Bay Valley products
Combining the Private Brands business’ capabilities with TreeHouse’s consumer insights is a key for the business unit’s growth.
 


Getting Private Brands on track

The focus on premium, better-for-you offerings is one key to making the acquisition of Conagra’s Private Brands business work, Mr. Riordan said. The company finalized the acquisition in early 2016, and Mr. Reed called it a once-in-a-lifetime opportunity.

“That business sold to Conagra for $6.8 billion, and 33 months later we got it at a 60% discount,” he said.

Combining the Private Brands business’ capabilities with TreeHouse’s consumer insights is a key for the business unit’s growth.

“There is so much opportunity with the Private Brands business,” Mr. Riordan said. “The funny part is some of the reaction we get is the categories are old and stale. ‘Why do you want to be in those categories?’ they ask and they point to cookies, crackers and cereal. They point to those categories that have less than high growth.”

Mr. Riordan said part of the problem with the Private Brands business was a lack of focus on research and development.

“Even in those so-called ‘old guard’ categories, the ones that have been declining,” he said, “you can look in any of the measured channels and see ready-to-eat cereal is slowly dropping, but if you listen to any of the earnings calls from any of the big cereal companies they will all tell you how they are growing their business in gluten-free and in organic. Consumers are looking for that and it takes investment — it takes R.&D.

“I don’t think they (Conagra) had the investment in formulation to get their products more on trend, and as a result they lagged. So one of the key things we are doing is focusing the R.&D. effort into better-for-you formulations.”

The effort is proving to be a challenge. First and foremost, to adapt product offerings to better-for-you formats product developers need insights to understand where opportunities may lie. While much of the rest of TreeHouse Foods is working off of a single IT platform that allows for the developing and sharing of insights, the company is still in the process of integrating the Private Brands IT infrastructure.

“We are doing two things,” Mr. Riordan said. “The Private Brands business was running under four different systems, and we have a requirement to move one of them off of Conagra’s system by the end of January 2018. So we are quickly trying to do that. Once that is done we’ll start migrating the other pieces.”