Snack World - November 2012 - (Page 15)

Bowing Out After trying to compete with Frito-Lay, both Borden and Anheuser-Busch get out of the snack business in the 1990s. BY BILL LEVY D riven by Frito-Lay, Anheuser-Busch and Borden, competition for snack shelf proved to be fierce in the opening months of 1990. From a mergers and acquisition standpoint, things were settling down. In 1992, things began to unravel for Borden’s. In October, the company said it was ready to roll out a national Borden “super brand” composed of Cheese Doodles and Krunchers later in the year. The national brand would be handled by the company’s regional snack companies and replace allied products in their individual lines. It would pit the Borden name against Eagle’s and Frito-Lay’s myriad brands. In a shocker, the next month, Borden’s reported it had lost $376.8 million and was taking a $450 million write-off for a restructuring plan that would shutter 10 plants. The major reason for the loss: Borden had failed to keep pace in steadily rising milk prices. By 1993, the financially troubled Borden’s tried to find a buyer for its entire snack operation, but it couldn’t. It began disassembling the nationwide network of companies and plants one by one. It was like a giant spool of string unraveling with a single pull. Pretty much everything was up for grabs, including some of the nation’s most wellknown brands such as Wise, Seyfert’s, Laura Scudder, Clover Club, Guy’s, Jay’s and Humpty Dumpty of eastern Canada. Granny Goose, Oakland, CA, acquired the Laura Scudder brand from Borden. Clover Club went to Country Club Foods in Salt Lake City, UT, headed by former SFA Chairman J. Myron Walker, whose firm also acquired Nalley’s Snacks, Tacoma, WA, from Curtice-Burns Foods. Guy’s, Liberty, MO, was sold to a group headed by Vic Sabatino, an industry veteran whose family once owned Buckeye Potato Chips, Columbus, OH. Jay’s was sold to Special Foods Co., owned by the Leonard Japp Sr. family, which founded Jay’s back in 1927. Seyfert’s of Fort Wayne, IN, was grabbed by Heath Acquisition Corp. a private investment company and eventually purchased by Troyer Farms of Waterford, PA. Borden, including the Wise and Moore’s brands, was acquired by Kohlberg, Kravis and Roberts, a major investment banking firm. While the eyes of the snack food industry were focused on what was happening to Borden, plenty of other news affected the industry in the early to mid1990s. For example, Frito-Lay introduced Baked Tostitos, a white corn tortilla with 85% less fat than traditional chips. They became an instant bestseller. Frito-Lay also launched a worldwide rollout of Doritos and rolled out Cheetos in China. The executives for Eagle Brand couldn’t make up their minds where they wanted to be headquartered, moving from St. Louis to Dallas and then back to St. Louis. The Anheuser-Busch unit also purchased an Illinois snack manufacturing plant from C.J. Vitner Co. In February 1996, Anheuser-Busch pulled the plug, closed down the Eagle operation and put 1,750 people out of work. At the same time, it said it was selling four of its closed plants to Frito-Lay. Eagle lost $25 million in 1995, and estimates are that the beer giant dropped as much as $500 million in its bid to challenge Frito-Lay for US snack food supremacy. Anheuser-Busch said it would retain the Eagle trademark and continue to seek a purchaser for its salted nut business as well as the Hyannis, MA, plant, which makes Cape Cod potato chips and popcorn. In May 1996, Anheuser-Busch sold the Eagle Snacks trademark and brand name to Proctor & Gamble for an undisclosed amount of money. Steve Bernard, who founded Cape Cod in 1985, repurchased the company. As the snack food industry rolled into the 2000s, a $20 billion food industry segment, the power of Wal-Mart, fewer supermarket chains and, thus fewer headquarters selling opportunities, the continued growth of warehouse club stores and new specialty supermarket and food retailing chains would provide big challenges and even bigger opportunities for snack food producers. sw www.sfa.org November 2012 Snack World 15 http://www.sfa.org

Table of Contents for the Digital Edition of Snack World - November 2012

Snack World - November 2012
Table of Contents
Letter from SFA - Strengthening SFA
Supplier's Corner - Suppliers Get Value from SFA
75th Anniversary - Navigating the Road Ahead
75th Anniversary - Let's Get Political
Bowing Out
Milestones - Golden Oldies
Government Affairs - Post-Election Actions
Industry Images - Back to School
Meeting Preview - Building Business Together
New Snacks
Products & Services
Ad Index

Snack World - November 2012