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ACH Aquires Proctor and Gamble Service Brands
Reprinted from the Memphis Business Journal
By Michael Paulk
Once known as only a maker of oil and shortening products, Memphis-based ACH Foods Co's., is in the midst of several moves to reposition itself as a broad based food ingredient company. ACH Foods announced last week that it would purchase Cincinnati-based Procter & Gamble Co.'s commercial shortening and oil products division for an undisclosed sum.
The acquisition will add several established brands to ACH Foods product line for the foodservice industry. Included in the sale will be the Frymax, Primex, Sweetex and Nutex brands of shortening and the Sterling salad oil line.
The sale merely reflects P&G refocusing on core businesses, not its dumping and unsuccessful one, says Douglas A. Christopher, an analyst covering P&G for the Los Angeles investment firm Crowell, Weedon & CO. "The company is really focusing in one its core brands like Tide, Pampers and Crest," he says. "The shortening and oil business is a fantastic business to be managed by a company that is focused on the food business."
ACH's newly formatted retail and foodservice divisions, which provide oils and shortenings to stores and restaurant chains, are two areas the company wants to grow, president and CEO Dan Antonelli says. The addition of the P&G brands should help that goal tremendously, Christopher says. "It's a diamond in the rough," he says. "It's a gold mind for a company that can concentrate on growing it into what it can become. This is a very well recognized, profitable business. I want to make that clear."
That recognition is where the addition of P&G's well-known brands fits into ACH's strategy as it looks to grow its market share in the commercial and consumer oils and shortening markets. "I come from a branded environment from my days at Kraft," Antonelli says. "I know the value of brands."
Formerly AC HUMKO Corp., ACH has since make a series of acquisitions that have added new product lines and services to the company's lineup and led to the creation of five divisions. The P&G purchase is just one of the 14 acquisitions the company has made in the past five years to boost its presence in the food industry. "The strategy now will be to fill out our participation in the five bus-inesses," Antonelli says. As it has acquired new businesses, ACH has added rice products, food distribution and ingredients manufacturing to its product lines. Those additions lead to the firm's decision to reorganize into five product divisions under the ACH name, although its past lives on in the nave of the HUMKO Oil Products division which still manufacturers the custom-designed fats and oils that gave the company its start. "It became very clear that a name change would be the best way to approach the market," Antonelli says. "Each of the businesses has a different personality or character that could not be represented by the AC HUMKO name." Also included in the ACH family: ACH Retail Products, a supplier of store brand cooking oils and shortenings; ACH Foodservice, a national supplier of food products to restaurant chains; ACH Rice Specialties, a maker of rice products like cooked and instant rice; and ACH Food and Nutrition, formed to give the company the ability to develop and market ingredients to other segments of the food industry.
The food and nutrition division could have a great deal of potential for the company as it develops new products to market to the food industry or for use by the other divisions to improve their products or make new ones, Antonelli says. "I think that, in terms of pure potential, that division has the most growth potential," he says. With the new divisions and the name changes comes a philosophical change in the corporate structure that governs the company. The company will move away from a centralized control structure that depended on a single marketing department for all of its products, instead opting to allow each division to market itself under separate command structures. The changes have been challenging. "Its never painless," Antonelli says. "Whenever you head out to change your corporate culture there will always be some resistance."
Founded in 1987 when Kraft Foods acquired Oklahoma City based Anderson Clayton Co. and Memphis-based Humko, renamed Kraft Food Ingredients, the company was renamed AC HUMKO in 1995 after it was purchased by Associated British Foods, a $7 billion international food company.
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