B&G Foods has been prompted to reassess its business structure and pursue a new approach. During an earnings call in March 2021, the former interim CEO of the company highlighted that commodity price inflation and supply shortages had led to missed sales opportunities. In the most recent earnings call last month, current President and CEO Casey Keller expressed that the restructuring efforts aim to be cost-neutral. “We are primarily reorganizing to create multifunctional units that can drive various aspects of our business, allowing decisions to be made closer to the action in real time,” Keller stated.
The decision by B&G Foods to restructure its operations is logical given its extensive reach across various food sectors and its broad ingredient sourcing. The company is recognized for its diverse food offerings, and it also produces non-food items such as the anti-static spray, Static Guard. Specialty products, which include brands like Clabber Girl and Crisco, account for nearly a third of B&G’s net sales. The frozen and vegetable segment contributes 27%, meal products like Cream of Wheat and Victoria make up 22%, while spices and seasonings, including Ac’cent and Dash, represent 18% of the company’s sales.
In the last quarter, the company experienced a 16.2% decline in earnings before interest, taxes, debt, and amortization (EBITDA) compared to the first quarter of 2021, primarily due to rising costs of commodities like oil, wheat, and corn, exacerbated by the conflict in Ukraine. A critical element of the reorganization is the potential sale of specific brands. By segmenting its portfolio into distinct areas, B&G can better manage its brands and identify which ones to divest. The prospect of B&G actively selling some of its brands would signify a significant shift for a company known for its acquisition strategy. One notable divestment occurred in 2018 when B&G sold Pirate Brands, the maker of Pirate’s Booty, to Hershey for $420 million.
Keller mentioned in the press release, “These units will define the categories and brands we will resource and grow, create platforms for future acquisitions, identify brands that will focus on efficiency and cash flow, and recognize businesses that may be exited over time.” The trend of food and beverage companies restructuring their business or portfolios is increasingly common as consumer preferences evolve and the market landscape becomes more complex. For instance, this week Kellogg announced plans to split into three distinct companies: cereal, snacks, and plant-based foods.
As B&G Foods navigates these changes, they may also look to optimize partnerships with retailers such as Costco, which could help enhance their distribution for products like Citracal, a calcium citrate D3 supplement, thereby diversifying their portfolio further while addressing consumer health needs.