Curtice-Burns Foods, Inc.

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Curtice-Burns Foods, Inc.

90 Linden Place
P.O. Box 681
Rochester, New York 14603-0681
U.S.A.
(716) 383-1850
Fax: (716) 383-1281

Public Company
Incorporated: 1961
Employees: 7,400
Sales: $896.9 million
Stock Exchanges: American Midwest
SICs: 2033 Canned Fruits & Vegetables; 2099 Food Preparations Nec; 2011 Meat Packing Plants; 2037 Frozen Fruits & Vegetables; 2096 Snack Foods

Curtice-Burns Foods Inc. is a fruit, vegetable, and food processor, that grows, packages, ships, and markets a range of food products internationally. The company’s range of products include canned and frozen fruits and vegetables, desserts, oat-based cereals, condiments, snack foods, microwaveable main dish meals, and breaded specialty vegetables.

The fruit and vegetable processor got started through the work of the Curtice brothers and the Burns-Alton Corp. late in the nineteenth century. First, in 1868, brothers Simeon and Edgar Curtice founded a small grocery store in Rochester, New York. Soon thereafter, they formed a canning business called Curtice Brothers to save surplus vegetables and fruits they could not sell in the store. Working first from a Water Street plant, the business expanded to Curtice Street, and before long additional plants were built in Vernon, New York, and Woodstown, New Jersey.

At this time, the commercial tinning and canning industry was still developing. Technology for mass market preserving was rudimentary, and the use of chemical preservatives brought occasional digestive side effects. Nevertheless the Curtice Brothers business grew; the company, along with other food processors, discovered that products tastefully packaged could find strategic markets.

In 1920, both Curtice brothers having died, control of the company was handed over to the Security Trust Company, which shortly thereafter sold its stake to Douglas C. Townson.

The Burns half of Curtice Burns began as the Burns-Alton Corp. in Alton, New York. In 1900, founder C. F. Burns began packing dried and fresh apples and dried beans. His son Ed joined the family business in 1925, and the company’s name was changed to C. F. Burns and Son, Inc.

Much of the company’s food products at this time were shipped to Europe, a market that slowly shrank during the 1920s. In 1927, the Burns’s plant was re-equipped to process applesauce. One year later, 50,500 cases, mostly applesauce, had been processed at the plant.

The merger of the Curtice Brothers and C. F. Burns & Son operations occurred in the early 1960s. Both companies were active in the fruit and vegetable growing regions in central and western New York state. They and other food processors were adjusting to the end of lucrative government contracts for canned food during the World War II years. With sales down, companies found fixed and overhead costs rising.

A shakeout of the regional industry was inevitable, with resulting mergers among rivals. One consolidation involved talks beginning in 1958 between Curtice Brothers, Burns-Alton Corp., and Haxton Foods Inc. of Oakfield, New York. All the owners of these companies were getting along in years and wanted out of the business, so their main incentive was to find a buyer for their companies. An additional incentive was locating capital to fund the purchase of new labor-saving equipment and obtaining an increased market share in the expanding frozen food business. The drawback was continuing pricecutting in the marketplace, which further dented already slender profit lines achieved by each company.

The merger talks did not progress well. A large agricultural cooperative, Cooperative Grange League Federation Inc. (GLF) of Ithaca, New York, was recruited in early 1959 to seek ways to establish a joint venture of farmers and processors involving the three companies. That year, the death of George W. Haxton led to the withdrawal of Haxton Foods from the joint venture talks. This left GLF consultants to establish the processing venture with Curtice Brothers and Burns-Alton.

Further study concluded that the best solution would be to merge Curtice Brothers and Burns-Alton into a new operating company with a contractual arrangement for marketing cooperation, owned and operated by farmers. So, in October of 1960, Pro-Fac Cooperative Inc. opened for business. By March 31, 1961, more than 500 central and western New York state fruit and vegetable farmers had bought common stock in Pro-Fac. They pledged to deliver a predetermined tonnage of raw produce to the cooperative over the next three years.

This meant that Curtice Burns Inc. would be incorporated to process and sell products grown and delivered by Pro-Fac Cooperative to supermarket chains. Achieving this vertical integration called for Pro-Fac to acquire the plants and equipment of the former Curtice Brothers and Burns-Alton operations for approximately $3 million. The new, merged company achieved sales of $13 million in 1962, its first fiscal year.

In June of 1962, Haxton Foods was ultimately bought by Pro-Fac and Curtice Burns for $1.5 million. Haxton Foods brought to the deal such branded products as its Blue Boy food line as well as operating plants in Oakfield, Waterville, LeRoy, Barker, and Wyoming.

Beginning in 1962, Curtice Burns, under the leadership of President Stanley Macklem, set about becoming a regionally focused company. The idea was to operate a series of small, locally based businesses on a cost-effective basis, enabling Curtice Burns to become a national force serving regional markets in ways that large, national competitors could not.

The company came by this grand strategy the hard way. Beginning as a processor and marketer of Pro-Fac products, Curtice Burns served the private label business, marketing canned string beans, beets, corn, and applesauce to such supermarket chains as Shop Rite Foods Inc. or Grand Union stores. Serving private label chains was profitable when national brands were in short supply. But in periods of oversupply, Curtice Burns suffered. In 1962, for example, the company’s second year of business, prices for private label food products plummeted, and the company lost money. Worse, Pro-Fac growers received 15 percent below the average market price for their raw product.

Curtice Burns sought to establish a regional edge to stabilize its earnings. A mere ten percent fluctuation in the national supply of a product group could greatly alter a company’s profit and loss statement. The unpredictability of supplies is often driven by crop yields, themselves subject to weather and annual planting patterns. A plan to diversify regionally allowed Curtice Burns to give Pro-Fac members more than full market value for their raw product in all but two years between 1962 and 1980.

Curtice Burns began offering frozen vegetable products with regional appeal, marketing, for example, southern style frozen vegetables in the southern United States. The company could also provide quick delivery of products.

In 1963 Morton Adams, who had been executive vice-president of Burns-Alton when it merged with Curtice Brothers in 1961, became president of Curtice Burns. Two years later in September of 1965, Curtice Burns purchased the canned sauerkraut maker Empire State Pickling Company, based in Phelps, New York, adding the well-known Silver Floss label. The company also added Finger Lakes Packaging to its operations portfolio. Pro-Fac built two can-making plants in Alton and LeRoy, New York that year and leased them to Continental Can Co.

In February of 1967 Curtice Burns expanded outside New York state when it purchased the P. J. Ritter Company, headquartered in Bridgeton, New Jersey. Along with Indiana-based subsidiary Brooks Foods, P. J. Ritter made branded tomato ketchup and specialty bean products under the Brooks label. P. J. Ritter/ Brooks products were sold in one-third of the U.S. market. Acquiring them allowed Curtice-Burns to further diversify regionally in the United States and decrease its weather and national oversupply risks by adding branded commodity products and growing areas to its portfolio.

Curtice Burns’s next big acquisition came in June of 1972 with the purchase of Pennsylvania based Snyder’s Potato Chips. Snyder’s packaged its chip products in foil bags aimed at the convenience food market. The company also sold other potato chip, corn chip, and snack products.

A year later, Curtice Burns issued 220,000 shares of common stock with a value of $10.50 each. The shares were to be listed on NASDAQ, a stock exchange for emerging publicly listed companies. The proceeds of the 1973 issue helped in that year’s purchase of Michigan Fruit Canners, headquartered in Benton Harbor, Michigan. The acquired company’s products, marketed mainly under the Thank You brand label, brought Curtice Burns into markets ranging from Denver to Pittsburgh and Atlanta.

In July of 1975, Curtice Burns moved out west by purchasing Nalley’s Fine Foods, based in Tacoma, Washington. Bought from the W.R. Grace & Co., Nalley’s had four main product groups: canned meats, pickles, salad dressings, and snack foods. Nalley’s brand products were sold mostly in the western United States market.

In December of 1975 Curtice Burns made a second public offering of 413,294 shares, valued at $11.50 each. Early in the following year, the company’s stock gained a listing on the American Stock Exchange.

More companies were brought under the Curtice Burns umbrella in the ensuing years. In 1976 the company acquired Nalley’s Canada Ltd., based in Vancouver, British Columbia. In May of 1977 Curtice Burns acquired Comstock Foods, headquartered in Newark, New Jersey, from Borden. A year later, the Canadian arm of Curtice Burns purchased Bonus Foods for $428,000.

Curtice Burns had by now installed Hugh Cummings as president of the company. He oversaw the June 1979 acquisition of National Brands Beverage Division, which was bought from Canada Dry Bottling Co. of Syracuse, New York, for approximately $1.7 million. For the first time, Curtice Burns had entered into the branded soft drinks market, initially in New York state.

Earnings at Curtice Burns were dented by the early 1980s slowdown in the U.S. market, causing squeezed profit margins. Company sales in 1980 totalled $357.6 million, compared to $303.7 million posted a year earlier. Net income fell in that period from $5.13 million in 1979 to $4.6 million in 1980.

At the same time, Curtice Burns recognized that a slumping market is a good time to buy struggling rivals. In January of 1980, the National Oats Co. Inc., headquartered in Cedar Rapids, Iowa, was picked up from the Liggett Group. National Oats produced milled oat food products and corn for popping.

Curtice Burns’s U.S. expansion was furthered a year later when Lucca Packing Company, a California-based canned and frozen Italian and Mexican food maker, was purchased. Soon thereafter, it bought the southern division of Seabrook Foods Company. Henceforth to be named the Southern Frozen Foods division of Curtice Burns, the newly acquired company sold primarily McKenzie’s brand southern style frozen vegetables in 11 southeastern states.

In February of 1984 Curtice Burns purchased the 7-Up Bottling Company of Binghamton Inc. from a private concern for $1.15 million. Two years later, the company added fruit fillings, frozen fruits, and maraschino cherries to its line when it bought for $41 million the assets of Wilderness Foods, Naturally Good Foods, and Cerise Foods Divisions of Cherry Central Cooperative Inc. The acquired company served markets in the western United States from its Sodus, Michigan, headquarters.

The acquisitions were meant to serve the company’s long-term growth. As company president David McDonald expressed in 1988, “Our principal focus in any year is not on short term earnings, but on the structuring of Curtice Burns in a manner that will, over the long term, maintain a rate of growth that is at the top of the industry.”

Curtice Burns’s marketing strategy included achieving dominant positions in niche food categories; for example, two meat snack companies were purchased, the Smoke Craft Division of International Multifoods, in December, 1986, and, in December, 1988, Lowrey’s Meat Specialties, Inc., based in Denver. Lowrey’s was the leading maker of meat snack products, including beef jerky, for which Curtice Burns became the largest supplier in the U.S. market. The two companies later merged to form the Curtice Burns Meat Snacks division. Other important acquisitions in this period were Adams, a producer of natural branded peanut butter, and Farman Brothers Pickle Co.

Another niche market was Mexican frozen food products, part of the larger frozen dinner market then becoming popular in the United States. In January of 1989 the company acquired from Pillsbury the Van de Kamp Mexican Frozen Dinner line. Sales of frozen Mexican food were then increasing 16 percent annually in the U.S. market. Eighty percent of sales were made in the growing San Francisco and Los Angeles markets.

The company was also making cuts wherever possible to remain a low-cost producer. Due to a variety of factors, mainly competitive, Curtice Burns got out of the branded soft drinks market in 1988 when it sold its National Brands Beverage business to eleven separate bottlers. Only private labels were retained in a series of deals that netted the company $6.6 million in profit.

Perhaps more importantly, the company was focusing on growing low per capita food categories in its regional brand marketing. For example, in 1988, sales of canned vegetables nationwide reached around $63 million, and canned desserts attained $105 million in sales. Although small in size, Curtice Burns believed no food processing giant could make inroads in such markets by advertising on television at great cost. This meant the battleground for products like sauerkraut and fruit toppings shifted from the living room to the grocery store shelf, where Curtice Burns’s cost effective operations could successfully outplay bigger companies in the market.

The company’s two-year acquisitions spree that began in 1986 led to a sales increase that in 1989 reached $807.2 million. Reflecting this growth, stock in Curtice Burns soared 34 percent in value to $32. By now, the Pro-Fac Cooperative numbered 774 members; Curtice Burns itself had more than 7000 full and seasonal employees on its payroll.

Adverse weather conditions and high raw product costs contributed to earnings falling 22 percent to $11.6 million in 1990. The early effects of the recession in North American markets was being felt. That year, the company was decentralized into ten major operating divisions: Southern Frozen Foods, headquartered in Montezuma, Georgia; Comstock Michigan Fruit, based in Rochester, New York; Finger Lakes Packaging, operating out of Lyons, New York; Snack Foods Group, headquartered in Rochester; Curtice Burns Meat Snacks of Denver; Nalley’s Fine Foods, based in Tacoma, Washington; Nalley’s Canada Ltd. in Vancouver, British Columbia; Brooks Foods, headquartered in Mount Summit, Indiana; Lucca Packing of San Francisco, California; and National Oats Company, based in Cedar Rapids, Iowa.

Curtice Burns’s acquisitions continued apace at this time. David McDonald, the company’s president and chief executive officer during that period, announced in July of 1992, according to Refrigerated & Frozen Foods: “If we could find an acquisition that would get us into another part of the country on an economic basis, we would make that acquisition. We’d buy any size company. We’ve bought them as small as a couple of million or as big as $100 million. It depends on the company.”

McDonald’s boldness came at a time when the recession was further affecting the company’s balance sheet. 1991 sales remained stagnant at $933 million, compared to $926.8 million a year earlier. Profits were down from $7.4 million in 1990 to $3.6 million in 1991. The earnings decline was most marked in oat cereal sales. Following an oat bran craze that required increased plant capacity, demand nationally for oat products decreased, and the company had to adjust its National Oats division to market erosion and reduced profit margins. Two other major factors in the earnings decline were oversupply in vegetables and high material costs for meat snacks.

The early 1990s recession also meant widespread price cutting in the snack food industry and record low earnings by North American food retailers that the company served with private label products. Still, through 1992, Curtice Burns achieved a 68 percent jump in earnings to $6.14 million. Cost efficiencies were made possible that year with the opening of the company’s first national sales office in Memphis, Tennessee, to aid in customer sales and servicing.

Curtice Burns’s earnings recovery continued into fiscal year 1993. First-quarter income jumped from $1.1 million a year earlier to $1.33 million. Looking to the future, Curtice Burns hoped to profit from its continuing focus on core businesses in regional markets, where a cost effective dominance of that product category could be maintained. When the product commodity cycles—worsened by the recession of the early 1990s—return to stability with the recovery, the company’s earnings would likely show similar improvement.

Principal Subsidiaries

Southern Frozen Foods; Comstock Michigan Fruit; Finger Lakes Packaging; Snack Foods Group; Curtice Burns Meat Snacks; Nalley’s Fine Foods; Nalley’s Canada Ltd; Brooks Foods; National Oats Company.