Allens Inc. for Sale, Bankruptcy Filings Show

by Mark Friedman  on Monday, Nov. 25, 2013 12:00 am  

By 2006, Allens reached “the saturation point in the market for canned vegetables,” James Phillips, Allens’ spokesman, told the Arkansas Democrat-Gazette. So it decided to jump into the frozen-vegetable market by purchasing private-label brands from Birds Eye. Those brands processed vegetables for customers including Wal-Mart Stores Inc. and Kroger Co.

“We’ve never done frozen before,” Phillips told the Democrat-Gazette. And that inexperience was soon apparent internally — Allens “incurred substantial debt” to buy Birds Eye’s lines, Hickman reported, though he didn’t list the amount — although the additional business line certainly added to top-line revenue.

For the fiscal year that ended Feb. 28, 2008, Allens had $610 million in revenue, up nearly 38 percent from the previous year.

Allens’ self-reported revenue peaked at $746 million in the fiscal year that ended in February 2010, and it had 2,100 employees.

Canned Food Sales

But Allens was beginning to show cracks.

As Allens struggled to integrate the frozen division into its business, overall sales of canned items in the United Sates were dropping. That trend started in the early 1990s when Americans started thinking twice about buying canned foods.

“The increasing availability of fresh produce, frozen produce and the rise of the takeout menu greatly diminished the demand for canned food,” Hickman said in his report.

Overall sales of canned and preserved foods have declined since 2009, according to a March 2013 report from Euromonitor International of Chicago, which conducts market research.

“While offering the advantage of low prices and long shelf life, canned/preserved food suffers from a poor image,” the report said. Part of the problem is that some canned items can be kept on the shelf for up to five years before spoiling, “much longer than their chilled and frozen counterparts,” the report said.

Also there is a perception that canned items are unhealthy because of the amount of sodium added as a preservative, which is often more than a daily recommended serving.

“Given the current health and wellness mindset of Americans, they are trying to avoid canned/preserved food if they can afford to do so,” Euromonitor said.

 

 

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