BOSTON — The acquisition of the Green Giant brand from General Mills, Inc. has had multiple benefits for B&G Foods, Inc., Parsippany, N.J. In addition to moving the company into a new retail category, the acquisition has allowed B&G to enjoy the economies of scale.
|Robert Cantwell, president and c.e.o. of B&G Foods|
“Green Giant allowed us to get bigger,” said Robert Cantwell, president and chief executive officer, Sept. 7 during a presentation at the Barclays Global Consumer Staples Conference. “As we inched ahead and certainly led in profitability, we ran a very small … low-cost operation, but we added an infrastructure to not only handle Green Giant, but now to take us to the next level. So, now we can drop additional acquisitions into this as a new existing infrastructure …”
With the acquisition of Green Giant, B&G’s product portfolio breaks out to be 65% grocery, including such brands as Cream of Wheat, Ortega, Mrs. Dash and others; 25% frozen food with Green Giant; and 10% snacks, which includes the company’s Pirate’s Booty, TrueNorth and Old London snack brands. In all, the company owns approximately 45 brands sold primarily at retail.
The added scale the company has put in place to accommodate Green Giant also gives it room to grow through additional acquisitions.
“We’re looking to acquire like products,” Mr. Cantwell said. “It doesn’t have to be in the same categories we play in, but it has to go through our sales, distribution, G&A synergies that we can absorb into our structure, cut cost out of what we just bought, and really just increase margins.”
B&G Foods has been aggressive on the acquisition front. Since October 2012, the company has made seven acquisitions, including the brands New York Style, Old London, TrueNorth, Rickland Orchards, Pirate’s Booty, Specialty Brands and Green Giant.
“And this strategy continues to grow us,” Mr. Cantwell said. “Back in 1996 when we started this, we were at $82 million in sales. Through the second quarter of 2016, we’re at $1.2 billion. We’ll finish the year a little over $1.4 billion.”
The company also is benefiting from economies of scale on the purchasing front.
“We’ve gotten much more procurement savings on packaging and things, not just on Green Giant, but across our portfolio because we have Green Giant,” Mr. Cantwell said. “We’ve gotten better cost on selling from a level of just being bigger, because now we’re going to market not with $800 million to our brokers, to our marketing partners, et cetera, we’re going with $1.4 billion.”
At the midpoint of fiscal 2016, Mr. Cantwell estimated the company will finish the year with an adjusted EBITDA of $322 million, which compares favorably with the previous year’s adjusted EBITDA of $218 million.