BOULDER, COLO. — For Boulder Brands, 2014 was a challenging year, marred by a weaker-than-expected operating environment for buttery spreads, service issues in the natural segment and higher egg white costs. After posting net income of $10,426,000 in fiscal 2013 the company sustained a loss of $127,076,000 in fiscal 2014. The focus now is getting back on track, said Stephen Hughes, chairman and chief executive officer.
“The company missed the expectations we set in the beginning of the year,” Mr. Hughes said. “The difficulties we experienced have given us a greater sense of urgency and the opportunity to strengthen our systems and processes in order to be better prepared for future growth than ever before.”
The road to recovery may reside in Boulder’s ability to deliver on six key strategies it has set for 2015.
First, the company aims to stabilize its dairy-free butter business.
“Smart Balance non-dairy butter with the higher oil content and performance formula that matches butter is starting to hit the shelves now,” Mr. Hughes said during a Feb. 26 conference call with analysts. “We have had very positive feedback from retailers, and at the same time our largest competitor — our most direct competitor — is reducing oil content, moving their formula to 55% water/45% oil at a time we are moving our oil content up. We are getting some indications from both customers and consumers that that competitive move is not being received well, so it could create a nice environment for us as we roll out the dairy-free butter.”
A second strategy, called “Frozen Forward,” involves the company’s move to expand distribution on Udi’s and Evol in frozen foods and freezer sets across all channels.
“We have tremendous growth opportunities to continue the revolution and revitalize the freezer with our two brands that appeal to millennials,” he said. “Our distribution gains have been strong, and we anticipate additional gains across all channels in 2015.”
Boulder’s third strategy for 2015 is called “Gluten-free Focus 2.0,” Mr. Hughes said. He said the company’s Glutino brand battled tough comps during fiscal 2014, but Boulder will look to revitalize the brand through renovating select ambient gluten-free items.
“We saw an immediate impact on items we recently have renovated,” Mr. Hughes said. “We recognize we have an opportunity to improve taste and quality within some of its products. And with those improvements it will be better positioned for growth.”
The “Perfect Frozen Bakery Door” is Boulder’s fourth strategy. Under this strategy Boulder aims to maintain its leadership in gluten-free frozen baked goods through continued innovation, optimizing stock-keeping units and flanking Udi’s with the selection of the highest velocity Glutino items, Mr. Hughes said. He said the company will be launching “the next generation of gluten-free baking products” at the Natural Products Expo West trade show set for March 5-8 in Anaheim, Calif.
“We will fill out a full door in the frozen bakery category,” he said.
The fifth strategy, in-store bakery, involves Boulder’s ability to cross high-velocity baked good products into the bakery section of the grocery store. Mr. Hughes said Boulder plans to continue distribution in Safeway, Target and Wal-Mart Stores, but the company does not have any plans to expand it beyond those retailers until it can improve the concept.
“We have had good success in taking our current products and merchandising it ambient, at Whole Foods and some Kroger divisions, but we haven’t really cracked the code on how you make that a turnkey program that can be effectively executed in 25,000 grocery stores,” Mr. Hughes said. “We’re just going to take our time to get it right so we launch a program that’s going to be sustainable. That was the key learning in the quarter is that we had some good green lights on the program, but we have enough yellow lights on it that we want to be very thoughtful about when we decide to take that more broadly.”Finally, Boulder will hone in on operations with the goal of formalizing cost savings initiatives under Project Challenge so that the company can generate savings to invest in its brands.