Business Strategies

5 Rebel Food Industry Leaders

Changing the industry from within are Denise Morrison of Campbell Soup, Gary Hirshberg of Stonyfield Farm/Danone, Sam Reed of TreeHouse Foods, Scott Mandell of Enjoy Life Foods and Jim Koch of Boston Beer Co.

By Food Processing Staff

Big Food is big. With such size comes a lot of baggage: 100-year-old brands, factories that sacrifice flexibility for throughput and leaders who are forced to placate activist investors.

But Big Food has begotten a handful of leaders who have gone against the grain and found success, who have created new categories or changed their companies and, in so doing, have changed the entire food industry. Or at least are trying to. There’s nothing intrinsically wrong with size; as one of our subjects, Gary Hirshberg, puts it, only Big Food can make big changes.

The editors of Food Processing developed a list of people who fits this persona, then we vetted that list with our Editorial Advisory Board, who made some new suggestions. While there are more people deserving of the recognition, on the following pages we look at the changes effected by Denise Morrison of Campbell Soup, Sam Reed of TreeHouse Foods, Jim Koch of Boston Beer Co., Scott Mandell of Enjoy Life Foods and Hirshberg of Stonyfield Farm/Danone.

If you have people you think should have been on this list, email our editor and include a few sentences on why. We’ll post your responses on our website.

Denise Morrison, Campbell Soup Co.

Stirring the pot in many ways

The big companies in the food & beverage industry were unified in their opposition to labeling genetically engineered ingredients until January, when Campbell Soup broke ranks and said it not only was in favor of mandatory labeling but would start labeling its own products for GMOs … and “will withdraw from all efforts led by coalitions and groups opposing such measures.”

The groundbreaking statement was on Campbell Soup Co. letterhead but it was the heart of Denise Morrison speaking. Making the company more consumer-focused has been her obsession since becoming CEO in August 2011, after about eight years at the Camden, N.J.-based company and more than 30 years in the food businesss. “Even our own employees are questioning what’s in their food,” she told financial analysts shortly after the GMO labeling announcement. She also told them she wants Campbell to “set the standard for transparency.”
To that end, the company last year created to share more information about how its food is made. It has sections on “What goes into our food,” “How we make our food” and “The choices behind our food.”

She followed the GMO labeling announcement with a March promise to transition away from bisphenol-A can linings – another consumer concern – to cans lined with acrylic or polyester. Both the GMO and BPA decisions were not based on new evidence that those materials are dangerous – in fact Campbell clearly said scientific studies confirm the safety of both. Just as clear, however, is that these are changes consumers want.
Morrison said the announcements were “rooted in our consumer-first mindset and driven by our commitment to transparency – to be open and honest about our food. It is the right thing to do for consumers and for our business.”

“We’re at a critical inflection point in the food business,” she stated during a February presentation. “Consumers endlessly evolve their preferences, and unceasing pressure is placed on the industry to operate differently. To survive in this environment, companies must be agile to identify trends, make decisions and try new things quickly. My biggest worry is if we can go fast enough – patience is not one of my virtues.”

In July 2015, Campbell joined the group of food and beverage processors revising recipes to clean up labels and simplify ingredients – in Campbell’s specific case, to make soup without preservatives, artificial colors or artificial flavors. “Consumers have the right to know what’s in their food,” she says. “People have an insatiable appetite for transparency and expect information in a variety of ways.”

Other recent moves under Morrison’s leadership:

  • Was named to Dow Jones’ Sustainability North America Index for the seventh consecutive year and its Sustainability World Index for the sixth consecutive year.
  • Added more organic products in core businesses and expanded into faster-growing spaces.
  • Revamped soups for kids with simpler ingredients.
  • Plans to remove artificial colors and flavors from nearly all of its North American products by the end of fiscal 2018.
  • She also was the only big-company CEO we saw at the March Natural Products Expo West, a bellwhether of what’s healthy, clean and up-and-coming.

Morrison says companies should embrace change or risk being left behind. “These seismic shifts are impacting how consumers engage with food,” she points out. “The consumer packaged-goods industry overall is navigating shifts in demographics and family structure, health and wellness, digital commerce and the ever-changing middle class in both developed and emerging markets. Only through flexibility and spirit will we thrive in this chaotic, pulling-and-stretching environment.”

—Lauren R. Hartman, Product Development Editor

Gary Hirshberg, Stonyfield Farm/Danone

Businessman/environmentalist now fights to ‘Just Label It’

Gary Hirshberg has played a number of roles in his three-plus decades in the food industry. But like a good character actor, he never strays far from his strong suit: social responsibility.

The guy who helped found Stonyfield Farm in the early days of the organic movement and went on to be an evangelist for saving the Earth now is engaged in his biggest fight: to label foods for the presence of genetically engineered ingredients. A year or two ago, that looked like a losing battle for him and the organization he heads, Just Label It. Now, it looks like the tide has turned.

“If there’s anything that characterizes the 21st century food marketplace, it’s that consumers want to know more about their food,” he says. He sees food & beverage companies making strides in that direction on many other fronts, which makes their resistance to labeling GMOs all the more confounding to him.

As the hippie co-founder of Stonyfield in 1983 and eventually its CEO, he managed to create a successful business that did its part to repair the planet. In 1997, Stonyfield became the first U.S. manufacturer to offset 100 percent of its facility energy use emissions with investments in wind energy, farm methane recovery and reforestation. In 2005, the company installed a 50 kW solar photovoltaic array on its yogurt making facility in Londonderry, N.H. The company built an anaerobic digester waste treatment system that cost 15 percent more than a conventional aerobic one, but creates 90 percent less waste (sludge), uses 40 percent less energy and even generates energy from the bio-gases created.

Then he sold Stonyfield to yogurt giant Groupe Danone. Along the way he wrote a book: “Stirring It Up: How to Make Money and Save the World.” And that’s been his mantra.

“I’m not anti-GMO,” he told us, a claim that would surprise his opponents. “Even Just Label It has never advocated the removal of GMOs.” All he and his group want is labeling. The danger lies not in the GMOs themselves, he says, but in the resulting increased use of herbicides and pesticides. Hirshberg and others worry about the residue of those chemicals in our food supply; about the replacement of easy-to-kill weeds with superweeds that resist the current barrage of chemicals (primarily glyphosate); about the spread of those weeds to fields of farmers who aren’t using GMO crops; and about the toll this nuclear-level of weed warfare is taking on the ecosystem.

He likens it to the current medical community concern for the overuse of antibiotics, which has created a new class of antibiotic-resistant bacteria.
While he stepped down in 2012 from daily management of Stonyfield, he remains its chairman, an advisor to France’s Groupe Danone and an advisor and board member on several small units of Danone, including HappyFamily.

The GMO labeling fight is far from over, but the battle is turning. With or without a pre-emptive federal solution, Vermont will require labeling of GMOs on July 1. Surrounding states are likely to pass similar laws or to remove contingency clauses in legislation that was awaiting appeals of Vermont’s law.

A huge step came in January, when Campbell Soup became the first big food company to support labeling of GMOs. CEO Denise Morrison (above) went a step further, saying Campbell no longer supported Grocery Manufacturers Assn. efforts at a diluted federal law.

Given his background, Hirshberg is not anti-Big Food. Quite the contrary. “The hope for the planet lies in big business,” he says. “I’m a big believer that Big Food could be the hero, the driver of truly healthy and truly safe food and ecologically beneficial practices. Only big business has the ability to effect the kind of big changes that are needed.”

—Dave Fusaro, Editor in Chief

Sam Reed of TreeHouse Foods

Why private label knows the consumer better

Every Big Food company will say it follows the consumer. But when you’re on a corporate campus in Purchase, N.Y., or Omaha, Neb., how many consumers do you make contact with? When you’ve spent millions over the years building a revered brand, how likely are you to change or even discard it when trends change?

In the waning days of Keebler Foods (circa 2001), Sam Reed saw private label as the future of food. But the private label world he envisioned was not that of cheap knock-offs sold in stenciled packaging. His vision was one where private label brands were leaders, not followers; where manufacturing trumped marketing; and where consumer demands were evaluated with contact from real consumers – shoppers walking store aisles.

So Reed and four other executives from Keebler went on to found TreeHouse Foods on those precepts. Reed is the chairman and CEO of what has become the biggest private label company in North America.

There are two key differences between private label manufacturers and branded food marketers, Reed says:

“Private label is about following the consumer as the marketplace changes. That’s very difficult if you have a vested interest in a brand” that you’ve spent millions nurturing. “In branded products, you offer every retailer the same product. In private label, you customize the product for what each retailer wants.”

His logic is simple. When a grocery chain sees consumers buying more of this and less of that, stock more of the more. The feedback is immediate, and the decision-making is not clouded by reverence for a 100-year-old brand.

To manufacture more of the more, the retailer contacts TreeHouse or some other private label company.

We once mused that private label is best done by small companies. TreeHouse had exploded that theory even before its late-2015 acquisition of the private label business – essentially the former Ralcorp – from a struggling ConAgra Foods. With pro forma sales now estimated at $7 billion, TreeHouse is in the top 20 of our Food Processing Top 100© list.

Size has advantages and disadvantages. When asked if private label could be done by a $7 billion company, Reed says, “Not if it acts like a $7 billion company. You take advantage of certain economies of scale, of smart personnel and other business resources.”

But, he adds, you leave the consumer research to the retailers, who see consumers every day. And you leave the operations of all these acquired companies and factories to the businesspeople who built them. TreeHouse tries hard to retain managers of the companies it has acquired.

The company is not oblivious to the overarching market trends. “Eighteen percent of our business is now premium or better-for-you foods,” Reed says. “I think we’re now the single biggest buyer of organic tomatoes in the U.S.” And the company’s largest single product category is snacks.

—Dave Fusaro, Editor in Chief

Scott Mandell, Enjoy Life Foods/Mondelez

Pioneering the free-from movement

Scott Mandell co-founded Enjoy Life Foods almost 15 years ago to make great-tasting, allergen-free cookies, bars and snacks that nearly everyone can “eat freely” without worry. Little did he know he was pioneering a category.

Back in 2000, the former banker and a colleague had an idea for a company after writing a business plan for a class in the masters program at Northwestern University. Neither classmate knew much about the retail food business, but were inspired by family and other people with dietary restrictions who sacrificed good taste and nutrition to find allergy-friendly and gluten-free foods.

“Gluten-free products were out there, but we always believed the need was much broader, which is why we developed our foods to be free from the ‘big eight’ allergens,” he says. The eight most common allergens recognized by the FDA are milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat or soybeans. “There was an opportunity to develop a new category, and with our brand promise, it would be incredibly difficult for anyone (big or small) to replicate what we were building.”

Enjoy Life opened in 2002 and began creating cookies, snacks and other treats on a trial-and-error basis. The company has added baking mixes, protein-filled bites and mini cookies. The initial dozen items have grown to more than 50 stock-keeping units across several product categories.

“The $8 billion free-from business is extremely challenging, but fun at the same time, with the onset of social media and proactive consumers’ desire to know what they’re eating,” he says. “The industry is definitely evolving for the better.”

In February 2015, Mandell sold Enjoy Life, then at $40 million in sales, to Mondelez International. Mandell and other managers remain with the company. “Our goals are the same, but we now have the resources to make things happen much faster,” he says. One example is the 200,000-sq.-ft., allergen-free manufacturing facility expected to come onstream this summer in Jeffersonville, Ind. “We have the best of both worlds, as we continue to grow as a standalone entity, but tap into the vast resources of Mondelez.”

“It was tough at first,” he reflects. “It was a real challenge to make products the way we wanted them and convince retailers to take them on. You need to be receptive to feedback from everyone at all times.”

Mandell wants to change things in food for the better. “We continue to do what’s right by ensuring all of our products are non-GMO-verified and transparent. We have a responsibility to listen to and evolve with the consumer. Big Food has to bridge this lack of trust gap in order to stay relevant in the long run.”

—Lauren R. Hartman, Product Development Editor

Jim Koch, Boston Beer Co.

Father of the craft beer movement

Few if any niche products have upended a once-monolithic category the way craft beers have. In some ways, that revolution paved the way for the current trend of artisanal products in nearly all food & beverage categories.

Don’t credit that success to marketing – that will offend Jim Koch, the 67-year-old founder and brewer of Samuel Adams beer. He’s also the chairman and chief cook and bottle washer of Boston Beer Co., the billion-dollar leader of the craft beer segment.

Calling his 32-year craft beer sales and distribution approach “marketing” is an affront, as he makes clear in “Quench Your Own Thirst: Business Lessons Learned Over a Beer or Two.” The book offers advice to food & beverage entrepreneurs while telling the story of the rise of Boston Beer and the craft beer category.

Koch credits a Seattle beer writer with tying the word “craft” to beer, but he indisputably popularized it. “Microbrew” was the term du jour when craft beers gained traction in the 1980s. Through a combination of grassroots marketing and personal relationship-building, Koch articulated what distinguished these new brews.

“Passion” is a word he uses frequently in describing the brewer’s art. Koch was placing table tents in bars and restaurants and raising public awareness with radio ads and publicity events about the new, richer tasting, full-bodied and fresh alternatives to both mainline beers and imports. Beginning in 1985, he was the tide that lifted all craft beer boats.

“Revolutions happen almost invisibly at first,” Koch told us. “It took 20 years for the craft beer revolution to get momentum. If you want to change something fundamentally, it almost takes a generation.”

Copackers made Sam Adams in the early years, freeing Koch and his sales team to educate drinkers and interact with retailers and restaurateurs about craft beer. “I could have bought a crummy brewery or worked with contract breweries that could consistently make good beer,” he says. “It wasn’t enough to make five good beers and then a science project in a glass. Making great beer every time was necessary to build drinker loyalty.”

Product innovation as much as superior ingredients and consistent production has been a key ingredient in Boston Beer’s recipe for success.

Direct contact with and an understanding of how customers make their money is another. Koch estimates he personally has visited 15,000 retail stores and restaurants, and the number continues to rise. “When the guy who actually makes the product visits, it makes an impact,” he understates.

In 1992, Boston Beer sold 275,000 barrels, accounting for 30 percent of craft beer sales – at a time when craft beers were less than 2 percent of the total beer market. Twenty-three years later, Sam and friends have dropped to “only” 5 percent of craft sales, not because Boston Beer has lagged – production has grown more than 15-fold – but because craft beers have exploded to 21 percent of all beer sales.

“It was lonely in the beginning,” Koch remembers. “It’s nice to have company,” with thousands of other better-beer companies helping to pull the craft-brew sled. It’s even better to be the lead dog, he adds, the only position where the view is always changing.

- Kevin T. Higgins, Managing Editor