Lance, the US snack maker, claimed today (24 April) that it had won new accounts in the wake of the peanut butter recall earlier this year – but said it was preparing for some fierce competition as rival brand-owners bounce back.
The peanut butter salmonella scare, which broke in January and led to hundreds of illnesses and nine deaths across the US and Canada, was not directly linked to Lance’s lines but saw some of the company’s peers pull products.
Lance said that sales across the industry had been hit and that sales of its branded products had been affected to the tune of US$2.5m.
Nonetheless, Lance president and CEO Dave Singer said the impact of the peanut butter recall on the company’s rivals meant his firm “increased market share significantly” during the first quarter.
“We gained quite a bit of distribution. There quite a few accounts that we had historically not been in that we got into, which generated quite a bit of sales that we otherwise wouldn’t have had.”
However, Singer added that Lance expects companies affected by the peanut butter recall to compete strongly in the months ahead. “We don’t expect to keep all of the distribution gains,” he said. “We build into our guidance a range of potential share gains, category issues. We think we’ve taken that into consideration.”
Earlier today, Lance posted an increase in first-quarter net profit today (24 April) and raised it full-year sales and earnings forecasts.
The group raised its 2009 full-year net sales estimate to a range of $910m to $930m from $900m to $920m, and its full-year diluted earnings per share estimate to a range of $1.10 to $1.20 from $1.00 to $1.15.
Singer said contributions of new products, the integration of the Archway cookie business bought earlier this year and increased market share in the wake of the peanut butter recall would help drive sales further than had been initially forecast.
The Lance boss said, at the moment, new products do not contribute a “huge percentage” to the group’s revenue. Nevertheless, Singer said the company wanted new products to account for increasing sales over the next three years.
“Our goal within three years to get to a comparable level of innovation to our best-in-class peers,” Singer said. He added that Lance wanted new products to account for a “mid-double-digit” percentage of the group’s total revenues over a three-year period.
In the year ahead, Lance, which also makes a range of own-brand products, plans to increase its capital expenditure, including boosting production capacity in the wake of rising private-label sales.
