Lincoln Snacks Company
Lincoln Snacks Company
4 High Ridge Park
Stamford, Connecticut 06905
Fax: (203) 329-4555
Web site: http://www.lincolnsnacks.com
Public Subsidiary of Noel Group, Inc.
Incorporated: 1968 as Lincoln Snack Co.
Sales: $23.1 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: SNAX
SICs: 2060 Sugar & Confectionery Products
Lincoln Snacks Company is one of the leading manufacturers and marketers of caramelized pre-popped popcorn in the United States and Canada. The company is a majority-owned subsidiary of Noel Group, Inc. Lincoln’s major products include glazed popcorn/nut mixes and sweet glazed popcorn sold under the brand names Poppycock, Fiddle Faddle, and Screaming Yellow Zonkers. Lincoln also processes, markets, and distributes a variety of nuts. The company sells its products to grocery stores, convenience stores, mass merchandise outlets, warehouse clubs, vending channels, military commissaries, and other retailers. Sales are subject to significant seasonal variation, due to buying patterns during traditional holiday seasons. Foreign operations account for less than ten percent of Lincoln’s sales. The company plant in Lincoln, Nebraska, makes and packages all Lincoln products.
From Switzerland to Nebraska: 1968-91
Before the Internet, there were roasted peanuts and popcorn. In 1885 Charles Cretor of Chicago developed a gasoline-powered wet corn popping machine, which also had a small peanut roaster. And in 1906 Amedo Obici—an Italian immigrant who, with Mario Piruzzi, cofounded Planters Peanuts—developed a process for commercially roasting shelled peanuts in oil. The snack food industry was on its way. Then came the Information Age and the launch of the official online snack authority: lin-colnsnax.com, the web site of Lincoln Snacks Company, advertising its products as’The Official Snack Food of the Internet.”
The roots of Lincoln Snacks Company are with a Swiss firm, the Wander Co., founded in Berne in 1865. According to Jeffrey S. Barnes in the Midlands Business Journal (MBJ), Wander was best known in the United States for the Ovaltine products manufactured at its Villa Park plant in Illinois and for the Poppycock snack it began producing in 1960. In 1968, another Switzerland-based company, Sandoz Nutrition Corp., bought Wander and moved the Villa Park offices to Lincoln, Nebraska, to create the Lincoln Snack Co. as an operating division. It was there that, by 1986, Lincoln Snack was producing an annual 14 million pounds of Poppycock, Fiddle Faddle, and Screaming Yellow Zonkers, wrote Barnes.
Donovan A. Weddle, former plant manager of the Sandoz division in Nebraska, told MBJ that “Americans are becoming ‘grazers.’ They don’t always have three meals a day anymore; they tend to snack more.” Weddle’s successor, Frank Hudecek, added that “two-income households have done more than anything to fuel the growth [of snacking]. The kids are more active, too, with football, choir and other activities outside the home.... It’s just too hard for the entire family to sit down together.” This growth of snacking also was fueled by the advent of wholesale clubs and discount stores. In 1986, for instance, sales to non-grocery customers (which included companies such as Sam’s Wholesale Club, Kmart, and Wal-Mart) accounted for about half of Lincoln Snacks’client base.
While Poppycock was the firm’s gourmet product, Fiddle Faddle with peanuts was the top seller; the company sometimes turned out 10,000 to 12,000 cases a day. The most unusual product, as far as name and marketing were concerned, was the Screaming Yellow Zonkers brand, developed in the late 1960s. “We only knew of it as‘S-Y-Z’here at the plant,” Weddle commented in an MBJ interview. “We had the formula, but not the name. Screaming Yellow Zonkers was put in an almost totally black box; I think [this was] the first food product ever in a black box. It had very funny copy, even for the ingredients, written by people who had been writing for Rowan and Martin’s Laugh-In,” said Weddle. The product generated considerable publicity, even to the point of having department stores decorate clothing sections with the name.
To make its products, Lincoln Snack shipped in tons of peanuts, pecans, walnuts, cashews, macadamia nuts, and coconut from California, the southeastern United States, Hawaii, South America, Africa, and India. The company bought corn syrup from Iowa and Illinois, sugar from Minnesota and western Nebraska, and popping corn from nearby producers in Iowa and Nebraska. Crop conditions throughout the world were a constant concern for the company. For instance, a peanut shortage in the late 1970s necessitated new sources for the product and caused the government to relax restrictions on importing peanuts.
Recycling was a major project at the plant. The damaged ends of Poppycock cans, cardboard, and computer paper all were recycled to keep waste from the dumpster. Unpopped kernels of corn were sold to a local farmer as feed. Lincoln Snack held an enviable position in the highly competitive glazed-popcorn industry. “Orville Redenbacher tried to enter it a few years ago and failed, even with a big name like his. Once you get on the shelves in the stores, you have to continue the movement or you’ll lose the space. In the non-foods businesses, it’s a matter of recognition—people perceive your product as a bargain and buy it on that basis,” quipped Weddle.
New Parentage in the Mid-1990s
In February 1992 Sandoz announced its intention to sell the Lincoln Snack division. According to Lincoln Snacks’1994 annual report, the decision to sell the business occasioned a decline in marketing promotion during 1992. In fact, net sales declined to $24.5 million in 1992 from $33.7 million in 1991. However, because Lincoln Snacks’operations were considered product lines within a division, Sandoz did not maintain complete independent financial data for Lincoln Snack. Consequently, limited data are available for periods prior to Lincoln Snacks’becoming the subsidiary of a new parent, New York-based Noel Group, Inc.
It was on August 31, 1992, that Noel Group, Inc. and a management team of former executives of Nestle Foods Corporation acquired Lincoln Snack Company from Sandoz Nutrition Corporation. Noel changed the name of the Lincoln Snack Company to Lincoln Foods Inc. and located the sales, marketing, and administration headquarters in Stamford, Connecticut. The decline in promotional activity, coupled with the complete turnover of the marketing and sales management of the business, contributed to a decline in net sales during 1992. In a May 19, 1993 interview with the Lincoln Star Journal, Scott Kirk—Lincoln Foods’vice-president and general manager—said that the company would come up with new marketing approaches and reach out “for worldwide sales by pushing Poppycock because there is nothing like it in Europe, the Middle East and other markets.” He also commented that the manufacturing plant did not always operate at full capacity and that, in order to keep the plant busy all the time, efforts would be made to sell Lincoln products year round. However, according to the 1994 annual report, throughout the first nine months of 1993, net sales continued to be negatively impacted by issues associated with Sandoz’s sale of the company.
On March 15, 1993, Lincoln Foods acquired Carousel Nut Products, Inc., an Owensboro, Kentucky-based producer and marketer of roasted, dry roasted, coated, raw, and mixed nuts. For the fiscal year ending December 31, 1993, Lincoln’s net sales—excluding those of Carousel—totalled $22.6 million, $1.9 million less than 1992 sales of $24.5 million.
By the first quarter of 1994 Carousel and its operations were integrated into those of Lincoln Snacks’manufacturing facility in Lincoln, Nebraska. On January 14, 1994, Lincoln Snacks Company began trading on the NASDAQ stock exchange under the symbol “SNAX.” On April 19, 1994, Lincoln Snacks changed its fiscal year-end to June 30.
Initially, Lincoln Snacks marketed its Poppycock and nut products directly through independent brokers. In the United States, sales of Poppycock and nut products were in the hands of four regional business managers working with some 80 brokers located strategically across the country. Lincoln Snacks’personnel saw to orders from large-volume customers and certain exports. In June 1995 Lincoln Snacks agreed to having the Planters Company—a unit of Nabisco, Inc.—be the exclusive distributor of two Lincoln Snacks products: Fiddle Faddle and Screaming Yellow Zonkers. The distribution agreement was limited to an initial term scheduled to expire June 30, 1997, unless renewed for additional one-year periods. By this agreement, Planters was compelled to purchase a minimum number of equivalent cases of Fiddle Faddle and Screaming Yellow Zonkers during the initial term.
Lincoln Snacks Company has positioned itself in the fastest-growing segments of the pre-popped popcorn category. The company’s strategy for future growth involves continuing to strengthen its existing brand franchise through the addition of new products and through further penetration of existing markets.
On May 9, 1997, Lincoln Snacks and Planters amended the distribution agreement in order to extend Planters’exclusive distribution rights for an additional six months, that is, to December 31, 1997, at which time the distribution arrangement was terminated. As of May 1, 1997, Lincoln Snacks resumed the marketing and distribution of Screaming Yellow Zonkers. However, the amendment required Planters to purchase a specified number of manufactured cases of Fiddle Faddle and to compensate Lincoln for the remaining contract minimums for the 12-month period ending June 30, 1997. Planters purchased 79 percent of the original contract minimum and compensated Lincoln Snacks for the remaining 21 percent. Planters also had to compensate Lincoln Snacks should certain sales levels not be achieved during the calendar year ending December 31, 1997; Planters met this requirement. Sales to Planters represented 47 percent of net sales for the year ending June 30, 1997. On July 11, 1997, Lincoln Snacks entered into a trademark license agreement with Nabisco, Inc. for use of the Planters and Mr. Peanut trademarks on Fiddle Faddle products in the United States for a period of five years, beginning January 1, 1998. A similar agreement was reached with Nabisco Ltd., the holder of the license to distribute Planters’peanut products in Canada, for use of Planters’trademarks on Fiddle Faddle in Canada. Johnvince Foods of Toronto was the distributor of Planters Fiddle Faddle in Canada.
As of June 30, 1997, Lincoln Snacks had 73 full-time employees and no part-time employees. The number of employees varied according to weekly and seasonal production needs, with an average of about 85.
The company’s manufacturing facility continued to be located in Lincoln, Nebraska. Here were installed continuous-process equipment for coating popcorn and nuts and four distinct high-speed filling and packing lines for canisters, jars, single-serving packs, and bag-in-box packages. The manufacturing and packaging equipment also allowed for the manufacture of other similar product lines or packaging formats. Depending on the season, the plant operated at an overall rate of from about 40 percent to 75 percent of capacity. The raw materials used for Lincoln Snacks’products were commodity items purchased directly from various suppliers. These items included corn syrup, butter, margarine, brown and granulated sugar, popcorn, nuts, and oils.
Lincoln continued to manufacture and market its three nationally recognized products: Poppycock, Fiddle Faddle, and Screaming Yellow Zonkers. Poppycock was a gourmet treat crackling with “crunchy, toasted nuts in a delicious syrupy glaze” available in three varieties: Butter Almond Pecan Crunch; Maple Walnut Cashew Crunch, and Macadamia Coconut Butter Crunch. The more moderately priced Caramel Fiddle Faddle consisted of popcorn and peanuts coated with caramel, while the butter-toffee variety contained popcorn and peanuts covered with a butter-toffee glaze. Fat Free Fiddle Faddle was made of popcorn in a caramel coating having no fat or cholesterol. Screaming Yellow Zonkers was billed as “the crunchy popcorn you crave, brilliantly lit by a sunny, sweet glaze.” Lincoln also processed, marketed, and distributed some ten different kinds of nuts. Poppycock competed with other premium-quality snack products; Fiddle Faddle and Screaming Yellow Zonkers competed directly with other brands, such as American Home Products Corp.’s Crunch‘n Munch, and Borden, Inc.’s Cracker Jack.
Toward the 21st Century
The marketing and distribution agreement with Planters Company ended December 31, 1997; Planters gave Lincoln Snacks a one-time payment amounting to $0.22 per share in compensation for lower than agreed-upon case sales of products for which Planters acted as exclusive distributor. As of January 1, 1998, Lincoln Snacks resumed full responsibility for the marketing and distribution of its entire product line. For the first nine months of Lincoln’s 1998 fiscal year, sales decreased five percent to $17.5 million compared to $18.4 million for the same period of 1996. During the third quarter, however, Lincoln sales increased seven percent to $4.6 million, compared to $4.3 million in the third quarter of fiscal 1997. Earnings for the nine months were $2.4 million, or $0.38 per share, versus $0.19 per share in fiscal 1997. The increase in sales was attributable to Lincoln’s new copack (packing products manufactured by another company) and private-label business.
As the 21st century drew near, Noel Group, Inc. (Lincoln’s parent company) continued to implement the one-to-two-year “plan of complete liquidation and dissolution” that the Noel board of directors had approved in 1997. Noel conducted its principal operations through small and medium-sized companies; it had acquired controlling or major interests in eight companies since 1990. The plan called for distribution of Noel’s net assets to shareholders in the form of stock of Noel’s holdings or of cash.
Nevertheless, Lincoln Snacks had reason to believe in its future strength and stability. The company committed itself to a three-pronged plan for thriving in the new century: namely, to rebuild sales momentum for core products, capitalize on initial success in the copacking and private-label business, and grow continuously by acquiring other companies.
Barnes, Jeffrey S., “Lincoln Snack Co.,” Midlands Business Journal, December 5, 1986, pp. 1, 14.
_____, “Lincoln Snack Feeds Appetite of Grazers, Wholesalers,” Midlands Business Journal, February 2-8, 1990, pp. 1, 10.
Barrette, John, “High Hopes Are Poppycock: Sale Brings New Marketing Approach for Ex-Lincoln Snack Co.,” Lincoln (Nebraska) Journal, May 19, 1993, p. 26.
Dwight, Donald R., “Noel Group, Inc. Announces [Another Liquidating Distribution],” press release, Noel Group, Inc., April 15, 1998, p. 1.
“Lincoln Foods Acquires Assets of Kentucky Nut Products Plant,” Lincoln (Nebraska) Star, March 12, 1993, p. 16.
“Lincoln to Tout Planters, Mr. Peanut on Fiddle Faddle,” Brandweek, August 4, 1997, p. 12.
Switzer, Gerry, “Lincoln Snack Co. Acquired by New York’s Noel Group,” Lincoln (Nebraska) Star, September 1, 1992, p. 8.
—Gloria A. Lemieux