BOSTON — More than three years ago Kenneth Keller took over leadership at B&G Foods, Inc. with a goal to clarify the company’s portfolio — deciding what businesses to be in and what brands and categories made sense to participate in.
Today, the Parsippany, NJ-based company finds itself further along in its mission but with still more work to be done.
“The company historically had just kind of bought any business across the store, across the grocery store, not a lot of synergies other than just kind of administrative synergies,” Keller said during a Sept. 4 presentation at the Barclays Global Consumer Staples Conference in Boston.
He said the company has worked over the past three years to better understand the economics of its portfolio. Instead of “spreading our resources like peanut butter,” he said the company has focused on what businesses are providing good margins.
To that end, B&G Foods made the decision to exit its cookie and cracker business, selling the Back to Nature brand to the Barilla Group in December 2022. A year later, B&G divested its Green Giant canned vegetable business, selling it to Seneca Foods Corp.
More portfolio reshaping may be right around the corner, Keller said, as the company moves closer to concluding its strategic review of its Green Giant frozen business and the Canadian Green Giant business.
“Frozen is not an area where I see us spending our capital or building scale,” Keller said. “Right now, our economics are subscale. The margin on our frozen vegetable business unit as we reported in segment reports — results is about a third of the margin of the rest of our business. So, I don’t think it’s a place that we should spend our time and energy. I don’t think that’s a business that we can necessarily succeed in the long term.
“I don’t want to spend our capital buying more frozen assets to get better economics in the frozen portfolio. I think that business probably belongs in someone else’s hands that’s going to be able to drive better economics. We have a third-party warehousing, transportation and distribution system that’s pretty costly. And I just don’t see us spending our time there.”
Instead, Keller said B&G hopes to be able to focus on a few core businesses and categories. No. 1 on its list is spices and seasonings.
“We’ve got a very nice spice and seasonings business,” he said. “We’re No. 2 to McCormick … but a strong set of assets, good portfolio, good manufacturing capability. That is a business, I think, longer term, the trend has been positive. In the category, 2% to 3%, you’re actually seeing a little bit higher growth rate now because of the growth of the fresh perimeter. I believe that’s a business … where we can also acquire in the future, so organic growth plus acquisition, higher margin business. That’s one part of the portfolio that I want to keep driving.”
Keller also sees a future for the company’s meals business, which includes Mexican at-home meal preparation and hot breakfast.
“The Mexican side I’m really interested in because longer term, we see the Mexican at-home meal preparation trends growing,” he said. “And I think that’s a place we want to play. We’ve got two good assets (Ortega and Las Palmas) there.”
A third area of focus involves baking staples, which includes the company’s Crisco shortening oil, Grandma’s Molasses and Clabber Girl baking powder.
“We’ve got some very good assets in the baking staples,” he said. “These are not growth assets, but they are very good margin strong, stable businesses over time that we would manage for cash.”
