Snacks & Candy

Snyder's of Hanover Wants to Double in Size

Pretzel maker expanding distribution, product innovation

HANOVER, Pa. -- Pretzel maker Snyder's of Hanover Inc.'s chairman, Michael Warehime, is working with a new CEO to make the company even bigger.

In a recent interview with The Central Penn Business Journal, Warehime declared that he aims to double the company's 2006 sales of $500 million to $1 billion within five years. I think it's very doable, he said.

In April, Warehime off the CEO position to Carl E. Lee Jr., a food-industry veteran who joined Snyder's as president in 2005.

I gave up a lot of operational [image-nocss] responsibility, Warehime told the newspaper. And what I'd like to doand what I'm doingis strategic planning and trying to direct the future of Snyder's.

Lee said his goal is to continue what the company has been doing since he arrivedproduct innovation, brand-building and -marketing and expanding the Snyder's distribution network.

Instead of going through independent distributors, Snyder's prefers to deliver pretzels to supermarkets and convenience stores itself, said the report. In the last half-year alone, the company has added distribution channels in Los Angeles, Las Vegas, San Diego, Dallas, Minneapolis and Oklahoma. The company has its own distribution system in 51 of the 65 biggest markets in the country, as measured by Chicago research firm Information Resources Inc. (IRI), Lee said.

Snyder's is starting up its own distribution systems in some places and acquiring distributors in others. The company began acquiring distributors 10 to 15 years ago, but it has turned the strategy up a notch in the last three years, Warehime told the paper.

In April, for example, Snyder's bought Grande Foods, a Los Angeles company that makes tortilla chips and is also a distributor. Warehime declined to disclose terms.

The snack-food industry in general relies on its own distribution more than other food segments, Chris Clark, vice president of operations and membership at the Snack Food Association, told the Central Penn Business Journal. That's very unique to our segment of the [food] industry, Clark said. That whole process provides a lot of advantages to the manufacturer.

Snyder's refers to its drivers as salespeople, and they do more than unload a truck, the report said. They take pretzels all the way to store shelves and stock them personally. They also decide which products to stock and even how to present them. That helps retailer and manufacturer, Warehime said. That's because Snyder's salespeople have a better grasp on what's selling and what events will drive a particular product.

Lee said the company brings efficiencies to its acquisitions, for example, by equipping drivers with handheld computers. We're bringing national scale when we go in there, he said.

Acquiring distributors is not a way to shut competitors out of the market, Lee and Warehime said. Rather, Warehime said he views it as a way to provide service to retailers. It made a big difference because the customers welcomed us, saying, 'Wow, you're going to bring value,' he said.

Deepening distribution is only part of Snyder's growth strategy. Even more important, Warehime said, is product innovation. The company has unrolled a line of multigrain products including pretzels, tortilla chips, sunflower chips and a cheese product that's similar to Frito-Lay's Cheetos but healthier, Lee said.

Everyone's eating healthier, Lee said. The multigrain product line is beating expectations and accounts for about one-third of Snyder's sales growth this year, which is on track to hit 15% by year-end, he added.

Snyder's is working on ideas for products that could be used in hors d'oeuvres and would appeal to caterers and restaurants in particular. For example, the company is developing a hybrid pretzel-cracker and so-called pretzel shotssmall pretzel containers that could hold crab meat or alcohol and be consumed in a bite. Also in the works is a pretzel ice-cream cone, Warehime told the paper.

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