View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
August 6, 2021updated 07 Aug 2021 9:02pm

TreeHouse Foods seeking to use M&A to boost growth

US private-label supplier TreeHouse is evaluating a shortlist of acquisition opportunities it said would "provide an incremental growth catalyst".

US private-label heavyweight TreeHouse Foods has said it is actively seeking acquisition targets in a bid to improve its growth prospects.

Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

Announcing TreeHouse’s second-quarter results yesterday (5 August), CEO Steve Oakland said the Illinois-based business – the largest private-label manufacturer in the US – “continued to navigate an unprecedented operating environment”.

He cited lapping last year’s heightened Covid-related demand, inflation, supply-chain disruption and lower-than-expected consumer demand for private label.

But speaking to analysts after the results were announced, Oakland suggested M&A could help the company to grow faster.

He said: “We are evaluating a shortlist of acquisition opportunities that would provide an incremental growth catalyst. We will remain disciplined in seeking the right fit and valuation.”

“We have plenty of capacity to do sizeable and bolt-on acquisitions. Our focus will be on existing categories and near-in adjacencies.”

He added: “Growth categories are 40% of our business mix and we’ve got to change that. We will use M&A to bolster our growth categories and change the mix.”

In the second quarter, TreeHouse booked sales of $1bn compared to $1.04bn for the same period last year and recorded a net loss from continuing operations of $5.2m, double that of a year ago.

Expecting the tough operating environment to remain in place, TreeHouse adjusted its 2021 sales and earnings guidance downwards.

Speaking to analysts, Oakland said: “Higher commodity, packaging and freight costs [amounted to] US$160m to $170m this year. But our execution around pricing to recover these input costs has been successful.

He added: “Retail acceptance around pricing has been strong” and said “we will see pricing initiatives reflected beginning in the third quarter”.

Oakland pointed out “in seven of our ten largest categories, like crackers, pretzels and dressings, we have grown share in private-label in the quarter. However, total consumer demand for private-label has been lower than expected. We believe this is temporary”.

He said: “The good news is that this will not impede the execution of our strategy to drive long-term sustainable growth.”

TreeHouse has been carrying out a restructuring operation for three years.

Related Companies

Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

Topics in this article:
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Friday. The industry's most comprehensive news and information delivered every other month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Just Food