Dive Brief:
- TreeHouse Foods, the nation's largest private-label manufacturer, saw robust sales growth in the last quarter of 2016, according to the company's earnings report. Net sales were $1.8 billion — a 105% increase from the last quarter of 2015 — while the company's volumes of products in the North American Retail Grocery segment increased 2.9% since the same time last year.
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TreeHouse's North American Retail Grocery segment, which represents its primary business, amounted to nearly $1.5 billion in net sales. The Q4 sales were 122% higher than the last quarter of 2015, mostly because of its purchase of the private label business from ConAgra Foods (now known as Conagra Brands).
- The report also announced a new five-division structure for the company: Baked Goods, Beverages, Condiments, Meals and Snacks.
Dive Insight:
As private label brands continue to grow in popularity, TreeHouse is reaping the benefits.
After a disappointing third quarter, the private label powerhouse is getting back to where it wants to be. And while sales figures for 2016 are skewed by the $2.7 billion acquisition of ConAgra's private label business a year ago, the company is still seeing growth.
"The breadth and depth of our product offering in private label food and beverage is unparalleled in the industry, and that puts us in a unique position to serve our customers in ways that cannot be easily replicated by the competition," Chairman and CEO Sam Reed said in the earnings report.
Among the products that saw sales growth in Q4 were TreeHouse's single-serve beverages, carton soup and dressings. Those increases were offset by declines in snacks, non-dairy creamer, pickles, canned soup and hot cereals.
The company saw more problems with its snacks than falling sales, however. The report details adjustments resulting from issues with healthy snack products acquired from Flagstone Foods in 2014. Since this deal went through, TreeHouse has seen falling profits in the segment due to competition, increasing almond costs, cashew supplier issues and a sunflower seed recall.
But the report affirms TreeHouse still believes in this business, and the new corporate structure — which concentrates on the categories that products belong in and will come with marketing teams specific for each category — should help matters. These products will fall under Snacks, a category that has seen growth for other brands. According to Mintel, 94% of Americans snack at least once a day. A third of those consumers are looking for healthier snacks, and nuts are now often considered a nutritional mainstay.