When Utz Brands Inc. announced in fall 2023 that it was closing one of its plants in Hanover, executives were prepared to answer questions about how many people worked there, what would happen to them, where production was moving and when.
They did not expect as many questions about the fate of the company store tucked into the plant, the company’s oldest, acknowledged Howard Friedman, who became CEO of the Hanover-based snack-food giant in December 2022.
There were no plans to close the store, the company’s only self-branded retail outlet, Friedman said. “But it was not the first thing that we worried about. We’ll always have a company store, we’ll always be in Hanover, we’ll always be accessible. Those things are not going to change. But suddenly we were answering questions about the company store.”
The questions were not ultimately about the store, but about what the store means to the community where Utz produces about two-thirds of its products, said Friedman, the first non-family member to lead the company. “It’s very important to our employee base and a lot of our constituents.”
Those constituents include the roughly 16,500 residents of Hanover, a borough in southwestern York County that is to pretzels and potato chips what Hershey is to chocolate bars and peanut butter cups.
Founded in 1921 in the kitchen of Bill and Salie Utz, the company has been a bedrock of the region’s snack food industry and grown to become one of the largest snack food companies in the U.S. But over the last four years, Utz has undergone significant changes, starting with its debut as a public company in August 2020.
Utz has continued to acquire snacking companies, but it has also taken steps to shed debt, retool its manufacturing footprint and focus on four core brands: Utz, Boulder Canyon, On The Border and Zapp’s. The company is also building a 650,000 square-foot warehouse in Hanover designed to streamline logistics.
‘Rightfully proud’
Friedman, an Army veteran and graduate of Dickinson College in Carlisle, joined Utz after nearly a quarter century working his way up through the ranks of food giants The Kraft Heinz Co. and Post Holdings Inc., where he led the cereal business for three years. He succeeded Dylan Lissette, who is married to a great granddaughter of Utz’s founders and remains on the company’s board.
At Utz, Friedman inherited a hardworking culture, one that was not resistant to change but that needed good reasons to do so.
“I was extremely pleased to find out that what was sold to me in the interview process was exactly what I found: A culture that is conceptually open, wants to learn, rightfully proud of what they’ve built,” he said. “This company is a remarkable organization if you think of where they started to where they are today.”
The company employs more than 3,600 people at factories and distribution centers around the U.S. Annual sales for its most recent fiscal year were $1.44 billion, up slightly from the prior year total of $1.41 billion. In addition to its core brands, Utz makes snacks under a range of smaller labels, such as Golden Flake, Snyder of Berlin and Vitner’s.
The company lost money in its last two fiscal years as it reworked its manufacturing base, its distribution system and its menu of products. But the company turned a net profit of $27.8 million in the first half of 2024, reversing a loss of $23 million for the year-ago period.
Friedman spoke in early July with biznewsPA about his experience so far and his plans for the company. The following interview has been edited for length and clarity.
biznewsPA: There have been a lot of changes in the last two years. You closed a number of plants, got rid of some brands, focused on four core brands, rearranged some debt. How would you describe your vision for the company?
Howard Friedman: My hope is to get a whole lot bigger. The story of this company is growth through organic and inorganic means. If you look at our Power Four brands, Utz was homegrown, but the other three were acquired and grown. Zapp’s, Boulder Canyon, On The Border were transactions done to get representation of all the subcategories in salty and start to gain scale. And scale matters in this business. What we laid out at our investor day and what we’ve been talking about ever since is how do we continue to grow organically; invest behind the brands, brand building and geographic expansion; and how do we drive the resources to fund that growth? When I got here, one of the questions was around our debt level. The debt never got in the way of us making good decisions for the company, but what it did was lead to a series of questions: ‘How are you going to bring it down and over what time period?’ What we found was that we had some facilities that we didn’t think we were going to need, and we had a portfolio of brands that we were going to manage and we were happy with, but we found a counterparty [Our Home] who valued those brands more than we did and allowed us to preserve jobs and get out of some of the facilities that we weren’t going to need. It was a win for us, a win for our debt level, a win for the associates who went with it.
biznewsPA: Do you feel that the company is fully optimized, or do you feel there’s still work to do in terms of finding the right mix of brands, the right mix of production plants?
Friedman:In terms of the physical manufacturing site, we probably are where we need to be. Eight is a good number for us. We’re going to invest in automation and capacity. The Northeast Logistics Center under construction in Hanover will allow us to consolidate some facilities. If you drive around Hanover, you can see us shuttling things all over. We’ll bring everybody under one roof. There will be infrastructure investment, there will be automation investment because I think there’s meaningful opportunity to eliminate work that is repetitive and not as value-added and then take our employees, train them and upskill them. In terms of our brands, we are represented in all the major subcategories of consequence in salty with the exception of two: popcorn and meat snacks. Should an opportunity ever come where those things made sense for us, we would obviously look at them. But the organic opportunities we have in growing our Power Four brands are significant.
biznewsPA: Are there other areas you’re investing in?
Friedman: Today we spend less than 1% of revenue in marketing. If you were to look at our salty snack competitors, they’re more like 3% to 4%. So, we’ve laid out an intent to increase our marketing investment by 40% year over year over year with two important things to be true. One is we have to have the money to spend. We’re not going to have ‘trust me, it’ll be awesome’ kind of spending. And two, we need to know who we were going to spend it on and how. So, we’ve spent time investing in building out our marketing capabilities, investing in understanding performance marketing and the brands that we own. The second is really around capability investment in our employees. We’ve been working on building out our integrated business planning process, which is how you take everything from your portfolio to production and everything in between and bring it together in an organized way of what are we going to do, when are we going to do it, can we afford to do it, at what cost, over what time period. That is a level of discipline that allows you to manage the environment that you’re in a little bit more effectively.
biznewsPA: How do you see the role of artificial intelligence in this business? It’s not a computer business, but you’re using computers, and technology is a huge portion of it.
Friedman: Depending on who you talk to, AI is either the cause of or solution to all of our problems. And my experience is neither of those two things about emerging technology turn out to be true. I was in the business in the late ‘90s when things like a website and the internet were sort of charming, but we weren’t really sure what they were going to go do. We’ve come a long way and I have no doubt that AI will do that as well. We are bringing in people smarter than certainly I am to help us process it. I’m sure it’ll play some sort of a role, but we’ve got a lot to do on the current edge before we get to the bleeding edge.
biznewsPA: Where do you see growth coming from? Is it geographic expansion? Is it brand expansion, category expansion?
Friedman: I don’t think there’s a marketer worth their salt that wouldn’t say ‘yes’ to all of the above, but the way I would put it is that we have meaningful opportunities to grow in our core markets. And that opportunity comes from bringing some of our Power Four brands like Boulder Canyon, On The Border and Zapp’s into our core markets where we are arguably at our largest and most well-known. The distribution opportunities that we have there are not insignificant for those brands and, frankly, even within our Utz brand, as we build out consumer love and awareness for it in some of the geographies where we have significant market share. The brand still has opportunities to talk to consumers in a different way in those markets.
biznewsPA: What’s your concern about GLP-1s, the Ozempics and Wegovys of the world [weight-loss drugs that suppress appetite]? Do you see that impacting your sales?
Friedman: There is no question that health and wellbeing are important in the category. I’ve been fortunate enough to have been in this industry since low-carb came along and then high-protein came along and then low-fat was around. All of those things are part of this long-term trend towards weight management. As consumer-packaged goods professionals, our job is to adjust to whatever the consumer tells us they want. So, the impact specifically of GLP-1s is still early for us. We certainly saw some shifts to smaller pack sizes, more satiating snacks. But it’s not big enough yet for us to attribute a whole lot of impact to it. But it is big enough to pay attention to and make sure that we’re offering solutions that appeal to consumers. So, if the answer is satiating snacks with protein, we’ll figure out our way into satiating snacks with protein. If the answer is smaller pack sizes, we will offer them smaller pack sizes. And my suspicion is that that story is still to be told.
biznewsPA: Are there any signals you’re getting from consumers at this point that are noticeable enough to share?
Friedman: There are a couple of trends that we are seeing in food, especially around flavor. Hot and spicy is the fastest growing segment in salty snacks. And some of that is the evolution of the American palette. You see that with our launch of Mike’s Hot Honey this year. The second thing I would offer is within innovation. Our Boulder Canyon business is really growing nicely, and it’s being driven by seed oil. We have an avocado oil item and an olive oil item, which are for consumers who seek to avoid seed oils. That business has been growing by double digits. The last trend is where people shop. We’re buying a lot more online now than we used to. Our e-commerce business is growing quickly as we’ve built out some of those capabilities.
biznewsPA: What’s the percentage of online sales at this point?
Friedman: We’re still relatively small, in the high single digits, low double digits, but we’re growing 40%, 50% over the last 12 periods. So that has been an area where we’ve gotten much better and that’s one of the places where that marketing investment is going.
biznewsPA: What are your thoughts on packaging? California, Oregon, other states have been aggressive about reducing single-use packaging, requiring bio-based recyclable materials, all the rest. Part of that’s a collection issue. But beyond that, what do you see Utz doing in that space?
Friedman: You hit on one of the points that I would make, which is the recycling system in this country leaves a lot to be desired. We are obviously interested in helping to make sure that we’re getting to a better recycling system overall. We have longstanding relationships with packaging suppliers who spend a lot of time thinking about it. And there are three things to me. One is, are we making the product that we need to make and not creating waste that we throw away? The least efficient thing you can do is make a product, put it in a bag, have it sit in the rafters for a while and then toss it. Two is, we are working on the right weight of our packaging. We sell a lot of barrels and plastic. Are there things that we can do to reduce the amount of plastics we are using, which is an ongoing conversation that we have with suppliers. And then third is to make sure as you think about materials and structures, how do you make them economical and affordable? There’s a challenge there, but I would love to make sure that we are helping create economies of scale.
biznewsPA: What convinced you to take this job?
Friedman: One was conversations with Dylan and the board about what they wanted for the company, what they thought was important from a leadership perspective and what kind of vision they had, which lined up with mine. I would like it to be a company that wants to grow and wants to grow quickly and wants to be consumer-led. The second was just the opportunity that a rapidly scaling company allows you. And I like companies where you can get your head and arms around the whole company, that I’m not sitting in some ivory tower and never can get on the floor. I’ve worked in much bigger firms, but I’ve always gravitated to places where you can get down to the retail level or the manufacturing floor, as well as sit in the C-suite, with equal effort.
