Utz Brands focuses on its “Power 4” brands to meet strategic goals

Utz Brands Inc. has reduced its debt and invested in its manufacturing and brand identity to meet its goal of four to five percent year-over-year growth.

Howard Friedman, who took the helm of the more than 100-year-old company in December 2022, said, “Our opportunity over time is to bring our four core products into the Utz geography.”

Utz is focused on its “Power 4” brands, Utz, Zapp’s, Boulder Canyon and ON THE BORDER, Friedman said from his office in Hanover recently.

“We have 28 individual products in our core geography,” he said, which is east of the Mississippi River and the Midwest to Texas.

Friedman said the company, which had acquired businesses and assets and then consolidated, said all the things Utz did last year was to reduce and leverage debt; create focus on brands, people and facilities; and create an impact on the workforce in the communities it serves.

The company has about 2,800 employees, 1,800 of whom work in Hanover, he said.

In 2020, then Utz Quality Foods completed a merger with special purpose acquisition firm Collier Creek and debuted on the New York Stock Exchange four days later as Utz Brands.

Shortly thereafter, Utz Brands acquired ON THE BORDER, a Texas-based manufacturer of tortillas, salsa and queso dips; Chicago-based snack food maker, Vitner’s; Nebraska-based filled-pretzel brand, H.K. Anderson; and Michigan-based R.W. Garcia Holdings and RW Garcia, maker of tortilla chips, crackers and corn chips.

According to then CEO Dylan Lissette, the move rocketed the company to the third largest manufacturer of tortillas in the country.

“When I started, we had 16 manufacturing facilities,” Friedman, a graduate of Dickenson College in Carlisle, said. “We now have eight.”

As the company acquired brands, Friedman said many of the operations were subscale, so they were consolidated.

“We closed one plant in Hanover and incorporated the operations and people into our other three Hanover facilities,” he said.

This year, Utz sold five plants to Our Home, including one in Lititz.

“We found someone to invest in the brands and protect jobs,” Friedman said. “By lowering our footprint, we can make more investments in our existing sites.”

The company said the transactions are expected to provide about $150 million in after-tax net proceeds, which Utz will use to pay down its long-term debt, which is expected to lower interest expense by about $12 million in fiscal year 2024.

“When we made the announcement in January, I didn’t do a good enough job explaining the move,” he said.

As part of the deal, Friedman said Our Home will co-manufacture certain Utz products for a period under the terms of a co-manufacturing agreement. Our Home plans to continue to operate and grow the manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition.

A big investment is a 650,000-square-foot distribution center currently being built in Hanover, he said. The Northeast Logistics Center is expected to open in the first quarter of 2025.

In 2022, Utz bought a snack food manufacturing facility in Kings Mountain, North Carolina from Evans Food Group Ltd. The purchase includes the existing building, land and pork-rind production equipment.

Friedman said the space has been converted into a fully operational snack food manufacturing facility that will allow the company to distribute to southern states, especially Florida which is its fastest growing market.

“Our goal is to bring our four core brands into the Utz geography and then expand nationally,” he said. “We have targeted brands to fill in where they play a role. That’s what we’ve been doing the past few years.”

Distribution is key

Friedman said distribution is key in growing the company. Sixty percent is direct to store distribution and 40% is directly to warehouses.

“We carry the majority of our own business through independent operators,” he said.

Utz acquires distribution routes to get its salty snacks to market. Friedman said it is independent operators that run those routes who make sure shelves are stocked and displays are set.

“We can show stores what we can do for consumers and their business with a strong DSD system,” he said. “Retailers give you time to see if the product will be there, but they need to see growth to give you more shelf space.”

In fact, Friedman said Utz went from being in 100 Publix stores to the entire chain and is now in Albertsons and Kroger’s stores.

“You need independent operators to get into new geographies,” he said.

Friedman’s impact

Friedman said he has known the Utz brand since he was a kid. He served in the Army for over five years and was at Kraft for 21 years.

“I love working in the food industry. Personally, I know that brands matter,” he said. “This is an opportunity to grow professionally. I’m a builder by nature so growing brands is what I love.”

Friedman, who holds an M.B.A in marketing and finance from New York University’s Stern School of Business, said Utz is big enough to impact brands but small enough to wrap his arms around it.

“I’m curious about new ways of doing things and I’m optimistic about what this business can be over the next 100 years,” he said. “I want to leave an impact on the communities we serve.”

From pork rinds and cheeseballs to potato chips

“Our strategy is to take our portfolio and expand into new geographies. Potato chips, our first product, is still the largest,” Friedman said. “We look at consumer interest and watch trends to see what the competition is.”

From pork rinds and cheeseballs to potato chips and pretzels, Friedman said Utz “fashions” products to meet the demand from consumers, adding spring and summer are the busiest times for the snack food industry.

“Hot and spicy products are hot right now,” he said, adding Utz makes 1,200 products.

“We have areas where there is enough demand for novelties, something people want to try but not enough to buy all the time”, he said. “So, we bring our products to new areas and sprinkle in the novelties.”

Friedman sited Halloween shaped pretzels and sports-themed packaging.

Utz is launching into the better-for-you items that has products made with non-seed oils, which is growing quickly, he said. The company’s Boulder Canyon brand uses avocado oil.

“If consumers aren’t interested, we don’t do it,” he said. “The market overall is different, but still growing. Consumers aren’t buying as much with the increased prices.”

Friedman said consumers are shopping in big box stores and discount grocers and will look for items they can afford.

“We are in all types of stores because we want to be where the consumer wants us to be,” he said. “We also do e-commerce.”

As for the national trend for increased use of weight loss drugs, Friedman said he’s seen some effects on buying habits, mostly in the sales of smaller portioned products.

“This is still a small group of people for us,” he said. “As preferences change, we address it. Our job is to listen to the consumer, so it is something we are watching.”

Calling the products “affordable indulgence,” Friedman said listening to consumers means offering no salt and non-nut oil options.

“Where it makes sense we put it into production,” he said. “But not in all of our plants.”

Friedman said ON THE BORDER is a $.5 billion brand. Utz will do more than $4 billion next year and Boulder Canyon is expected to net between $250,000 to $500,000.

“This is a testament to our portfolio,” he said. “Our goal is to take our brands across the country. Not tomorrow but in the next 10 years.”