Fresh off a 2013 campaign that saw income increase 148% and sales soar 25%, Boulder Brands, Inc. is heading into fiscal 2014 with a strategy six-pack geared toward propelling the company closer to $500 million in annual revenues.
In a Feb. 27 conference call with analysts to discuss fiscal 2013 results, Steve Hughes, chairman and chief executive officer of Boulder Brands, highlighted the six points:
1. Expand gluten-free products and velocities in all regions — the United States, Canada and the United Kingdom — and all channels — natural, grocery, mass, food service, club and drug.
Calling the effort “Project Gluten Freedom,” Mr. Hughes said Boulder will look to continue to drive its gluten-free portfolio by gaining distribution, increasing velocities, and, most importantly, driving household penetration off a relatively low base.
“We’ve set our goal on the average items at retail at 25 gluten-free items in conventional grocery retailers by 2014, as compared to the 20 items we ended 2013 with,” he said. “In food service, we expect to see a robust build off a relatively small base as we gain distribution in both large and small food-service formats and distributors. In the U.S. and Canada, we expect our efforts in 2013 for alternative channels, mainly club and drug, to develop into significant businesses in 2014. And, in the U.K., given the initial launch of Udi’s into Tesco, we will expand in 2014 with Ast and Sainsbury in January and April, respectively.”
2. Leverage the frozen platform.
Mr. Hughes said Boulder in 2014 will focus on accelerating the distribution of EVOL Pure and Simple frozen platform products and will launch Udi’s gluten-free entrees and handhelds.
“We expect EVOL, a relatively small business, at $17 million in net sales in 2013, to accelerate distribution materially in 2014 under the Boulder brands sales platform,” he said. “We also expect to launch 8 to 12 Udi’s gluten-free frozen entrees and hand-held products in 2014.”
3. Revitalize the spreads business and increase stock-keeping unit productivity, while maintaining strong profitability.
“Over the last two years, we have exited what were no longer a strategic brand in Best Life,” he said. “We licensed a business that was not profitable with milk. And we introduced into a new category that was growing with spreadable butter. We also took leadership by addressing the retailers’ biggest issue in the dairy case, which is limited space in the store and the warehouse with the space-saver packaging. This year, we’ll continue to focus on profitability while further innovating and differentiating Smart Balance spreads. And all I can say on this at this point is to stay tuned.”
4. Strengthen Earth Balance.
Mr. Hughes said Boulder will continue to leverage the strength in the Earth Balance brand through broader distribution, retail store expansion and entering new products and categories.
“Earth Balance is beginning to gain traction in conventional grocery and categories outside its core spreads — nut butters, the culinary spreads and snacks — and should gain new distribution in 2014,” he said. “Finally, with respect to new products, Earth Balance has quickly become an important brand in the vegan diet. This allows us to enter new categories where consumers are avoiding dairy, and we’ll continue to launch new Earth Balance products in 2014.”
5. Expand level-wide distribution through the launch of bars and shakes in the United States.
“This emerging diabetes-friendly brand is gaining traction with retailers,” Mr. Hughes said. “In Q4 we began selling four bars and four shakes in advance of the Q1 2014 shelf resets, and we expect to gain significant distribution in 2014.”
6. Improve overall long-term profitability through near-term sustainable margin improvement investments in 2014.
“We initiated a comprehensive strategic review to ensure we have the integrated strategies, processes and operations in place to keep up with our growth, and then take steps to ensure we have the people end of the structure to keep pace,” Mr. Hughes said. “Jim Leighton, our (chief operating officer), is leading this initiative, and I’m very encouraged by the progress on this project and the potential benefits as we move through 2014 into 2015. Jim has identified specific platforms and has hired an expert outside consulting firm to help us develop our long-term manufacturing plan, with the goal of ensuring the most optimal and low-cost production of our brands, products, and platforms.”
In the year ended Dec. 31, 2013, Boulder Brands had income attributable to shareholders of $10,426,000, equal to 17c per share on the common stock, up from $4,203,000, or 7c per share, in fiscal 2012. Net sales were $461,338,000, up from $369,645,000.
