"Utz Potato Chips - Market Bag"

Utz Brands Targets Distribution Expansion, Automation for Growth

March 12, 2024
Snack brand sees muted category growth for 2024 but feels it controls much of its own fate through its growth strategies.

Utz Brands CEO Howard Friedman kicked off the company’s 2024 Consumer & Retail Conference (hosted by Bank of America) discussion by referencing its investor day presentation, where Utz explained that it expected the snacking category would maybe be more muted this year than it had been, and that a conservative approach was planned. He pointed out that the start of 2024 has been slower, but the company was confident the category would bounce back and improve the rest of the way.

For Utz specifically, growth is expected to focus on distribution expansion for the company’s brands. Because of that, the company is encouraged that its fate is skewed more toward things in can control versus overall category impacts.

The biggest growth drivers currently for the company, Friedman said, were the expected growth in distribution, filling the whitespace in the marketplaces and also working to expand product mix. In addition, several items such as pork rinds and cheeseballs, which fought headwinds and lagged last year, now have tailwinds, and the company is increasing its marketing spend to take advantage.

The BofA moderator asked for an update on the automation initiatives the company demonstrated some three years ago to analysts, and Utz explained that there’s still work to be done. Improvement has occurred, said Ajay Kataria, CFO, but there’s still a ways to go.

Friedman added that palletization, case-erection and filling remain goals, and the company was looking at platforms and solving these challenges in stages without disrupting production. The Hanover facility was named as a possible target for automation, since it represents 60% of the volume for the company. Friedman added that Utz was keen on incorporating automation that allows the company to invest in upskilling and giving employees higher value jobs at the plant.

Geographically, the company sees some opportunity to continue to grow in Florida and through a continued progression westward. Texas and Michigan were viewed as opportunities that Utz could continue to exploit.

Finally, Kataria noted that the sale of the R.W. Garcia and Good Health brands to Our Home was a very good transaction for Utz, in that it got fair value and was able to fold the roughly 5% of production lost (through the inclusion of processing plants in the sale) into its current facilities. The transaction generated proceeds the company can use on capital expenditures and to pay down some debt, Kataria said.

About the Author

Andy Hanacek | Senior Editor

Andy Hanacek has covered meat, poultry, bakery and snack foods as a B2B editor for nearly 20 years, and has toured hundreds of processing plants and food companies, sharing stories of innovation and technological advancement throughout the food supply chain. In 2018, he won a Folio:Eddie Award for his unique "From the Editor's Desk" video blogs, and he has brought home additional awards from Folio and ASBPE over the years. In addition, Hanacek led the Meat Industry Hall of Fame for several years and was vice president of communications for We R Food Safety, a food safety software and consulting company.

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