B&G Foods bucks trend by pursuing growth with brands in the center of the store

28-Apr-2015 - Last updated on 29-Apr-2015 at 13:33 GMT

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B&G Foods’ strategy to grow by expanding its footprint in the center of the store is succeeding even though it seems counter-intuitive at a time when other manufacturers are trying to reach consumers along the store’s perimeter.

The firm reported net sales in its first quarter of 2015 increased 9.6% to $217 million – of which $22 million came from its acquisition in April 2014 of Specialty Brands. Excluding this contribution, base business net sales fell 1.5% for the quarter compared to the same time last year.

The $155 million acquisition of Specialty Brands brought B&G several maple and pancake syrups, New York Flatbread crackers, Canoleo margarine and Bear Creek Country Kitchens dried soups, pasta dishes and rice dishes – all of which are solidly stocked in the center of the store, save for the margarine.

The purchase of Specialty Brands followed the 2013 acquisition for $195 million of Pirate Brands, a natural channel snack leader that makes the popular Pirate’s Booty, as well as Smart Puffs and Original Tings.

This acquisition, like that of Specialty Brands, proved fruitful for B&G in the last quarter with a 13.1% or $2.7 million increase in net sales during the most recent quarter.

Based partly on these successes, B&G “is poised and ready to grow our strategy of acquiring center of the store grocery and snack brands, if and when the right opportunities present themselves,” said Robert Cantwell, president and CEO of B&G Foods Inc.

“We are always looking, we are very willing buyers and we are truly ready to acquire things,” but also “we are patient and they have got to be the right acquisition for us,” he added during a call April 24 with investment analysts.

In particular, he said he hopes that B&G can acquire more brands in the natural and specialty food channels.

“We see tremendous opportunity as those channels keep growing and we want to make sure our products are in there,” he said.

He pointed to the success of Pirate Brands as an example of the opportunity for brands in the natural channel.

He also attributed the growth of Pirate Brands’ sales to the use of promotional displays at retailers, which is a strategy B&G recently began using for the New York Style foods, sales of which fell 33.9% in the quarter, said Cantwell.

The expanded distribution of Pirate’s Booty to an additional 1,000 Walmart’s in the fourth quarter of 2014 also lifted the brand’s sales.

New products set for launch

Even as B&G looks for more acquisitions, it is investing in the brands it already owns with new product launches.

For example, B&G plans to launch four flavors of Bear Creek hearty soup bowls, which will provide an easy, on-the-go, single-serve option. It also is exploring opportunities to expand distribution of the brand’s core, dry soup items, Cantwell said.

It also will launch several new Ortega branded products, including two new tacos, Street Taco Kits and a smoky chipotle taco sauce, Cantwell said.

The firm also will re-position its iconic Cream of Wheat brand by supporting the launch of instant cups, which it hopes will attract millennials seeking convenient, on-the-go products.