Michael G. Rosenberg, president and ceo of The Promotion In Motion Cos. And this year’s recipient of the Kettle Award, not only gets close and personal with Candy Industry Magazine’s readers, he also provides them with an aerial view of where the company is headed.
Growth, even double-digit growth, has never been an issue for The Promotion In Motion Cos., Inc. (PIM).
Named twice in the past three years by the Boston Consulting Group as one of the Top 10 fastest growing CPG companies in the United States within the billion dollars and under sales category, PIM has been on an extremely fast track for the last five, say even ten years.
Thus, when the company’s sales gains were released last year, on the low end of the double-digit range, one would have expected the usual “high fives” being passed throughout the offices.
That wasn’t the case, says Michael Rosenberg, president and ceo of PIM. “People were looking around and wondering what happened,” he says.
Well, sweet and swift success is what happened. Perhaps, too swiftly.
“It was a lack of capacity,” Rosenberg explains. Sales were outpacing production. “We were shipping everything we were making, just pushing product out the door.”
In most instances, companies would love to be in that situation. But it does have repercussions. As expected, customers didn’t necessarily find the situation to their liking.
“We learned a lesson,” Rosenberg says. “We were a bit too conservative, too hesitant to expand manufacturing and packaging capacity. So we made it our mandate last year to find a way to do it. And now, we’re back to our normal growth rates.”
But as anyone who’s overseen confectionery production knows, one can’t simply turn on a switch and have a new mogul line in operation or have high-speed baggers in place. Aside from the investment, there’s a tremendous amount of planning and coordination involved, not to mention serious testing before a new line can be operational.
But if there’s one thing that this year’s Kettle Award recipient is known for, it’s his tenacity. As a result, PIM added capacity to its facility in Spain as well as its plant in Somerset, N.J. Thus, a new jumbo mogul was installed at PIM’s Spanish plant while Somerset received a fourth mogul line — with another new jumbo currently being installed for implementation before yearend — new high speed form/fill/seal baggers, and currently has an additional high-speed boxing line being built for delivery this fall. In all, by early 2015, the company pumped up its production and packaging capacities by 75 million lbs. That represents a 35 percent uptick in output so far, with more on the way.
Of course, that was only the beginning of the investment process, one that easily exceeds $30 million. As Rosenberg explains, an additional 175,000 sq. ft. Was added to the production facility in an adjacent building, which now holds raw materials as well as packaging components. The move has freed up space in the production facility for yet another mogul line, which should be installed in the next 18-24 months.
In addition, the company acquired a massive warehouse facility — 325,000 sq. ft. — that will house finished goods inventories. The plan calls for yet another 240,000-sq.-ft. addition to be added to that facility, one that will employ an automated robotic inventory system and high cube ceilings.
The original 325,000 sq. ft. Will then be converted into the company’s next production plant.
In total, the Somerset “campus” will encompass more than a million square ft. For production and warehousing needs by the end of 2017.
So, is Rosenberg overreaching now?
He doesn’t think so. As he points out, consumers are enjoying between 85 to 90 packs of its Welch’s Fruit Snacks alone, every second, of every hour, of every day. Those are staggering numbers.
“Consumers love our product; they love the fruit,” he says. Moreover, the draw goes beyond the United States.
“In the past, we were growing internationally more by accident than on purpose,” Rosenberg says. “Now we’re moving to take control. We’ve just entered into a joint venture with Nongshim Co. Ltd., South Korea’s largest processed food company.
“We’re also seeing growth in China, Mexico and Brazil, as well as other parts of Asia, South America and Latin America.”
But PIM isn’t just about Welch’s Fruit Snacks; it has a bevy of other brands and confectionery products.
The company’s product lineup breaks almost evenly between its “betterfor- you offerings (Welch’s Fruit Snacks, Welch’s Yogurt-Covered Fruit ‘n Yogurt Snacks, its Go Organically Fruit Snacks) and confectionery items (Sun-Maid Milk Chocolate Raisins, Sour Jacks, Tuxedos Chocolate Covered Almonds, Toggi Chocolate Covered Wafers, and others).
“We want to make certain that the confectionery side of the business keeps pace with our ‘better-for-you’ segment,’” Rosenberg says. As a result, the company has launched several initiatives. One of those involves Sour Jacks, PIM’s sour candy brand.
“We’re in the midst of transforming Sour Jacks, introducing new flavors, new packaging as well as exploring new product formats,” he says. “And aside from driving distribution on both our new Toggi flavors, including Milk Chocolate Hazelnut, Bittersweet and Milk Chocolate Peanut Butter, and our new pack sizes, including flat bottom re-sealable bags and singles/ vend size bars, we have a seasonal tin for our Toggi wafers coming out next Christmas. You’ll also see additional flavors, sizes, and even a new theatre pack for Toggi in the months ahead.”
Of course, there’s still plenty of activity going on in the “better-for-you” segment at PIM, Rosenberg adds.
“Seasonal provides a special opportunity for Welch’s Fruit Snacks. We’ve introduced special packs for Easter, which include custom shapes, such as bunnies, chicks and eggs for baskets, and egg stuffers, along with a big push on our fun-size bags of Welch’s Fruit Snacks for Halloween. Moms are looking to give something healthier during the holidays and Welch’s Fruit Snacks provides a great opportunity for the retailer and the consumer to do so. And you’ll see seasonal packs for Christmas and Valentine’s Day next year as well.”
Then there’s Welch’s Fruit ‘n Yogurt Snacks, which were launched last year and are growing at a very robust double-digit rate, and will be further expanded with a new Cherry variety later this year, and as well as the company’s newest better-for-you-addition, Go Organically, Organic Fruit Snacks. The Juicefuls brand, which the company had to suspend selling because of capacity constraints, will also be relaunched in 2016. Moreover, next month PIM will be launching its newly developed fruit roll-ups product, Fruit Rollers, in Canada and in early 2016 in the United States. And in 2016, the long-awaited Welch’s Fruit Roll-Ups will be launched, containing significantly more fruit than any other fruit roll-up product on the market.
But what’s really fueling Rosenberg’s optimism about continued double-digit growth, and he underscores high-end double-digits, is the company’s ability to be truly innovative, whether it’s in product development, processing technology and/or formulation.
“In addition to our base business, which is certainly contributing to our growth, I see the business evolving to include supplements, nutraceutical and pharmaceutical applications,” he says. “Pharmaceutical companies are coming to us. Over the years, we’ve developed cutting edge and unique technology and know-how. For example, we’ve really mastered the science of dosing. As a result, we have our own vitamin testing lab where we can conduct in-house testing ourselves and then have those results third party validated by outside sources.
“It allows us to test the efficacy of an active ingredient so that we know that it’s still fully intact and effective until the expiration date and precisely at the indicated dosage levels.
“We also have extensive knowledge involving encapsulation, which masks the bitter tastes of various actives,” he points out.
Although nothing has been formalized with any of the pharmaceutical companies to date, Rosenberg says that there are several business models on the drawing board that PIM is considering and actively negotiating.
“I do see a natural connectivity between confectionery and food and science,” he says.
There’s also a natural connectivity in Rosenberg being able to attract top talent. Beginning with Basant Dwivedi, the company’s coo and research and development savant, to some of the most recent executive hires, including Jose Sepulveda, v.p. of manufacturing, formerly with Gimbal’s Confections and Jelly Belly Candy Co.; Kevin Walsh, v.p. of engineering, formerly with Farley & Sathers as well as Nabisco and Kraft Foods; Kevin Mahoney, director of purchasing, formerly with Weight Watchers; and Joe Vittoria, formerly president of PEZ USA, as executive vice president and chief administrative officer, Rosenberg continues to surround himself with experienced and engaged executives.
Given such talent, one would think Rosenberg would step back a bit. A quick smile suggests that he has, kind of, sort of, OK, a tiny bit.
“I’m very involved in innovation, and the particulars of our marketing strategy,” he says. “I’m also involved in the plant expansion, looking at machinery. And I still enjoy making customer calls. I want to stay connected with our customers, to get in front of them and share information about our products and the category.”
To that end, PIM as a company has expanded its efforts in data analysis.
“Customers are looking for information that’s concisely packaged to ensure that they are hitting on all cylinders as to what consumers are looking for,” he says. “This is where we can bring our expertise as the category leader within the betterfor- you, fruit snacks segment.”
As Rosenberg points out, consumers are more educated today; they want to experience new things. They have, as he says, “expanded palates, expanded horizons.”
Rosenberg cites the development of Welch’s Apple Orchard Medley Fruit Snacks as proof that familiar flavors can be re-invented to deliver excitement. Thus, instead of just an apple flavor, Welch’s Apple Orchard Medley offers distinct apple flavors such as: Granny Smith Apple, Golden Delicious Apple and Red Delicious Apple.
“It was interesting, and fun,” asserts Dwivedi, the man responsible for product development. “We like to push the envelope.”
That’s certainly the case with PIM’s latest launch, Fruit Rollers.
“Fruit roll-ups are a tricky product when you try to put much more fruit into them,” he explains. “It’s a lot easier to produce a fruit rollup product with sugar and corn syrup than with fruit purees. Fruit ingredients are hydroscopic, so they pick up moisture. As a result, you get a product that’s sticky and unpleasant looking. It was a challenge to counter that, but we did so after seven to eight months of research and development.”
That kind of innovation, however, doesn’t stop at the company’s R&D lab. It extends through the company’s suppliers.
“We’re rather unique in that we work with our prime suppliers,” Dwivedi says. “We’ve worked with our suppliers to create fruit purees lower in water content. We also developed our own proprietary surface finishing agent called 'PolyGlaze' for polishing our fruit snacks and gummies. It gives us a leg up."
It’s an advantage that will stand PIM in good stead as the company explores getting into pharmaceutical candies, Dwivedi adds.
“When you look at the vitamin gummies that are out there, you begin to realize that those gummies don’t contain all the vitamins one would expect,” he says. “For example, there are no B complex vitamins in gummies on the market. That’s really unfair to the consumer, since B complex vitamins are more important than other vitamins. The reason they’re not in gummi vitamins is that B1 and B2 and other B complex vitamins have a bad taste.”
Again, thanks to the company’s dosing and encapsulation technologies, Rosenberg and Dwivedi believe they are capable of overcoming such challenges.
Seems like there’s plenty of runway left for Rosenberg to further fuel PIM’s growth.