PARSIPPANY, N.J. – Pinnacle Foods’ acquisition of the Wish-Bone salad dressing business from Unilever USA allows the company to extend its reach in the market for vegetable eating occasions and beyond.
“We know a lot about vegetables and vegetable eating occasions because of our No. 1 position in Birds Eye,” said Bob Gamgort, chief executive officer of Pinnacle Foods, in a conference call with analysts on Aug. 12. “Salads are the No. 1 vegetable occasion in which we currently don't participate. Being able to have that business allows us to participate in that vegetable occasion. (It) makes a lot of sense not to mention all of the abilities for us to co-market and co-promote these businesses together.”
Mr. Gamgort went a step further when he said many Wish-Bone products are not just used as salad dressings. Many consumers also use the products as marinades, and that may open the door for greater opportunities for the brand.
“When we take a look at meal solutions, recipe ideas, etc., with Birds Eye and a protein, it really is a perfect fit,” he said.
Merchandising across Pinnacle’s entire portfolio of brands, which include Armour, Birds Eye, C&W, Duncan Hines, Nalley and Open Pit, is considered a significant opportunity by company executives.
“We know that the average consumer going into the store is time-pressed and looking for easy solutions,” Mr. Gamgort said. “Anytime you can merchandise or promote a vegetable, a starch and a recipe idea with the protein all together, it is a home run of an idea.
“I will give you one example of that. We are now the number-one player in skillet meals with Birds Eye Voila. The number-one item that accompanies a Birds Eye Voila is a salad. So you can imagine the ability to take Voila and Wish-Bone and market those together going forward, because you have a complete meal once you do that.”
Mr. Gamgort estimated the size of the salad dressing category to be $2.5 billion. Wish-Bone holds the No. 3 position overall in the category behind Hidden Valley Ranch and Kraft Foods, but the brand holds the No. 1 position in the Italian dressing segment with 40% of the segment.
“There is movement in share,” Mr. Gamgort said. “Hidden Valley Ranch has some share growth. Wish-Bone has been stable. Kraft has had some share loss over the longer term.”
Pinnacle Foods did not acquire any production capacity from Unilever USA. The company plans to consolidate Wish-Bone production into its existing plants.
“We plan to invest $40 million to $50 million in capital over the next 18 months to build a new, highly-efficient production capability that will ultimately enhance gross margins for the business,” Mr. Gamgort said.