Ralcorp Acquires American Italian Pasta Co.

June 21, 2010

Ralcorp Holdings is purchasing American Italian Pasta Company (AIPC) for $1.2 billion in stock, or $53 a share, a deal that further deepens the company’s store brand food holdings.

Ralcorp, which sells cereals, corn snack products, syrups and salad dressings, said the deal will be funded through a combination of cash on hand, borrowings under existing credit facilities, a bridge facility for which it has received a commitment letter or other debt or equity arrangements. The deal, which is slated to close Sept. 30, is subject to regulatory approvals.

AIPC is a leading producer of dry pasta in North America, operating four manufacturing plants and employing approximately 650. In addition to its store brands manufacturing, AIPC makes regional pasta brands such as Mueller’s and Golden Grain.


Ralcorp Co-CEOs Kevin Hunt (left) and David Skarie.

"This transaction strengthens our position as a diversified provider of private label and branded food products, and we anticipate that by adding AIPC's number-one position in private label dry pasta, strategically-located production facilities, solid brands and top-tier customer base to Ralcorp's capabilities, we will be able to better address a broader spectrum of customer and consumer needs," said Kevin J. Hunt, co-CEO and president of Ralcorp.

David P. Skarie, co-CEO and president of Ralcorp said: "We expect AIPC's workforce to be an important part of Ralcorp's continued growth and success and we intend to continue to invest in the combined business for sustainable and profitable growth."

When the deal is completed, AIPC will become a wholly-owned subsidiary and will operate as an independent division of Ralcorp, reporting to Hunt, who oversees the company's existing snacks, sauces and spreads and frozen bakery products businesses, Ralcorp said in a statement.

“We believe that the addition of AIPC's products to Ralcorp will help create a stronger, more diversified company with long-term advantages for both companies' customers and employees,” said Jack P. Kelly, president and CEO of AIPC. We look forward to working closely with the Ralcorp team to complete the transaction as expeditiously as possible and to ensure a smooth transition."

In 2009, AIPC posted $88 million in profit compared to $19 million in 2008, and sales rose to $628 million last year, up 10 percent from prior year, according to a Reuter’s report.

Chicken as Its Exclusive Store Brand

October 6, 2009

Food Lion as part of an agreement with Tyson Foods Inc., Food Lion LLC will replace all store brand fresh chicken with Holly Farms premium brand chicken at 1,200 Food Lion, Bloom and Bottom Dollar Food grocery stores throughout the eastern United States.

After a 10 year absence from retail grocery stores in the southeast, "the reintroduction of this brand enables us to provide a differentiated product to our customers at or below current store brand fresh chicken prices," said Hans Lefebvre, vice president of meat and seafood merchandising at Salisbury, N.C. -based Food Lion.

"In an economy where consumers are always searching for premium products at great prices, we are able to provide both to our customers through this arrangement," he said in a company statement. "This is a fantastic opportunity to provide a unique product offering exclusive to our customers, while delivering on our commitment of quality products at great prices."

The Holly Farms poultry company was founded in Wilkesboro, N.C., in 1958. Tyson acquired the company in 1989, and by the late 1990s Holly Farms was phased out as a national brand.

Valero performed a complete reset

August 19, 2009



Fine-tuning the Fountain

By Linda Lisanti

August 10, 2009 - The summer season is a prime time for fountain drink sales, and smart convenience retailers know they must put their best set forward to make the most of this time of year.

For Valero Retail Holdings, the retail division of San Antonio-based Valero Energy Corp., operating c-stores in primarily hot climates means it is prime fountain time all the time. I recently had the opportunity to speak with Valero Retail executives about their fountain sets and how they ensure each store delivers a quality fountain offering through the right combination of brands, flavors, cup sizes and promotional activity.

To fine-tune this year's summer selling season, Valero performed a complete reset of its "Flavors 2 go" fountain program across the company's entire chain of 1,000 Corner Stores. Valero's Corner Stores have between 12 and 16 fountain heads, depending on volume, while the chain's new large-format stores have 30 fountain heads.

As part of the reset, which was completed in June, each store was individually evaluated and then brands and flavors were allocated based on current sales and market share data. All fountain machines were inspected for quality control and brixed to guarantee a quality product, explained Hal Adams, Valero's vice president of merchandising.

The retailer did a similar fountain reset roughly three years ago, and had great success in lifting sales. At that time, Valero analyzed its c-stores on a regional basis and aligned the valves and flavors for each store according to market share data, Adams said.

Unlike three years ago, however, this year's reset also ushered in Valero's first foray into private label at the fountain. Its "Flavors 2 go" offering now includes three proprietary beverages -- root beer, cherry limeade and cream tangerine. All of the company's c-stores offer at least two of the new "Flavors 2 go" varieties.

Valero's own fountain drinks are made with pure cane sugar in place of high fructose corn syrup -- a decision driven by the fact that its Hispanic customers prefer the taste of cane sugar, which is used in the Coca-Cola found in Mexico. The private label dispensed beverages are being targeted particularly at Hispanic consumers and youths.

The fountain is just one of many new additions Valero is making to its private label lines. Along with "Flavors 2 go" and its Cibolo Mountain coffee brand on the foodservice side, Valero is expanding its "Fresh Choices" brand of packaged goods. A sports drink launched in June in five flavors -- fruit punch, orange, lemon-lime, grape and blue raspberry -- and a private label energy drink called "U Power" is expected to roll out in September.

In addition to new product development, Valero is completely redesigning and launching new packaging for its Fresh Choices products. The new packaging, which will be coming in the next few months, is bright, colorful and has a lot more energy, keeping with the new image of the retailer's Corner Stores, company executives noted.

Valero has the right idea. Consumers love variety in their beverages, so the more options, the better. Plus, putting private label on the fountain contributes to strengthening the Valero brand, and in these challenging economic times, shoppers are turning to brands they know and trust.

Food for Thought

I was in my thought and ready to wind down for the night and all of the sudden I just started to pray for all the great business that is going on and I know the lord has help me my whole life with my being able to be in the middle of everything. The lord has given us all the power to sit and hear all side of a situation and then make a wonderful decision on that discussion in you just went through. The lord has given me the wonderful way to listen to all sides of the story and help everyone that I truly can in a situation. So where I am going with this is trust the lord and he will give you the right answers then it is up to you to listen to the answers that are given.
Truly see the lord will never give you what you can not handle.