Private label sales, according to TreeHouse, are picking up steam.
TreeHouse Foods, Inc., a manufacturer of private label products, says that while a global pandemic nearly brought down the North American private label business, it is now beginning to recover and respond to a strong consumer demand signal. Oakland is president and chief executive officer.
During a Nov. 30 virtual Bank of America Leveraged Finance Conference presentation, Mr. Oakland stated, “Private label was built on a complexity model.” “Our industry’s supply chain collapsed when volatility was introduced to complexity…
Branded manufacturers saw an opportunity to take market share and fill shelf space as a result of that circumstance.
William J. Kelley, chief financial officer of TreeHouse Foods, stated, “We also saw an unprecedented level of branded promotion early in the year (2021), a lot of high-value promotions, in-store activity as well as the kind of buy-one-get-one that showed up in the back of Q2.”Federal stimulus programs that enabled many private label customers to upgrade to branded products further disadvantageted private label.
After the termination of numerous federal stimulus programs and a significant reduction in supply chain instability during the mid-2020 period, manufacturers have managed to stabilize themselves and adapt to the demands of retailers.
According to Mr. Oakland, “a lot of things have an impact on the macro food environment, and impact private label in particular.” However, we believe that the company’s core values are still very strong. In fact, which is quite exciting for us, we are beginning to observe both the restoration of the private label market share and the outperformance of some of our larger categories over private label.TreeHouse Foods continues to be concerned about input and logistical inflation; nevertheless, pricing measures implemented during the third andIt is anticipated that the fourth quarters of fiscal 2021 and the ones to be taken in the first quarter of fiscal 2022 will counteract inflation.
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In his thirty years in the business, Mr. Oakland described the pricing climate with TreeHouse’s clients as the most cooperative he had ever witnessed.He remarked, “I believe this has caused us all to think differently.” “And I believe that will make the relationships healthier in the long run.”
The board of directors of TreeHouse Foods declared on November 8 that the company has started a strategic assessment, which might lead to the sale of all or a portion of the business. When questioned about the study during the presentation, Mr. Oakland stated he did not think it would be too disruptive to split the company up.
“I would like to take you back to our announcement of the re-segmentation of the business in February of 2020,” he remarked. After that, we divided into two businesses: meal prep and snacking and beverages. And since they are essentially different companies that we manage differently, we took that calculated risk.
In comparison to the third quarter of fiscal 2020, when earnings were $12.1 million, or 21¢ per share, TreeHouse Foods’ net income for the third quarter ended September 30, was $6.7 million, or 12¢ per share on the common stock.Sales for the quarter increased somewhat from $1.05 billion to $1.1 billion over the previous year.The company’s largest business area, Meal Preparation, saw a 7.4% increase in revenues to $690 million during the quarter.