Faribault Foods, Inc.

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Faribault Foods, Inc.

Campbell Mithun Tower Suite 3380
Minneapolis, Minnesota 55402
U.S.A.
Telephone: (612) 333-6461
Fax: (612) 342-2908
Web site: http://www.faribaultfoods.com

Private Company
Incorporated: 1895
Employees: 510
Sales: $105.9 million (2005 est.)
NAIC: 311421 Fruit and Vegetable Canning; 311422 Specialty Canning; 311423 Dried and Dehydrated Food Manufacturing; 424490 Other Grocery and Related Product Merchant Wholesalers

MODEST GROWTH IN EARLY YEARS

EXPANSION LEADING TO YEAR-ROUND PRODUCTION

CONSUMER TASTES DIRECTING GROWTH

PRINCIPAL COMPETITORS

MODEST GROWTH IN EARLY YEARS

Founded by a group of local investors in 1888, Faribault Foods originated as Northwestern Canning Company, a specialty vegetable company processing small-kernel, juicy corn, and “petits pois” peas. The company expanded with the then-nascent canning industry and incorporated as Faribault Foods in 1895. Faribault Foods operated on a regional scale for many years, and it changed hands twice during the 1910s, first to the Douthit family in 1916, then the Vandever family in 1917. The company thrived and survived according to the vagaries of the early 20th century, such as the drought of 1933, which caused many canning companies to reduce production. During World War II, the company shifted production to serve the war effort, and related labor shortages required Faribault to employ German prisoners of war. Only after reorganizing its canning facilities for the postwar growth did Faribault begin to expand in scale.

During the 1950s, an association with Butter Kernel, a brand of canned sweet corn popular in the upper Midwest, led Faribault to acquire a 50 percent interest in the company. In 1953, Butter Kernel began to distribute its canned corn products nationwide through cooperative packaging and distribution agreements with canneries around the country. Faribault purchased the remaining 50 percent interest in Butter Kernel in 1972. While the acquisition expanded Faribault’s presence in the canned corn market, its primary customer base still resided in the Midwest. The 1969 acquisition of North-land Canning Company, one of two major canneries in Cokato, Minnesota, further solidified Faribault’s position in canned corn.

Northland Canning had a long history of canning in Minnesota. Its predecessor companies originated in 1904 and had combined with other canneries by the time the consolidated company emerged as Northland Canning in 1924. While Northland thrived over the years, problems during the late 1960s prompted the shareholders at Northland to sell. Migration from rural areas to the cities and resulting depopulation in such places as Cokato Township, reduced the available work-force, and the processing facilities needed to be updated to improve efficiency. Several companies sought to purchase Northland Canning, but Faribault offered cash, a total consideration of $262,000 for all 665 shares of the company.

Upon purchase of Northland, Faribault immediately upgraded the Cokato operations with new facilities and new equipment. The company constructed a new warehouse in 1970, and a new scale facility in 1975. In particular, Faribault Foods invested in automated processes that reduced the need for human labor. New processing equipment included five automated corn huskers, installed in 1973, and a continuous cooker and two boilers to provide cooking heat, installed in 1975. Faribault overhauled the canning operation for cream-style corn with the installation of all stainless steel equipment. Overall, corn packaging was reduced to a 40-minute process. Hence, by the late 1970s, efficiency at the Cokato operation had improved significantly. Faribault experienced a record in corn packing at Cokato in 1979. That year, after planting 1,947 acres of corn, Faribault canned approximately 510,000 cases. Also in 1979, the company initiated its first run of eight-ounce cans, in addition to the standard run of the “303,” a 16-ounce can.

EXPANSION LEADING TO YEAR-ROUND PRODUCTION

During the late 1970s, Faribault entered a period of significant growth through acquisitions that expanded the company’s product line, as well as its processing capacity. The purchase of the Durand Canning Company, of Mondovi, Minnesota, in 1977, added snap beans to Faribault’s product offering. Through the 1983 acquisition of Kuner Empson, a Stokely Van Camp subsidiary located in Colorado, Faribault obtained the Kuner brand of canned vegetables popular in the Rocky Mountain region. With the Kuner brand, Faribault entered the “dry bean” business, referring to plain canned beans, such as great northern beans, red beans, and kidney beans.

COMPANY PERSPECTIVES

The fundamental strategy of Faribault Foods is to win customers’ business with innovative products, superior quality and value, and to keep them coming back to us for more with responsive, personalized service. We want to offer you a wide assortment of great products to ship together. We want Faribault Foods to be your favorite supplier.

We are proud of Faribault Foods and of the century-long history behind our company. Our name and brands have always stood for quality, dependability and the highest ethical standards. These remain our core values. We look forward to the future with energy and excitement.

Beginning in 1980, the company expanded production capabilities in preparation for year-round production. Prior to that time, the company’s canning facilities operated only during the harvest season, canning peas in June and July and corn in August and September. By 1984, upgrades at the Faribault facility supported year-round production. That year, Faribault folded its Colorado operation, a seasonal processing facility, into the Faribault center for year-round production. The 1987 acquisition of Beaver Valley Canning from Stokely provided another source for the additional processing capacity, as Faribault consolidated production from the Grimes, Iowa, facility to Faribault, Minnesota, as well. Further expansion of corn processing, warehouse, packaging, and distribution capabilities followed in 1990. The snap bean canning facility at Mondovi was expanded in 1992. Through the acquisition of Pride of Illinois, from Pillsbury in 1988, Faribault attained the Mrs. Grimes brand of dry beans well known in the mid-South. In 1995, Faribault purchased the SeaSide brand from the California Bean Growers Association. A year later the company expanded its dry bean canning capacity to two lines at the Faribault facility.

The company upgraded the Cokato plant with a $750,000 renovation designed to improve efficiency and reduce staff requirements. In 1986, Faribault installed two new automatic corn huskers, replacing the five purchased in 1973. The company implemented computer control processes which reduced staffing requirements at the plant. The installation of ten automated cutting machines resulted in 19 job cuts. Packaging improvements reduced the problem of empty cans, so inspection staff was reduced from eight to one. Automated transfer of can stacks from the canning facility to the warehouse reduced staffing for that position from 34 to eight employees.

The addition of new product lines facilitated Faribault’s transition to year-round production at the Cokato site. In 1994, Faribault completed construction on a new, state-of-the-art food processing facility designed to accommodate meat processing and the production of pasta and soup products for private-label customers. Faribault’s soups and pasta products were designed to compete with popular national brands, such as Chef Boyardee and Franco American, on the basis of taste, texture, visual appeal, and nutritional content. Such products included spaghetti rings, spaghetti rings with meatballs, and beef ravioli. The new business prompted further expansion of warehouse facilities, as well as construction of a new warehouse at the Faribault complex, named Faribault Industrial Park.

CONSUMER TASTES DIRECTING GROWTH

Addressing changes in consumer tastes led Faribault to expand in the area of specialty foods. In 1999, Faribault initiated production of soup and specialty products, notably with an investment in ShariAnn’s Organics, a leading national brand of organic soups. Though the company sold its interest in ShariAnn’s to Acirca, Inc., in 2001, Acirca retained Faribault to handle production of the food line. Also, this entry into the ready-to-serve food market provided opportunities to design and process products for other companies, including the Wolfgang Puck brand for Country Gourmet, Inc. Faribault’s product development and research department worked closely with Country Gourmet to create new varieties of soup, such as chicken pot pie and potato cheddar. Faribault expanded its product development capabilities in order to serve other private-label brands; the company’s other premium soup products included chicken noodle, clam chowder, and vegetable beef.

New production capabilities added in 2001 facilitated Faribault’s growth in specialty foods. That year, the company began processing canned chicken; the company’s premium Breast of Chicken product used only broiled breast meat. Other new products included chili, refried beans, and stews. The 2001 acquisition of the Sun Vista brand of dry bean foods supplemented Faribault’s capacity to produce those products. To accommodate growth in specialty foods, the company added a fourth packaging line in 2002. In 2003 Faribault acquired the Chili Man brand label from Milnot Company, along with a chili production plant in Litchfield, Illinois. New pasta products for private-label customers included the Chuck E. Cheese brand offering several varieties of pizza-flavored ravioli as well as pasta in unusual shapes that appeal to children.

KEY DATES

1888:: Northwestern Canning Company is formed.
1895:: In conjunction with incorporation, the company takes the name Faribault Foods.
1953:: Butter Kernel brand begins national distribution.
1969:: Company acquires Northland Canning Company in Cokato.
1973:: Series of automation and other facility upgrades begin at Cokato plant.
1980:: Faribault begins major expansion and upgrade of facilities in Faribault.
1984:: Faribault begins year-round production.
1999:: Faribault introduces specialty products, including organic foods.
2002:: Consolidation of facilities and offices improves efficiency.
2005:: Acquisition of SoftPac division provides entry into fruit juice market.

Settling into its new areas of growth and expansion, Faribault sought to improve on plant efficiencies. The implementation of new enterprise software in 2002 facilitated the company’s goal to meet order requests in the quickest time. The company consolidated corn harvesting at the Cokato plant, putting an end to farming at the Faribault site. To accommodate the change, Faribault added a third production line at Cokato. The company then sold its Mondovi plant, where snap beans were processed, and relocated chili production from Litchfield to Cokato. The company closed its Grimes, Iowa, packaging and distribution warehouse, and consolidated those operations with an expanded facility at Faribault Industrial Park. Also, Faribault combined its Aurora, Colorado, sales offices with the company’s main office in Faribault, Minnesota.

In June 2005, Faribault entered a new product market through the acquisition of the Fruit Juice division of SoftPac Industries. Products included fruit drinks and 100 percent fruit juices packaged in foil stand-up pouches. Faribault proceeded to develop several new flavors, such as Strawberry Kiwi, Fruit Punch, and Lemonade. New products for the health-minded consumers included a sports drink, a ten-calorie beverage, and a juice with 50 percent less sugar.

Faribault continued to develop food products for consumers’ diverse tastes and began to develop new product packaging for consumer convenience. The company introduced Chili Man, Pasta Select, and other contracted private-label foods in convenient, microwavable bowls. Faribault also introduced meal kits that included prepared ingredients for a meal to be combined by the consumer; flavors included chicken and dumplings, chicken and biscuits, and Italian pasta. New canned products available for private-label customers included corned beef hash, beef stew, and five styles of chili. Faribault introduced several organic bean products, including baked beans with onion and maple and four varieties of refried beans, such as with green chili and lime. Also, Faribault expanded its canned vegetable operations with the purchase of S&W Fine Foods from Del Monte Foods, Inc., in July 2006. The acquisition provided the company with another strong regional brand and included license rights to produce and market the S&W value-added dry bean product line.

Mary Tradii