We publish so many stories about the flashier sides of the food and beverage business: new product launches, marketing, what the Big Food companies are doing – and the wildly innovative small companies, too. Sometimes I think we don’t give enough attention to the nuts-and-bolts side, to plant operations, the making of all this wonderful food.
Part of all that flash is names. Big companies, 100-year-old brands, globe-trotting CEOs. It’s the People magazine stuff of the food and beverage trade press.
The very antithesis of that is contract manufacturing. I’ve been intrigued by that discreet partnership ever since I learned, a couple of decades and a couple of magazine jobs ago, that Kraft makes very little Kraft cheese. Naive me, I was shocked! Private labeling fascinates me, too. Companies in both of those categories must labor in relative obscurity, somehow making their abilities known without providing references.
Hearthside joins our growing list of Processors of the Year, which you can read more about on our website
2018: Smithfield Foods
2017: Pinnacle Foods
2016: General Mills
2014: WhiteWave Foods
2012: Chobani Inc.
2011: H.J. Heinz Co.
2010: TreeHouse Foods
2009: Nestle USA
2008: Hormel Foods
2007: Mars Snackfood
2006: Kellogg Co.
2005: Tyson Foods
“Contract manufacturing is a tough business, especially if you specialize only in one type of process,” says a friend of mine who’s in that business. “You have to have the ability to adapt to trends and see what else can you make with existing equipment and minimal capital expense.”
Capability and quality are always top concerns for branded marketers looking for a co-manufacturer, but cost is never far behind.
As you can see, Hearthside Food Solutions is our 15th Processor of the Year. In just 10 years of existence, this company has grown from $145 million in sales to $3 billion. I wonder how many of you other companies out there secretly depend upon Hearthside for some of your manufacturing.
Hearthside has no brands, and it cannot publicly name any customers (although Chairman Rich Scalise did share an anecdote about making General Mills’ Fiber One brownie). What it does have is 39 plants, including four in Europe, that can make just about any cookie, cracker or other baked snack you can think of – or that you currently have in your portfolio. They can make it economically, reliably and with the utmost quality. No one needs to know it’s not from one of your own plants.
The reasons for contracting-out some manufacturing vary with each company: labor issues, capital limitations, the uncertainty of how a new product or line extension will do. It used to be that every sizable branded company did some contract work or private labeling on the QT, but I’m not sure that’s true any more. They seem to be trying to get out of manufacturing altogether.
Not Hearthside. Manufacturing is its forte.
In our main story, Scalise recounts how, when he started the company in 2009, all the orders were for well-known mainstream products from the biggest food companies. Then came orders from entrepreneurial companies with novel products but no manufacturing facilities of their own, nor any idea how long their inaugural product would survive. Then came orders from the Big Food companies again, only this time for niche products in the same categories the entrepreneurs were in. That pretty much summarizes the past 10 years of the food and beverage industry.
And while good old-fashioned manufacturing prowess is the foundation of Hearthside and all contract manufacturers, these companies increasingly are called upon for product development help, too. So Hearthside has had to beef up its R&D team, which is one of the three stories that begin here.