination of large and small lines in the facility and have created CIP system capabilities to do line changeovers very quickly,” Mr. Child explained.
The production lines allow Nellson to run end-of-life stock-keeping units, limited time offers, as well as orders for emerging companies who may not need the throughputs available on the larger lines. A sophisticated packaging line enables Nellson to do multiple pack-outs for the same product at the same time.
“We’re not having to stop, change the packaging and start the line again,” Mr. Child said.
Space for new technology and an R.&D. lab also enables Nellson to help its customers stay competitive in an increasingly challenging market. At the time of Baking & Snack’s visit, the company was experimenting with co-extrusion technology from Europe and modifying it to create bites.
“We wanted to not just take a regular nutrition bar and cut it up smaller but also create a new eating experience,” Mr. Child said. “We believe the technology we’re working on now will deliver things not currently available like creamy centers with nuts and seeds on the exterior. It also could be a gateway to savory nutrition, which is still in its infancy.”