If there is a theme running through this year's edition of the Top 100©, it may be less is more. As in lower sales can still mean higher profits.
Fifteen of the top 25 food & beverage companies on this list recorded lower sales in 2009 (or an early fiscal 2010) than they did in the previous year. Yet 18 of those 25 had higher net earnings.
That's not surprising when you consider that the recession hit a year earlier. According to the National Bureau of Economic Research (the official arbiter of recessions) the past recession began in December 2007, and it certainly was widely apparent early into 2008. That gave food & beverage processors the better part of a year or more to prepare for the worst.
That lag time was apparent in our Top 100© report in 2009 "If 2008 was the start of the current recession, you can't tell it from at least the sales activity of the leading food & beverage companies," we wrote last August. "Only one of the 27 largest companies on the Food Processing Top 100© reported a decrease in sales, and 16 reported increases in net income, as well."
What a difference a year makes. So even though sales slipped – down a scant $21 million at Maple Leaf Foods to the $1.4 billion (17 percent) plunge at Pilgrim's Pride – everyone already had taken or was taking the painful steps needed to make it through the darkest days of 2009.
Even Pilgrim's Pride. That poultry processor could well be the poster child of the recession, its fate seemingly sealed in the go-go days of mergers & acquisitions and cheap credit. In January 2007 it bought competitor Gold Kist for $1.1 billion, even as both companies were recording annual net losses. Like many companies, Pilgrim's Pride predicated the bank repayments on increasing sales and profitability. Instead, it recorded a $999 million loss in 2008 and filed for bankruptcy protection at the end of that year.
Yet in a year of painful austerity, it eked out a $152 million profit in its fiscal 2009. Nevertheless, to emerge from bankruptcy protection, Pilgrim's Pride had to issue a whole new class of stock, with Brazilian beef processor JBS now holding 64 percent of the company (at a cost of $800 million).
Actually, it's not fair to call JBS a Brazilian company. While the parent remains headquartered in Sao Paulo, the U.S. sales organization – composed of the former Swift & Co. and more recent acquisition Smithfield Foods' beef group – comprises 65 percent of the parent company's sales. With some acquisitions and organic sales growth, JBS USA posted the second-biggest sales gain in our Top 25, growth of 36 percent, to catapult it from No. 13 last year to at tie for No. 8 this year.
With an identical increase of $3 billion, the biggest gainer among our Top 25 was Mars Inc. Most of its sales jump is attributable to its late-2008 acquisition of Wm. Wrigley Jr. Co. – that's a name you'll no longer find on our list.