Reaping the benefits of beverages
TreeHouse Foods’ foray into beverages has been evolutionary and transformational, Mr. Reed said. The company’s first step into the marketplace occurred with the acquisition of Sturm Foods in 2009. Sturm Foods offered a private label analog to Crystal Light and opened management’s eyes to the opportunities to be found in beverages.
The introduction of the Mio brand by Kraft Foods, now part of Kraft Heinz Corp., showed additional promise in the category, and Keurig’s success with single-serve coffee pods in the United States and TreeHouse’s ability to develop a compatible private label product propelled TreeHouse Foods further into the beverage category.
“We estimated the size of the market we could pursue in shelf-stable staples to be $56 billion,” Mr. Reed said. “We now see that market as $128 billion, and a substantial portion is from us bringing in beverage categories to be a part of our universe. That number excludes water, carbonated beverages or dairy products.”
The company’s battles with Green Mountain Coffee over the introduction of the second generation Keurig coffee maker, which included a feature to prevent non-Keurig pods from working in the system, has been well chronicled. The company has overcome those hurdles, and Mr. Reed estimates single-serve coffee accounts for approximately $600 million in retail sales for TreeHouse Foods.
“Private label, in terms of cups, is the same size now as the top two brands in single-serve coffee: Green Mountain and Starbucks,” Mr. Reed said. “The category last year grew 32%, and we’ve moved from coffee into other beverage categories and from brick and mortar into e-commerce.”