There hasn't been a single year in iconic potato chip maker Utz's 99-year history that sales haven't increased, but it's been more slow and steady than rapid growth. “We built our whole life on singles, doubles—never a grand slam,” CEO Dylan Lissette says. “We're consistent.”
But Utz's approach has become supercharged in recent years, under Lissette. Since taking over as CEO in 2013, sales have roughly doubled to $1 billion. Much of that growth has come from the 10 acquisitions he's engineered, including the purchase of kettle-cooked chip brands like Dirty and Zapp's. Today Utz manufactures about 300 million pounds of salty snacks annually, from cheese balls and pretzels to its classic potato chips, enough to make it the fourth largest salty snack company in the U.S.
Now comes perhaps his biggest move yet: On Monday, he is taking the company public through a backdoor listing. While he's confident that investors will eat up the shares, it's in part a defensive move, in light of the fact that many smaller brands in the industry have been bought up in recent years, like Angie's Boomchickapop.
“The alternative is we end up sold to somebody, someday,” says Lissette, while calling in from his home office in Hanover, Pennsylvania. “This is really us owning our future—lighting the match on the next 100 years and the next billion dollars.”
Held almost entirely by the founding family up until this point, the Utz heirs are selling about 10% of their shares and merging with special-purpose acquisition company Collier Creek Holdings. The family, which is now worth an estimated $1 billion, will own 50% ownership of the merged entity's shares.
Lissette married into the family that has owned Utz for a century. His parents divorced when he was young. His mother moved him and his siblings, including his twin brother, to Venezuela for a year while her boyfriend studied killer bees. They later moved to Cape Cod, then he was a page for the late Senator Ted Kennedy in D.C. After spending senior year enrolled in a Jesuit boarding school in Mississippi, he and his twin enrolled at George Washington University.
That's where he met Stacie Rice, the great-granddaughter of William and Salie Utz who started making potato chips in their tiny Pennsylvania kitchen in 1921. A law student at George Washington, she spotted his brother working as a bartender at an off-campus dive. She asked him if he was single. He said no, but mentioned that his twin, also a bartender there, was. Stacie and Lissette got married in 1994, and a year later Lissette started running Utz's outlet store and mail-order operation, which had him working the cashier during holidays.
“When you grow up relatively poor, you're hungry and you're motivated,” Lissette says. “I never had my name on the door. It wasn't my blood. I had the benefit of being an outsider.”
One of the first things he asked his father-in-law Mike Rice was: Where are the computers? “I would plug my laptop in but have no one to email,” Lissette recalls, noting that within a few months, the entire office had laptops. “We've come a long way.”
Lissette worked through sales and marketing departments,and it soon became clear that despite Stacie and her brother Matt growing up in the family business, Lissette was the only one now interested in one day taking over. As he took on more leadership in 2009, he pushed for the company, then with $400 million in sales, to merge with Snyder's, at the time a$750 million pretzel company based in the same town as Utz near the Pennsylvania-Maryland border. “I was leading the charge on the integration,” he recalls.
It ended up getting investigated by the Federal Trade Commission, and left Lissette, about to become CEO, with the hard takeaway that his family's long-independent company would need scale at all costs to survive. He was undeterred and started going for smaller, more niche brands. Lissette acquired regional plants, like one in Massachusetts that was the last independent left in a once-thriving industry of more than a dozen local chip makers, as well as health-conscious brands that had high-growth prospects.
“We looked at the competition and thought that ultimately, having scale and relevance would pay dividends for us,” Lissette recalls. “This was before Campbell's bought Snyder's Lance brands or Hershey acquired SkinnyPop or ConAgra got into salty snacks with the purchase of Angie's Boomchickapop. We really were at the forefront of thinking that consolidating into a broader platform made a lot of strategic sense.”
One of the last independent snack brands left, Utz briefly caught the eye of warren buffett, an avid fan of the PotatoStix, who told Fortune in 2015 that he once considered making an acquisition offer, though it never materialized. Undeterred, Lissette continued on an acquisition spree, buying three companies for around $150 million each over the next four years,as strong returns from snacking divisions at Pepsi Co.'s Frito-Lay and Campbell Soup Company put a spotlight on the industry and ushered in a wave of dealmaking. Sales hit over $1 billion when Utz acquired some West Coast brands including Hawaiian Snacks and Erin's from ConAgra at the end of 2019.
Paying down much of Utz's $400 million in debt from all those acquisitions will give the company the ability to invest more in its 14 plants nationwide. Lissette says robotics and more automation are in the works, while the capital will also help Utz expand popular lines like its cheese balls.
When it comes to opportunities, Lisette points to Walmart as one place where he thinks it can grow. Right now it gets 10% of revenue from the giant retailer, but thinks it can increase that number. “Just doubling our business with them today would be another $120 million a year,” Lisette says. “At the end of the day, a Walmart buyer or a Kroger buyer wants to deal with suppliers that provide them the best results. Can you service all stores? You're not going to be on anyone's radar when they want to buy $1 billion worth of snacks.”
Lissette says he envisions Utz becoming similar to J.M. Smucker, a publicly traded company that's still partially owned by the third-generation CEO Mark Smucker and his family. Its market cap is now close to $13 billion, a more than five times increase since it went public in 1959 at $20 a share. Lissette, who has five children, hopes new capital will help Utz chip away at its competitors, and he predicts it can become second to $16 billion giant Frito-Lay within a few years.
“The family is taking very little out of the business with us going public,” says Lissette. “It's a family business, but the mentality has always been, take care of the business and the business will take care of the family.”
Source: forbes – Exclusive: Utz CEO Talks Family And The 99-Year-Old Company's Plan To Go Public On Monday