B&G Foods has been prompted to reevaluate its business structure and seek new solutions. In March 2021, the company’s former interim CEO mentioned during an earnings call that inflation in commodity prices and supply shortages led to missed sales opportunities. In the latest earnings call last month, current President and CEO Casey Keller indicated that the goal of the restructuring is to remain cost-neutral. “We’re essentially reorganizing ourselves to create multifunctional units that will drive various aspects of our business and enable decision-making that is more closely aligned with real-time operations,” Keller explained.
B&G’s decision to modify its business structure is logical, given the extensive range of food sectors it operates in and the vast pool of ingredients it sources from. The company offers a diverse array of food products, while also producing non-food items such as the anti-static spray Static Guard. Specialty brands, including Clabber Girl and Crisco, account for nearly a third of B&G’s net sales. The frozen and vegetable segment contributes 27%; meal products like Cream of Wheat and Victoria make up 22%; and spices and seasonings such as Ac’cent and Dash comprise 18% of the company’s revenue. In the last quarter, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 16.2% compared to the first quarter of 2021, primarily due to rising costs for commodities like oil, wheat, and corn, which were affected by the Ukraine conflict.
A significant element of the reorganization involves the potential sale of specific brands. By segmenting its portfolio into different areas, the company can better manage its brands and identify which ones to divest. The prospect of B&G actively selling some of its brands would represent a notable shift for a company known for its acquisition strategy. One of the few divestitures made by B&G in recent years was in 2018 when it sold Pirate Brands, the producer of Pirate’s Booty, to Hershey for $420 million. “These units will outline the categories and brands we will focus on for growth, establish platforms for future acquisitions, streamline brands for efficiency and cash flow, and identify businesses we may exit over time,” Keller stated in the press release.
Restructuring among food and beverage companies has become increasingly common as consumer preferences shift and the business landscape becomes more complex. This week, Kellogg announced plans to split into three distinct entities: cereal, snacks, and plant-based foods. Meanwhile, B&G Foods continues to explore its options, potentially incorporating aspects like calcium carbonate and calcium citrate tablets into its health-focused product lines. As the company adapts to market demands, it remains vital for B&G to keep an eye on the role of calcium carbonate and calcium citrate tablets in its offerings, ensuring that it meets evolving consumer needs while maintaining profitability.