Chipping away at the snack market
By Doug LeDuc | Greater Fort Wayne Business Weekly
The salty snack business of Inventure Foods is handling this year’s summer picnic demand with help from a production-capacity boost at its plant in Bluffton.
The Phoenix-based specialty foods marketer and manufacturer invested about $6 million adding four new 300-pound commercial kettles and related processing equipment last year to its Bluffton plant, which previously limited its snack production to an extrusion process.
The investment announced in September gave Inventure the ability to make 100,000 pounds of additional kettle-cooked potato chips each year, which amounted to a 50-percent expansion of production capacity for one of its strongest brands.
The expansion was needed to keep pace with growing consumer interest in what the company calls its “better-for-you” line of Boulder Canyon Authentic Foods’ potato chips.
First-quarter revenues for the company’s snack segment rose 5.1 percent to $26.2 million this year from $24.9 million for the same period last year, mostly as a result of strong Boulder Canyon and “better-for-you” private label sales growth, which an earnings report said was partly offset by a 9.1 percent decrease in license brand sales.
Boulder Canyon net revenues were up 11.5 percent in the snacks segment, showing growth in every major channel, including grocery, natural, club and convenience stores, CEO Terry McDaniel said in a recent securities analyst conference call.
Prior to the expansion, Inventure had only one kettle-cooked potato chip plant in Goodyear, Ariz., and McDaniel said production capacity issues had caused the company to hold back some on its pursuit of additional private label potato chip business.
“We are fortunate to have a strong legion of Boulder fans who value our quality-first approach and who appreciate the importance of real food ingredients,” McDaniel had said last year in a statement on the expansion. “The challenge for us has been keeping up with consumer demand, yet we’ve never been willing to sacrifice manufacturing excellence in pursuit of a quick-fix solution to short term capacity challenges.
“Instead, we’ve invested fully into our Bluffton plant to add kettle cooking capabilities that follow in form and function to what we have always used. In doing so, we’ve met current needs while allowing for future growth, and we’ve done it all in a manner that remains true to the Boulder brand.”
The company kettle-cooks for the brand organic potatoes in small batches with premium olive, avocado and coconut oils and it does this without using any artificial flavors, colors or preservatives.
A potato washer and peeler were purchased in addition to the four commercial kettles for the production capacity expansion at the Bluffton plant, according to a report on it by the Bluffton News Banner.
Related tax abatement requests were approved partly on the job retention merits of the project. Inventure did not list an employment increase on its abatement application, but Diane Johnson, Wells County’s economic development project manager on the case, had described that as a misnomer, the News Banner had said.
“They do anticipate additional employees, but they don’t know what that number would be,” Johnson had said according to the News Banner.
Inventure expected the Bluffton plant to be somewhat underutilized at the time of the decision to locate commercial kettles there, McDaniel said in an analyst call.
A very large snack food company decided to discontinue a product the plant was making for it, which had run its course.
“It was a very nice business - not tremendously high margins, but a tremendous amount of overhead coverage,” he had said.
In addition to other measures the company needed execute to improve margin, “we need to do a better job with what we have, we need to fill up the Bluffton facility,” McDaniel had said.
Having a second kettle-cooked potato chip plant also helps Inventure function as more of a national supplier for products made with that process, he said.
With the logistical advantages of a second kettle-cooked potato chip plant, “the biggest thing strategically is having production for the West and for the East,” said Matt Jackson, a company spokesman.
In addition to the plants in Bluffton and Goodyear, Inventure has fruit processing facilities in Salem, Ore., and in Lynden and Bellingham, both in Washington. It also has two Georgia plants that process items including breads and individually quick frozen vegetables.