Bringing Culinary to CPG
Photography by Vito Palmisano
This year, Pinnacle Foods CEO Robert J. (Bob) Gamgort and his carefully assembled management team have seen their plans and dreams for the company come to fruition with an initial public offering of stock at the end of March and the $575 million acquisition of Wish-Bone on Oct. 1.
Many of the Parsippany, N.J.-based food company's brands can trace their roots back to the 1800s, and enjoy a long and cherished history with the American consumer. Today, Pinnacle has pinpointed its mission as "Reinvigorating Iconic Brands." Toward that end, it has named its two divisions after its two leading brands: Duncan Hines and Birds Eye.
"These brands are great examples of the culture and the entrepreneurial spirit that we want to have," Gamgort told Retail Leader during an exclusive interview. Interestingly enough, both the Duncan Hines and Birds Eye brands were named after real people.
Clarence Birdseye is credited with not only pioneering frozen food technology, but also collaborating with retailers to help bring frozen cases into their stores. Duncan Hines, whom Gamgort jokingly refers to as "the original Zagat," traveled the country writing about food until Procter & Gamble approached him about lending his name to a line of baked goods that would bring his culinary sensibilities to the mass consumer.
The $1.3 billion Birds Eye acquisition, which took place in 2009, was a transformational event for Pinnacle, says Gamgort. It was then that the corporate culture of today's Pinnacle Foods began to take shape.
"It nearly doubled the size of the company, and it made us a top five player in frozen foods. Right after we completed that transaction, we brought everybody together for a couple of days to talk about what we wanted this company to be," says Gamgort.
The first slide Gamgort showed the group contained the logos of every food company and CPG company that everyone in the room had worked for. He told them: "We all came here for a reason. We've all worked for our peer companies and our competitors. We have an average 25 years of experience. This is our shot to now create something. What do we want to keep, and what do we want to leave behind?
"We mapped that all out. Everything you see from the company today, from the strategy to the way the office is designed, came right from that thought process."
What emerged from that meeting, and those that followed, was the outline of a company in which all offices are the same size–and purposely smaller than average, so members of the team gravitate toward public areas more. As you enter the building and pass reception, a naturally lit atrium with a warm fireplace greets you. These strategically positioned public spaces encourage interaction among employees in an organic way.
Another key tenet that came from the initial meetings: Pinnacle is a food company. "When the team and I got here, there were no chefs. One of the things we said was, we're a food company, we have to serve our products, we have to know our food, we have to know our competitors' food," says Gamgort. "Now, we have the culinary kitchens.
"My office just happens to be right at the entrance to the culinary kitchens, and if you stick your head in there, you never know what you're going to find. It could be our products; it could be our competitors' products. Sometimes the chefs have new concepts–someone went to a restaurant and tried something, and they're trying to duplicate it in here."
Another key decision was to move R&D from southern New Jersey and Green Bay, Wis., to the Parsippany headquarters building. From his days at Mars, Gamgort had learned that it was key for the business and R&D teams to keep their eye on the same goal, and that physical location could facilitate collaboration between the two.
So when R&D moved to Parsippany, they weren't warehoused in test kitchens in the back of the building. Instead, the teams are behind glass and are located down a main hallway in the building, so you can't help but peek in and see what they are up to.
"We made a huge investment to co-locate R&D with marketing and our sales teams," says Gamgort. "We look at that as our 'demand' team. They really drive these brands. You can do video conferencing, you can do lots of things, but there's nothing like having people here all of the time."
ON A MISSION
After making these important investments, Gamgort knew that his next task was to solidify the sales side. A large part of that effort came in the hiring of Christopher Boever, executive vice president and chief customer officer, to lead the Pinnacle sales organization.
Once the two put their heads together, it became clear that speed to market would be their formidable point of difference. "We run as a very lean organization. Our overheads are the lowest in the industry. That allows us to add more value to our brands," explains Gamgort.
"It also allows us to be more responsive, quicker and a lot more nimble," says Boever. "We have a broad portfolio that gives us some scale, and it gives us the opportunity to bundle a lot of our activities with our customers. We can drive efficiencies from the supply chain all the way to the in-store execution to what we offer to consumers through the retail offerings that each particular retailer may have from a differentiation standpoint. This gives us a lot of options and opportunities to bring a complete solution across categories, helps us drive adjacencies and recommendations of flows."
Once the goal of being faster and more responsive than its competitors was identified, the Pinnacle management team set out to explore what this meant specifically and for every rung of the ladder.
"We said we have to move faster than everyone else. Our competitive advantage has to be speed and nimbleness. So how did we capture that?" Gamgort posits. "We brought our senior leaders together to talk about not only the strategy of the business, the competitive environment, the macro-economy, but we also talked a lot about how we want to behave as leaders to drive this organization. And for us it came down to three words: trust, candor and ownership."
The team then took that mantra on the road, from field sales to the plant floor, and used the feedback they got to hone the meaning, and the supporting statements, behind them.
Gamgort and his team have made it clear that listening to people within the organization, at every level and function, is critical to not only its foundation but also its future success. Not surprisingly, listening to the consumer is just as high on Pinnacle's list of priorities.
Through a series of innovation "boot camp" type programs, Pinnacle puts together cross-functional teams that are embedded with consumers and have a task to complete. Tasks can be as broad as: we're underrepresented in a specific channel, come back with ideas to increase our presence; to, solve this specific consumer need on a brand.
"You've got to get people out of the office, working together, and it's not just marketing, sales and R&D teams," explains Gamgort. "We have finance, operations, engineering working in groups together in an intense period of time, about a week, on a specific assignment out of the office.
"In this latest one, they started in the store with consumers, shopping with them, watching what they bought, going through the whole shopping process. Then they went into their homes, watched them unpack and prepare dinner. Then sat with them while they were serving dinner."
At the end of the week, each team is asked to present their idea and a rough P&L statement associated with the project. Most recently, the concept for Farmer's Garden by Vlasic–artisan-quality shelf-stable pickles on-trend with the farmer's market/local foods movement–was born out of this insights and innovation process.
This type of exercise is critical for new product development and innovation, says Gamgort: "You can't get meaningful consumer insights sitting behind your desk staring at the computer screen."
Boever agrees: "Everything starts with insights here. It starts from the consumer side as in product development, but we also have insight groups around the shopper and how they behave. What's important is we take those insights, and we turn them into something we can execute and bring to market, whether it be a product or a new way to merchandise or strategically price a product or the overall assortment that is being offered."
Having accomplished so much in a short period of time poses the question, what's next for Pinnacle Foods? Where do the opportunities lie for the company that holds its culture dear and keeps a firm eye on growth?
"We have platforms of growth through all channels, but we have to be selective," explains Boever. "Within the supermarkets, we're seeing growth regionally as well as with the national chains. We're seeing growth with specific channel customers, whether they are in the value segment or in the club segment. On the mass side of the equation, we're experiencing significant growth with the mass merchants."
Gamgort agrees, noting that while gaining share is good for Pinnacle and for its investors, the team also remains focused on driving category growth and innovation so that its customers, the retailers, also win.
"I think we've done a good job of not only bringing ideas that allow us as a company to gain share, but really bringing innovations into the categories and bringing new sales into the stores," he says.
Jennifer Acevedo is editor-in-chief of Retail Leader.