Snyder's to buy Utz in snack-food deal
In a major deal for Pennsylvania's snack-foods industry, Snyder's of Hanover Inc. said yesterday that it was buying cross-town rival Utz Quality Foods Inc.
In a major deal for Pennsylvania's snack-foods industry, Snyder's of Hanover Inc. said yesterday that it was buying cross-town rival Utz Quality Foods Inc.
The combination of the two York County food manufacturers comes as smaller players are under growing pressure from industry giant Frito-Lay Inc. and from America's growing ambivalence toward salty snacks.
The two family-owned companies were short on details, including the purchase price, in the announcement. But the deal is sure to unnerve residents of Hanover, where the two companies have a combined five factories that are major employers and the competition between the two brands is especially intense.
Snyder's already is the nation's largest pretzel-maker. Now, it will have an increased presence in the potato chip market.
"Merging our companies together will bring out the best in our respective brands, our people, and our cultures and improve our long-term viability in the snack-food industry," Mike Warehime, Snyder's chairman, said in the news release.
Snyder's pretzels and Utz potato chips have solid positions in the salty-snacks aisle in thousands of supermarkets, but they face huge challenges in expanding.
"All of these snack-food people are competing against a giant," said John Stanton, a professor of food marketing at St. Joseph's University, referring to PepsiCo Inc.'s Frito-Lay unit.
Frito-Lay North America registered $3.2 billion in sales and $822 million in operating profit in its most recent quarter, compared with Snyder's and Utz's combined annual revenue of about $800 million.
"What Wal-Mart is to retail, Frito is to salty snacks," said Stanton, who is on the board of another local competitor of Frito-Lay, Chester County's Herr Foods Inc. "One of the ways to compete against a giant is to get bigger."
That is how at least one Utz employee understood the sale of his company.
"I'm not worried about my job," Bill Dodge, a route salesman for Utz, told the Evening Sun in Hanover on Wednesday. "I'm interested in the details. It would allow [Utz] to expand outside the area and all of us to better compete with Frito-Lay," he said.
The merger of Snyder's and Utz, if it is approved by the Federal Trade Commission, could make life harder for Herr's and smaller manufacturers of snack foods in Pennsylvania, such as Bickel's, Bachman, and Martin's.
The state ranked first in the nation in potato chip production, with shipments of $569 million, and in pretzel production, with shipments of $308 million, according to the most recent data from the U.S. Census Bureau.
Snyder's, founded in 1909 as a pretzel-maker, has expanded by building a plant from scratch in Arizona in 1998 and through acquisitions, including the 2007 purchases of Jay's Foods Inc., of Chicago, and a snack-food plant in Indiana. Its main plant is in Hanover.
Snyder's said it employed 2,250. It is the largest pretzel-maker in the United States, selling $300 million worth of pretzels for a 36 percent market share in the 52 weeks ended Oct. 2, according to Information Resources Inc., a Chicago market-research firm that tracks scanner data from supermarkets and other stores, but not Wal-Mart Stores Inc. or club stores. Business-information provider Hoover's said Snyder's had revenue of $652 million last year.
Utz, best known for the potato chips that William and Salie Utz began making in 1921 and delivering to Baltimore markets, has four plants in Hanover, where it produces a full line of snack foods and employs 2,200. Information Resources said Utz sold $185 million in chips in the last year for a 4 percent market share. It was third behind Frito-Lay with 59 percent of the market and Procter & Gamble Co. with 9 percent.
Snyder's said it would continue operating all five Hanover plants.
Snack Attack
The two snack-food companies, at a glance.
Snyder's of
Hanover Inc.
Headquarters: Hanover, York County
Founded: 1909
Business: Makes potato chips, pretzels, and popcorn
Employees: 2,250
Annual revenue: $652 million
Product distribution: Worldwide
Utz Quality
Foods Inc.
Headquarters: Hanover
Founded: 1921
Business: Makes potato, tortilla, and sunflower chips, pretzels, and popcorn
Employees: 2,200
Annual revenue: Not available
Product distribution: U.S. East Coast
SOURCES: The companies, and Hoover's
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