Sector News

TreeHouse Foods embracing a customer-centric strategy

January 3, 2019
Food & Drink

TreeHouse Foods, Inc. is developing a strategy that puts its customer first. The company is reorganizing its business structure and sales department to make it easier for customers to interact with all aspects of the company rather than representatives from different divisions.

“I think our current five division structure was set up nicely for TreeHouse, but not nicely for the customer,” said Steven T. Oakland, president and chief executive officer, Dec. 11 during the company’s annual investor day presentation. “It was confusing.”

Maurice Alkemade, chief strategy officer, added, “We’re complicated. We go to an average retailer with five or six divisions, not necessarily as one TreeHouse. The organization that we’re moving to is going to be far more centralized, more focused on retailers.”

The reorganization will merge the company’s Meals and Condiments business units to create four business units around beverages, baked foods, snacks and the center of the store. The company also has put its snacks business, which consists of nuts and trail mixes, under strategic review. If that business is divested, it will further reduce TreeHouse’s operating structure from four units to three.

TreeHouse graphicMr. Oakland emphasized that there is 1% to 2% of profitable growth in the product categories where the company currently competes.

“We don’t have to do (an) acquisition, we don’t have to do tremendous new product investment, (and) we don’t have to do a lot of those things,” he said. “Now we have to service the customer right. We have to understand their needs. We have to prove to them that we’ve turned the operational thing around, that we’ll deliver on time, in full when they want it. So, it’s not that we don’t have to do work to do that, but the growth exists in our current business today.”

TreeHouse Foods management is forecasting the company will generate fiscal 2019 sales in a range between $5.45 billion to $5.75 billion and earnings per share in a range between $2.35 per share and $2.75 per share.

On Nov. 1, when the company issued its third-quarter results for fiscal 2018, it forecast year-end earnings per share in a range between $2.05 and $2.25.

“We are, in fact, at a strategic inflection point,” Mr. Oakland said. “Our vision is to be the undisputed solutions leader for custom brands. And the word solutions is key because it’s more than just products. We bring a lot more to the retailer than that. And our mission is to create value as our customers’ preferred manufacturing and distribution partner, providing thought leadership, superior innovation, and a relentless focus on execution.”

By Keith Nunes

Source: Food Business News

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