Brief description of the dive:
- B&G Foods is creation of four different business units later this year to improve focus and drive growth. Business units: specialty; frozen and vegetables; food; and spices and condiments. Each division will have its own president.
- The manufacturer behind brands such as Ortega, Green Giant and Crisco said the new structure will also increase accountability and increase the speed and clarity of decision-making to ensure the growth and financial performance of B&G’s complex portfolio.
- While CPG grapples with issues like inflation and supply chain issues, B&G and others are restructuring to help them better revalue their portfolios and determine which products will be their top priorities going forward.
B&G Foods had reason to question its business structure and come up with a new solution. In March 2021, the company’s former interim CEO stated in the income statement that due to commodity price inflation and lack of supply, the company missed out on sales.
At B&G Foods’ last earnings call Last month, incumbent President and CEO Casey Keller said the company is committed to making the restructuring cost-neutral.
“We’re pretty much reorganizing ourselves to create sort of cross-functional divisions that manage aspects of our business and get people to make decisions that are closer to the business, in more real time,” Keller said.
B&G’s decision to restructure its business makes sense given the wide range of food sectors it works with and the large pool of ingredients it comes from. The company is known for its diverse range of food products. Non-food products also use Static Guard anti-static spray.
Specialty merchandise, which includes brands such as Clabber Girl and Crisco, accounts for almost a third of B&G’s net sales. Frozen and vegetables are responsible for 27%; food products such as “Wheat Flour” and “Victoria” make up 22%; and spices and seasonings like Accent and Dash make up 18% of the company’s sales.
In the most recent quarter, shortages and rising prices resulted in the company’s earnings before interest, taxes, debt and depreciation (EBITDA) down 16.2% compared to the first quarter of 2021. This fall is mainly due to higher costs for commodities such as oil, wheat. and corn obtained from the war in Ukraine.
A key aspect of the reorganization concerns the potential sale of individual brands. When a company divides its portfolio into different areas, it is more likely to be better versed in its brands and know which ones to offload. The possibility that B&G could actively market some of its brands would mark a game changer for a company that has a reputation as a serial buyer. One of the few sales B&G has made in recent years was in 2018, when it sold Pirate Brands, maker of Pirate’s Booty, to Hershey for $420 million.
“These divisions will define the categories and brands that we will use and develop, the platforms for future acquisitions, the brands that will work to increase efficiency and cash flow, and the businesses that we may leave over time,” Keller told the press. -release.
Food and beverage companies restructuring their business or portfolios have become more common as consumer interests change and the business environment becomes more complex. This week, Kellogg announced plans to split into three separate companies: cereal, snacks, and plant-based products.