Top Food and Beverage Companies for 2011: PepsiCo Takes the Lead

The biggest sales increase in dollars belonged to PepsiCo, thanks to those acquisitions. Percentage-wise, the biggest increase was recorded by No. 67 AdvancePierre Foods – up 117 percent. Why? Because a year earlier it didn't exist. Pierre Foods, with sales of about $600 million, languished in Chapter 11 bankruptcy protection until its investors merged it last September with Advance Foods and some other properties to create a $1.3 billion company. The new company is owned by funds managed by Oaktree Capital Management LP, current Advance shareholders and members of the company's leadership team.

Imperial Sugar Co. (No. 81) sales shot up 74 percent, largely because its Port Wentworth, Ga., refinery came back on line, after that 2008 explosion. But sales also were helped by three interesting joint ventures – with PureCircle to blend sugar and stevia; with Edward Billingtons & Sons to market agave; and with Cargill Inc. and Sugar Growers & Refiners Inc. to build a new refinery in Gramercy, La.

No. 42 Pinnacle Foods also jumped, up 48 percent, largely due to its billion-dollar 2010 acquisition of former No. 78 Birdseye Foods. No. 6 JBS USA, which just burst on the North American scene in 2007 with its acquisition of Swift & Co., grew another 21 percent, thanks in part to its purchase of Smithfield Beef Group (the Dept. of Justice blocked its proposed acquisition of National Beef Packing Co.).

Smucker and Ralcorp both added about $200 million in sales due to acquisitions. Hormel Foods recorded 11 percent sales growth largely on organic (the business term, not the agricultural term) growth.

The vagaries of milk pricing and that market continue to vex No. 8 Dean Foods. In 2010, its sales were up but profits were down. In 2009, just the opposite occurred. "In 2010, we experienced the most difficult year in Dean Foods history," Chairman/CEO Gregg Engles wrote in his annual report. "While we have remained a profitable company, the financial pressures that began impacting our core dairy business in late 2009 continued throughout the year and into 2011.

Margins on private label milk declined significantly." The former stockbroker wanted to create a national, branded dairy when he began acquiring dairy companies in the 1990s, but his company's output remains 56 percent private label.

A couple companies returned to profitability in 2010 after sinking into red ink in 2009. Tyson Foods (No. 4) turned a $551 million loss into a $765 million profit.

"We produced record sales and earnings despite some market headwinds," President/CEO Donnie Smith said (a lot of CEOs used the term "headwinds" this year). "We're just over halfway through our first quarter of fiscal 2011, and it is shaping up to be a strong quarter and another good year. There are always challenging market conditions to manage."

Smithfield Foods (No. 10), another animal protein supplier, did similarly. Ditto for No. 18 Pilgrim's Pride, which emerged from bankruptcy protection in 2009, thanks to a 67 percent buy-in by JBS.

Food Company Comings and Goings
In addition to AdvancePierre Foods, we have a couple of new names on this year's list. Diamond Foods debuts, at No. 93, with a bullet. Once a sleepy walnut cooperative, the company developed its own brand (Emerald) of nut snacks, then bought Pop Secret popcorn from General Mills in 2008 and Kettle Foods potato chips in early 2010. Next year it will rocket up the list, hitting an estimated $2.4 billion in sales, having bought Pringles from Procter & Gamble.

The core of companies and brands that comprised National Dairy Holdings hasn't changed, but the name has. National Dairy was acquired by Mexico's largest dairy company, Lala, in mid-2009, and used the name Lala USA last year. Just this summer, Lala said it's changing that name to reflect its leading brand, a venerable old name in the food industry. So Borden Dairy appears at No. 43.

It's going to be tougher to get figures from two of these companies next year. Michael Foods (No. 63) went private in June of 2010. And on March 8 of this year, Del Monte Foods (No. 31) was acquired by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co., Vestar Capital Partners and Centerview Partners.

And as earlier noted, Birds Eye Foods is gone, now a part of Pinnacle.