Look up “pinnacle” in the dictionary and nothing could be further from the truth in describing Pinnacle Foods, our 2017 Processor of the Year. Ascendant Foods might be a better name.
The company has only been around since 2001, but it can trace some of its brands back to the 1800s. Philip Danforth Armour formed Armour and Co. in 1867 when Chicago’s fabled (and now long gone) stockyards were booming. Two decades later, Minnesota grocer Patrick J. Towle introduced Log Cabin syrup, named for President Lincoln’s boyhood home.
There also are contributions from Theodore J. Van de Kamp, the Snyder family and Clarence Birdseye.
That kind of heritage is a double-edged sword. Fabled as those brands are, they are, after all, 19th century brands and products. It’s hard to maintain relevancy at such an advanced age. And that’s why companies like Campbell Soup, Unilever, even Dial Co. lost interest in them and stopped investing in them, in both product development and marketing.
I can’t recall the last time I had canned meat, but pancake syrup, seafood, chips and vegetables are still on my shopping list and the lists of millions of others. A group of investors sensed opportunity where brand-building companies did not, and Pinnacle Foods was born. Born not out of some Amazon superfruit drink favored by Justin Timberlake or Channing Tatum but out of Vlasic pickles, Swanson frozen dinners and Open Pit barbecue sauce.
Those are the kinds of mundane but everyday staples on which Pinnacle spent its first decade, and they created a solid foundation. So did the fiscal conservatism required by the equity investment funds that owned Pinnacle Foods. They prepared Pinnacle for life as a profitable public company…which prepared Pinnacle for the second chapter in its life, the one we’re most interested in today, in this issue.
A new Pinnacle emerged with its initial public offering of stock in 2013. Then came two acquisitions that position the company for the future: Garden Protein in 2014 and Boulder Brands in 2016. Those were somewhat opportunistic acquisitions, too, but the vegan meat replacements, gluten-free and premium clean label products those companies represent are solid trends for the future that show no signs of abating.
It’s clear from talking with the executives of this company they’re just getting started. Of course, they couldn’t provide us with what’s coming next, but it’s apparent there’s something up their collective sleeves.
For a 16-year-old company, its leaders have some deep roots in the food industry. The CEO, with whom we visited, is Mark Clouse, who left a 20-year career at Kraft and Mondelez to take over in 2016. Another ex-Kraft guy is the chairman, Roger Deromedi, whose Kraft career stretches all the way back to General Foods (remember that one?). EVP Mark Schiller spent eight years at PepsiCo, mostly at its Frito-Lay and Quaker businesses. Yet they all have an entrepreneurial spirit. So Pinnacle is in good hands.
It’s also interesting to note that, for about a month in spring of 2014, it looked like there would no longer be a Pinnacle Foods. Recall that Hillshire Brands, the reorganized businesses of the former Sara Lee Corp., made a $4 billion offer for Pinnacle. But that became moot two weeks later when first Pilgrim’s Pride/JBS then Tyson made bids for Hillshire (Tyson won).
So this is an interesting change of pace for our Processor of the Year project. Most of the past winners were already at the top of their game. This year’s winner is still on its way to its pinnacle. Pinnacle now has a solid foundation for the future: established, center-of-store brands, products in hot and growing categories and enough cash and borrowing power to make key acquisitions.