Speaking on the company’s Q4 earnings call a day after Maple Leaf Foods unveiled plans to buy plant-based protein brand Lightlife Foods, Pinnacle CEO Mark Clouse said: “We continue to believe that the growth of plant-based proteins represents a very significant opportunity, and gardein is poised as the leader in this space to benefit meaningfully.”
He added: “The gardein business today is still at a very, very low household penetration, and with that growing demand from consumers, I think we're set up in a really positive way for that to be a growth engine. If you look at the results on the gardein business to-date, you see consistently we've been growing in the higher double digits and continue to do that.
“Our biggest challenge has been to fuel that demand with supply [currently gardein products are made at a leased facility in Richmond, British Columbia, which is at capacity]. So, we're quite excited about Hagerstown opening up here very shortly and being able to use that as a tool to really ramp-up our support.”
According to Pinnacle’s 10-K filing, almost $29m has been invested into the capacity expansion project at the Hagerstown factory, which was acquired by Pinnacle in late 2015 for $8m.
EVOL is the fastest–growing business in Pinnacle’s Boulder division
However, the fastest-growing brand within the ‘Boulder’ segment (which includes gardein, gluten-free brands Udi’s and Glutino, frozen food brand EVOL, and spreads/nut butters brand Earth Balance), is EVOL, said Clouse.
“EVOL… is very much about clean ingredients in frozen, and I would tell you right now it is our fastest-growing business within Boulder. It is a combination of the fact that that transparent ingredient line and the relevance of that being moved into mainstream location and broader distribution is working very effectively.
"So I would expect to continue to see that business growing very quickly through the balance of 2017.”
Speaking to FoodNavigator-USA after striking the deal with Pinnacle in late 2014, gardein (Garden Protein) founder Yves Potvin said he was keen to avoid being pigeonholed as a 'meat-alternative' brand tucked away in the 'vegetarian foods' or 'natural foods' section, and said his products performed most strongly when they were merchandised in the main freezer section, where they reached a wider audience.
As for products, while Gardein has several meat-free burgers, it also sells a wide range of other options from wings, tenders, crispy fingers, cutlets, riblets, meatballs and tenders to sliders, breakfast sandwiches and scallopini.
While newer entrants to the market such as Beyond Meat focus on pea protein, many of gardein’s products use soy protein as a base.
There’s still ‘meaningful growth’ in gluten-free
As for gluten-free (Pinnacle owns the Udi’s and Glutino gluten free brands), Clouse said, “There is a lot of discussion and debate around whether gluten-free as a category was a fad, was it going to fade? And I'm happy to tell you that as you look at the underlying dynamics in gluten-free, you continue to see very strong double-digit top-line.
“Whether you're looking at IRI or whether you're looking at Mintel, you see very positive momentum, albeit down from where it was a year or two ago, but certainly very meaningful growth.”
M&A: ‘There will be movement this year’
Asked about the acquisition strategy at Pinnacle Foods, Clouse said: “I think that there will be movement in the industry this year… we're ready and we're in a good position.”
Q4 and full year 2016 figures
Q4 net sales rose 18.8% to $858.5m, reflecting a 17.3% benefit from the acquisition of Boulder Brands and higher volume mix of 2%, partially offset by lower pricing of 0.5%.
For the full year (ended Dec 25, 2016), net sales rose 17.8% to $3.13bn.
New Jersey-based Pinnacle Foods markets brands including Birds Eye, Hungry-Man, Aunt Jemima and EVOL (frozen foods), Smart Balance (spreads), Duncan Hines (baking), Wish-Bone (dressings), Vlasic (pickles), Udi’s and Glutino (gluten-free), Earth Balance (spreads, nut butters), gardein (plant-based protein), and Mrs Butterworth's (syrups).