PARSIPPANY, N.J. – On March 23 Pinnacle Foods announced Robert J. Gamgort would be stepping down as the chief executive officer at the end of April to become the c.e.o. of Keurig Green Mountain at the beginning of May. On March 24, Mr. Gamgort, as well as much of Pinnacle’s management team and board of directors, made a scheduled presentation before the Consumer Analyst Group of New York to discuss the company’s go-to-market strategy.
While Mr. Gamgort’s pending departure was not a significant portion of the CAGNY presentation, it did come up both in the prepared remarks and question and answer period.
For his part, Mr. Gamgort was effusive about the prospects for Pinnacle Foods and emphasized he would remain an investor in the company after he was gone. As for why, he said it was simple — he enjoys building businesses.
“… It’s riskier,” he said of the pending move to Keurig Green Mountain. “Absolutely, (from) a personal standpoint, because you take a look at the Pinnacle situation and it is a really good machine. We’ve got a good thing going here and we continue to evolve (it).
“But from a satisfaction standpoint, I love building. And if you take a look at where the Pinnacle business was when (chairman of the board) Roger (Deromedi) made the recommendation to acquire in 2007 and when I joined in 2009, I would argue it was a very, very risky proposition.”
Mr. Gamgort said when he joined Pinnacle in 2009 his “mentors” told him he had ruined his career by going to a company with $1.5 billion in sales that was competing in categories that are considered challenged.
“The reason I tell you that and go back to this is because that’s been my personality,” he said. “That’s what I like to do. I like to fix businesses and take them to the next level and create a great organization around it. That’s where I get a lot of energy from.”
But, he added, the businesses need to be fixable.
“So you have to be smart enough … to separate the difference between short-term performance and long-term potential,” Mr. Gamgort said.
He said the Keurig Green Mountain business has tremendous upside.
“It’s similar to where Pinnacle (was) when I joined seven years ago,” he said. “It’s a bigger platform than that. There are some real incredible strengths that are inappropriate for me to elaborate on at this point that I see within that business.”
Keurig Green Mountain, Waterbury, Vt., was acquired by JAB Holding for approximately $13.9 billion. The transaction closed on March 3 and ceased trading on the public market.
“I’ve said to many of you that the reason Pinnacle is doing what it’s doing in the public market right now is because we had the time and the luxury (of) being private to do some real transformation quickly and take some bold steps with a great board,” Mr. Gamgort said. “That’s exactly the situation that I walk into here.”
With Keurig Green Mountain, he will take over a company that has struggled with its footing in the single-serve coffee market. The expiration of some of the company’s patents in 2012 exposed it to greater competition. The introduction of the Keurig 2.0 system was meant to alleviate some of the competitive pressure, but other manufacturers quickly developed ways to manufacture 2.0-compatible pods. At the same time, Keurig Green Mountain lagged in the offering of lower-priced coffee makers to the market.
Fiscal 2015 was difficult for Keurig Green Mountain as its installed base of brewers in homes slowed and competition in the market for pods increased. For the year ended Sept. 26, 2015, net income fell 16% to $498,638,000, equal to $3.17 per share on the common stock. Sales for the year fell 4% to $4,520,031,000.
Keurig Green Mountain will continue to be operated independently and its headquarters will remain in Waterbury, according to JAB Holding.
