A combination of strategic acquisition and quick innovation has helped B&G Foods, Inc. expand its presence in warehouse clubs. The channel accounted for 12% of the Parsippany, N.J.-based company’s first-quarter sales, a significant jump from 3% in the prior-year period.
“And what that does is it opens up channels of communication that we’ve never had before in terms of talking to the buyers at these clubs and understanding what kind of products they are looking for,” said David Wenner, president and chief executive officer, during a June 3 presentation at the Stephens Spring Investment Conference in New York. “We’re not going to be selling them the commodity grocery products they already own; we’re going to be trying to innovate around our snack and our dry grocery products to give them things that they think are relevant to their consumers and where their consumers are going in terms of health and wellness innovation.”
For example, B&G Foods recently introduced new organic pita chips under its New York Style brand in Costco stores at the retailer’s request for such a product.
“And we were able to move faster than everybody else in terms of getting that product to market,” Mr. Wenner said. “So, we’re learning how to do the dance with the clubs and what they need and hoping that that translates to some sales in our grocery products, as well as our snack products as we go forward.”
Expanding into the club channel has presented new challenges and a new way of doing business for B&G Foods.
“One thing Costco hates is to be very successful and then be out of stock,” Mr. Wenner said. “So you need to monitor daily how events are going on at Costco, because you may need to get a truck on the road today to meet a Costco need tomorrow. And that’s a very different situation than we’ve had in the past. So we’re well on the way to addressing all of those issues and getting our service to where our customers expect it to be, but it has been quite a change in terms of how we do business.”
With a recent string of snack acquisitions, B&G Foods has broadened its reach beyond the center of the grocery store, where many of its brands are based, including Mrs. Dash, Ortega and Cream of Wheat. The additions of New York Style and Old London crackers and chips, TrueNorth nut clusters, Pirate’s Booty puffed snacks and Rickland Orchards Greek yogurt-coated bars have opened up doors to dollar, drug and convenience stores, too.
“As far as other channels, it’s the same story; it’s how do you create products for dollar store, for drug, for all these other C-stores?” Mr. Wenner said. “C-store is another entry that snacks has brought us. How do you create products for these other venues where more and more food is being bought, that’s not the run-of-the-mill product? That is somewhat unique, somewhat innovative, and gives you a reason to be that somebody else might not have. And that’s frankly been a cultural change for B&G to start thinking like that, rather than selling you the same jar of molasses over and over again. But I think we’re doing a good job at getting there.”
