Our annual Top 100© primarily is a descending list of the largest food and beverage processors in the U.S. and Canada (See the full list at www.foodprocessing.com/top100). But if you look beyond the first column of numbers, 2012 food and beverage sales, it also provides a glimpse into the general health of the food industry.
The next columns, especially "2012 Net Income (or Loss)," tell who's doing well and who's not so well. Big changes – plus or minus – in sales hint at who has done some acquiring and who has sold off some assets. And this year, like never before, corporate reorganizations have given birth to new companies.
That's perhaps the most remarkable part of this year's report. Every year, a few companies come and go from this list, although in the past it's always been sizable processors being acquired by even bigger ones, resulting in some $500 million sales company sneaking into 99th or 100th place on this list.
This year there are some huge debutantes. Mondelez International (No. 19) leads off that list. The much-heralded splinter off what used to be Kraft Foods had 2012 overall sales of $35 billion – although we credit the firm only for $6.9 billion, that being the value of products Mondelez manufactures in U.S. and Canadian plants.
Legacy Kraft Foods Group Inc., which was designed to be the smaller company, lands higher up at No. 6 because of its preponderance of North American-produced foods. Together as Kraft Foods Inc., they were a perennial top-4 company.
Hillshire Brands debuts at No. 30, taking the place – albeit much lower – that predecessor Sara Lee used to hold.
WhiteWave Foods is a new name, at No. 52. It was the organic milk (Horizon brand), soymilk (Silk brand) and coffee creamer (International Delight brand) businesses of Dean Foods. Dean has had a rough time in recent years, having lost nearly $1.6 billion in 2011. So to focus the company, Chairman Gregg Engles engineered the initial public offering of 20 percent of WhiteWave stock last fall, with Dean holding the other 80 percent. As planned, those shares right now are being distributed to Dean shareholders, with the two companies being totally separated. Even Engles resigned from Dean Foods to devote his full attention to WhiteWave as its chairman. Which means Dean has a new chairman and a new CEO.
And in January of this year – so it won't show up in this report, which is based mostly on calendar 2012 figures – Dean Foods completed the sale of its Morningstar Foods division to Saputo Inc. for $1.45 billion. Morningstar specialized in dairy and non-dairy extended shelf-life and cultured products. Which leaves Dean primarily with fresh milk and ice cream products. So while Dean remains in the top 10 this year, it will undoubtedly slide further on next year's list.
Another newbie that's another victim of corporate reorganization and spinoff is No. 85 Post Foods. Until 2008, the cereal business was part of Kraft, which sold it to Ralcorp, which spun it off in a poison pill-like attempt to fend off the overtures of ConAgra. Which didn't work.
ConAgra continued its pursuit of a smaller Ralcorp, with the acquisition of the former private label leader occurring at the very end of last year. So ConAgra moves up a notch this year to No. 12 while Ralcorp, formerly No. 24, disappears.
What the numbers show
Getting back to the numbers, especially comparing sales and profits in 2012 vs. 2011, you get a collective pulse of this business. It's remarkable that only two of the top 26 companies saw sales decline in 2012, and both of those – Dean and Kraft –we've already explained. Two of those top 26 companies saw positive reversals in the profit/loss column. All the gyrations at Dean appear to have paid off, with the company turning that $1.6 billion 2011 loss into a $161 million profit in 2012. No. 17 Pilgrim's Pride, now majority owned by JBS (No. 4), went from -$497 million to +$174 million. (And, as we went to press, the poultry company reported a healthy 2Q2013, with net income of $191 million, nearly triple that of 2Q2012.)
You have to scroll all the way down to No. 28, Dole Food Co., to find a net loss this year – although two steps down, aforementioned Hillshire Brands apparently hasn't found its legs yet. (Hillshire, however, has a fiscal year that ends on June 30, so its current-year report was not available as of our press time.)
Six more steps down, No. 36 Chiquita Brands Intl. endured a $403 million loss in 2012, the most red ink on this chart. The company's explanation is a cautionary tale that maybe not every company should become a value-added product innovator:
"Chiquita experienced a significant decrease in profitability and free cash flow over time as a result of a previous business strategy focused on branded diversification and innovation," the company annual report states. "This set of strategic choices … required significant investments in research and development, consumer marketing and corresponding infrastructure, which diverted resources and attention from our core businesses of bananas and salads and burdened us with product offerings that ultimately failed to meet our revenue growth and profit expectations."
So, in August 2012, a new strategy started transforming the company (back?) into a high-volume, low-cost branded produce supplier.