Birds Eye Foods, Inc.

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Birds Eye Foods, Inc.

90 Linden Oaks
Rochester, New York 14625
U.S.A.
Telephone: (585) 383-1850
Toll Free: (800) 999-5044
Fax: (585) 385-2857
Web site: http://www.birdseyefoods.com

Private Company
Incorporated: 1961 as Curtice-Burns Foods, Inc.
Employees: 2,750
Sales: $843.4 million (2004)
NAIC: 311411 Frozen Fruit, Juice, and Vegetable Manufacturing; 311421 Fruit and Vegetable Canning; 311919 Other Snack Food Manufacturing

Birds Eye Foods, Inc., formerly Agrilink Foods, Inc., is the country's top producer of frozen vegetables. Approximately 60 percent of the company is owned by Vestar Holdings. Agrilink was formed from two existing businesses in 1961 to process and market produce for the Pro-Fac agricultural cooperative, which owns a 40 percent interest.

Aside from its namesake, Birds Eye Foods has acquired other regionally strong brands of canned and frozen vegetables, such as C&W (also known as California & Western) and McKenzie's (based in the South). Greenwood Beets (mostly distributed in the East) is the country's best-selling brand of pickled beets. Birds Eye Foods has extended the well-known Birds Eye brand into value-added categories such as Voilà packaged meat and vegetable dinners. The brand also appears on some packages of fresh vegetables. (The European Birds Eye business was taken over by Unilever in 1943.) Nonfrozen lines owned by the company include Bernstein's Salad Dressings; Brooks chili beans; Husman's potato chips; Mariners Cove clam chowder; Nalley Products, which makes canned chili and 1,300 other items; Riviera soup (San Francisco); Snyder of Berlin (potato chips and other snacks, Pennsylvania); Tim's Cascade Snacks (potato chips and other snacks, the Northwest); and Comstock/Wilderness, the world's largest pie filling producer.

Tracing Company Roots to Curtice Brothers and Burns-Alton Corp.

The fruit and vegetable processor got started through the work of the Curtice brothers and the Burns-Alton Corp. late in the 19th century. First, in 1868, brothers Simeon and Edgar Curtice founded a small grocery store in Rochester, New York. Soon thereafter, they formed a canning business called Curtice Brothers to save surplus vegetables and fruits they could not sell in the store. Working first from a Water Street plant, the business expanded to Curtice Street, and before long additional plants were built in Vernon, New York, and in Woodstown, New Jersey.

At this time, the commercial tinning and canning industry was still developing. Technology for mass-market preserving was rudimentary, and the use of chemical preservatives brought occasional digestive side effects. Nevertheless the Curtice Brothers business grew; the company, along with other food processors, discovered that products tastefully packaged could find strategic markets.

In 1920, both Curtice brothers having died, control of the company was handed over to the Security Trust Company, which shortly thereafter sold its stake to Douglas C. Townson.

The Burns half of Curtice-Burns began as the Burns-Alton Corp. in Alton, New York. In 1900 founder C.F. Burns began packing dried and fresh apples and dried beans. His son Ed joined the family business in 1925, and the company's name was changed to C.F Burns and Son, Inc. Much of the company's food products at this time were shipped to Europe, a market that slowly shrank during the 1920s. In 1927 the Burns's plant was re-equipped to process applesauce. One year later, 50,500 cases, mostly applesauce, had been processed at the plant.

Creation of Curtice-Burns Through Merger in 1961

The merger of the Curtice Brothers and C.F. Burns & Son operations occurred in the early 1960s. Both companies were active in the fruit and vegetable growing regions in central and western New York State. They and other food processors were adjusting to the end of lucrative government contracts for canned food during World War II. With sales down, companies found fixed and overhead costs rising.

A shakeout of the regional industry was inevitable, with resulting mergers among rivals. One consolidation involved talks beginning in 1958 between Curtice Brothers, Burns-Alton Corp., and Haxton Foods Inc. of Oakfield, New York. All of the owners of these companies were approaching retirement age, so their main goal was to find a buyer for their companies. Additional aims were locating capital to fund the purchase of new labor-saving equipment and obtaining an increased market share in the expanding frozen food business. The obstacle was continuing price-cutting in the marketplace, which further dented already slender profit lines achieved by each company.

The merger talks did not progress well. A large agricultural cooperative, Cooperative Grange League Federation Inc. (GLF) of Ithaca, New York, was recruited in early 1959 to seek ways to establish a joint venture of farmers and processors involving the three companies. That year, the death of George W. Haxton led to the withdrawal of Haxton Foods from the joint venture talks. GLF consultants were left to establish the processing venture with Curtice Brothers and Burns-Alton.

Further study concluded that the best solution would be to merge Curtice Brothers and Burns-Alton into a new operating company with a contractual arrangement with an agricultural cooperative, owned and operated by farmers. Thus, in October 1960, Pro-Fac Cooperative, Inc. opened for business ("Pro" standing for producers and "Fac" for the facilities owned by them). By March 31, 1961, more than 500 central and western New York state fruit and vegetable farmers had bought common stock in Pro-Fac. They pledged to deliver a predetermined tonnage of raw produce to the cooperative over the next three years.

This agreement meant that Curtice-Burns would be incorporated to process and sell products grown and delivered by Pro-Fac Cooperative. Achieving this vertical integration called for Pro-Fac to acquire the plants and equipment of the former Curtice Brothers and Burns-Alton operations for approximately $3 million. The new, merged company achieved sales of $13 million in 1962, its first fiscal year.

In June 1962, Haxton Foods was ultimately bought by Pro-Fac and Curtice-Burns for $1.5 million. Haxton Foods brought to the deal such branded products as its Blue Boy food line as well as several operating plants.

Regional Focus in the 1960s

Beginning in 1962, Curtice-Burns, under the leadership of President Stanley Macklem, set about becoming a regionally focused company. The idea was to operate a series of small, locally based businesses on a cost-effective basis, enabling Curtice-Burns to become a national force serving regional markets in ways that large, national competitors could not.

The company came by this strategy the hard way. Beginning as a processor and marketer of Pro-Fac products, Curtice-Burns served the private-label business, marketing canned string beans, beets, corn, and applesauce to supermarket chains such as Shop Rite Foods Inc. and Grand Union stores. Selling private-label products was profitable when national brands were in short supply. But in periods of oversupply, Curtice-Burns suffered. In 1962, for example, the company's second year of business, prices for private-label food products plummeted, and the company lost money. Worse, Pro-Fac growers received 15 percent below the average market price for their raw product.

Curtice-Burns sought to establish a regional edge to stabilize its earnings. A mere 10 percent fluctuation in the national supply of a product group could greatly alter a company's profit and loss statement. The unpredictability of supplies is often driven by crop yields, themselves subject to weather and annual planting patterns. A plan to diversify regionally allowed Curtice-Burns to give Pro-Fac members more than full market value for their raw product in all but two years between 1962 and 1980. Curtice-Burns began offering frozen vegetable products with regional appeal, marketing, for example, southern-style frozen vegetables in the southern United States. The company also could provide quick delivery of products.

In 1963 Morton Adams, who had been executive vice-president of Burns-Alton when it merged with Curtice Brothers in 1961, became president of Curtice-Burns. Two years later, in September 1965, Curtice-Burns purchased the canned sauerkraut maker Empire State Pickling Company, based in Phelps, New York, adding the well-known Silver Floss label. The company also added can-maker Finger Lakes Packaging to its operations portfolio. Pro-Fac built two can-making plants in Alton and LeRoy, New York, that year and leased them to Continental Can Co.

In February 1967 Curtice-Burns expanded outside New York State when it purchased the P.J. Ritter Company, headquartered in Bridgeton, New Jersey. Along with Indiana-based subsidiary Brooks Foods, P.J Ritter made branded tomato ketchup and specialty bean products under the Brooks label. P.J Ritter/Brooks products were sold in one-third of the U.S. market. Acquiring them allowed Curtice-Burns to further diversify regionally in the United States and decrease its weather and national oversupply risks by adding branded commodity products and growing areas to its portfolio.

Acquisition Activities Dominating the 1970s and 1980s

Curtice-Burns's next big acquisition came in June 1972 with the purchase of Pennsylvania-based Snyder's Potato Chips. Snyder's packaged its chip products in foil bags aimed at the convenience food market. The company also sold other potato chip, corn chip, and snack products.

Company Perspectives:

Our Mission: To be widely recognized for leadership and accomplishment as a food processing and marketing company by using all of our partners' and associates' talents.

Our Core Values: Do What is Right; Excellence in Performance; Commitment in Objectives; Teamwork.

A year later, Curtice-Burns issued 220,000 shares of common stock with a value of $10.50 each. The shares were to be listed on the NASDAQ. The proceeds of the 1973 issue helped in that year's purchase of Michigan Fruit Canners, headquartered in Benton Harbor, Michigan. The acquired company's products, marketed mainly under the Thank You brand label, brought Curtice-Burns into markets ranging from Denver to Pittsburgh and Atlanta.

In July 1975, Curtice-Burns moved west by purchasing Nalley's Fine Foods, based in Tacoma, Washington. Bought from W.R Grace & Co., Nalley's had four main product groups: canned meats, pickles, salad dressings, and snack foods. Nalley's brand products were sold mostly in the western U.S. market. Later the same year Curtice-Burns made a second public offering of 413,294 shares, valued at $11.50 each. Early in the following year, the company's stock gained a listing on the American Stock Exchange.

More companies were brought under the Curtice-Burns umbrella in the ensuing years. In 1976 the company acquired Nalley's Canada Ltd., based in Vancouver, British Columbia. In May 1977 Curtice-Burns acquired Comstock Foods, headquartered in Newark, New Jersey, from Borden. A year later, the Canadian arm of Curtice-Burns purchased Bonus Foods for $428,000.

Curtice-Burns had by now installed Hugh Cummings as president of the company. He oversaw the June 1979 acquisition of National Brands Beverage Division, which was bought from Canada Dry Bottling Co. of Syracuse, New York, for approximately $1.7 million. For the first time, Curtice-Burns had entered into the branded soft drinks market, initially in New York State.

Earnings at Curtice-Burns were dented by the early 1980s slowdown in the U.S. economy, which squeezed profit margins. Company sales in 1980 totaled $357.6 million, compared with $303.7 million posted a year earlier. Net income fell in that period from $5.13 million in 1979 to $4.6 million in 1980. Curtice-Burns recognized, however, that a slumping market is a good time to buy struggling rivals. In January 1980, the National Oats Co. Inc., headquartered in Cedar Rapids, Iowa, was picked up from the Liggett Group. National Oats produced milled oat food products and corn for popping.

Curtice-Burns's U.S. expansion was furthered a year later when Lucca Packing Company, a California-based canned and frozen Italian and Mexican food maker, was purchased. Soon thereafter, Curtice-Burns bought the southern division of Seabrook Foods Company. Renamed the Southern Frozen Foods division of Curtice-Burns, the newly acquired company sold primarily McKenzie's brand southern-style frozen vegetables in 11 southeastern states.

In February 1984 Curtice-Burns purchased the 7-Up Bottling Company of Binghamton Inc. from a private concern for $1.15 million. Two years later, the company added fruit fillings, frozen fruits, and maraschino cherries to its line when it bought for $41 million the assets of Wilderness Foods, Naturally Good Foods, and Cerise Foods Divisions of Cherry Central Cooperative Inc. The acquired company served markets in the western United States from its Sodus, Michigan headquarters.

The acquisitions were meant to serve the company's long-term growth. As company President David McDonald expressed in 1988, "Our principal focus in any year is not on short term earnings, but on the structuring of Curtice-Burns in a manner that will, over the long term, maintain a rate of growth that is at the top of the industry." Curtice-Burns's marketing strategy included achieving dominant positions in niche food categories; for example, two meat snack companies were purchased, the Smoke Craft Division of International Multifoods, in December 1986, and, in December 1988, Lowrey's Meat Specialties, Inc., based in Denver. Lowrey's was the leading maker of meat snack products, including beef jerky, for which Curtice-Burns became the largest supplier in the U.S. market. The two companies later merged to form the Curtice-Burns Meat Snacks division. Other important acquisitions in this period were Adams, a producer of natural branded peanut butter, and Farman Brothers Pickle Co.

Another niche market was Mexican frozen food products, part of the larger frozen dinner market then becoming popular in the United States. In January 1989 the company acquired from Pillsbury the Van de Kamp Mexican Frozen Dinner line. Sales of frozen Mexican food were then increasing 16 percent annually in the U.S. market. Eighty percent of sales was made in the growing San Francisco and Los Angeles markets.

The company also was making cuts wherever possible to remain a low-cost producer. Due to a variety of factors, mainly competitive, Curtice-Burns exited the branded soft drinks market in 1988 when it sold its National Brands Beverage business to 11 separate bottlers. Only private labels were retained in a series of deals that netted the company $6.6 million in profit.

Key Dates:

1868:: The Curtice brothers open a grocery store in Rochester, New York.
1924:: General Seafoods Corp. is founded by Clarence Birdseye.
1929:: The Postum Company buys General Seafoods, which becomes General Foods Corp.
1943:: British Birds Eye operations are sold to Unilever.
1960:: The Pro-Fac Cooperative is formed.
1961:: Curtice-Burns is formed.
1985:: Philip Morris buys General Foods Corp.
1993:: Dean Foods Vegetable Company (DFVC) buys Birds Eye from Philip Morris/Kraft.
1997:: Curtice-Burns is renamed Agrilink Foods.
1998:: Agrilink acquires DFVC and the Birds Eye brand; revenues exceed $1 billion.
1999:: Agrilink restructures to one company.
2002:: Vestar Holdings acquires majority control of Agrilink from Pro-Fac Cooperative.
2003:: Agrilink is renamed Birds Eye Foods.

Perhaps more important, the company was focusing on growing low per capita food categories in its regional brand marketing. For example, in 1988, sales of canned vegetables nationwide reached around $63 million, and canned desserts attained $105 million in sales. Although small in size, Curtice-Burns believed no food processing giant could make inroads in such markets by advertising on television at great cost. The battleground for products such as sauerkraut and fruit toppings shifted from the living room to the grocery store shelf, where Curtice-Burns's cost-effective operations could successfully outplay bigger companies in the market.

The company's two-year acquisitions spree that began in 1986 led to a sales increase that in 1989 reached $807.2 million. Reflecting this growth, stock in Curtice-Burns soared 34 percent, to $32. By now, the Pro-Fac Cooperative numbered 774 members; Curtice-Burns itself had more than 7,000 full and seasonal employees on its payroll.

Streamlining and Change of Ownership in the 1990s

Adverse weather conditions and high raw product costs contributed to earnings falling 22 percent to $11.6 million in 1990. The early effects of the recession in North American markets was being felt. That year, the company was decentralized into ten major operating divisions: Southern Frozen Foods, headquartered in Montezuma, Georgia; Comstock Michigan Fruit, based in Rochester, New York; Finger Lakes Packaging, operating out of Lyons, New York; Snack Foods Group, headquartered in Rochester; Curtice-Burns Meat Snacks of Denver; Nalley's Fine Foods, based in Tacoma, Washington; Nalley's Canada Ltd. in Vancouver; Brooks Foods, headquartered in Mount Summit, Indiana; Lucca Packing of San Francisco; and National Oats Company, based in Cedar Rapids, Iowa.

Curtice-Burns's acquisitions continued apace. David McDonald, the company's president and chief executive officer, announced in July 1992, according to Refrigerated & Frozen Foods: "If we could find an acquisition that would get us into another part of the country on an economic basis, we would make that acquisition. We'd buy any size company. We've bought them as small as a couple of million or as big as $100 million. It depends on the company."

McDonald's boldness came at a time when the recession was further affecting the company's balance sheet. Sales in 1991 remained stagnant at $933 million, compared with $926.8 million a year earlier. Profits were down from $7.4 million in 1990 to $3.6 million in 1991. The earnings decline was most pronounced in oat cereal sales. Following an oat bran craze that required increased plant capacity, demand nationally for oat products decreased, and the company had to adjust its National Oats division to market erosion and reduced profit margins. Two other major factors in the earnings decline were oversupply in vegetables and high material costs for meat snacks.

The early 1990s recession also meant widespread price-cutting in the snack food industry and record low earnings by North American food retailers that the company served with private-label products. In 1992 Curtice-Burns achieved a 68 percent jump in earnings to $6.14 million, but this profit was well below the levels of the 1980s, when sales were much lower. Return on average shareholders' equity was only 5.8 percent in 1992, less than half of the 1986 figure of 12.1 percent, which itself was the low mark of the period from 1983 to 1989. Results for 1992 were helped somewhat by cost efficiencies made possible with the opening that year of the company's first national sales office.

The competitive pressures of the food industry forced Curtice-Burns to take a hard look at its operations portfolio in 1993. That year, the company embarked on a restructuring program in order to shed unprofitable businesses. Early in the year Lucca Frozen Foods was divested, and in November the oats portion of the National Oats division was sold to Ralston Purina for $39 million, with National Oats' popcorn business being transferred to Comstock Michigan Fruit. Also in November, the Hiland potato chip business was sold for $3 million. In February 1994 Curtice-Burns sold its meat snacks business for $5 million, and the following year the company sold Nalley Canada Ltd. and the snack food line of its Nalley's Fine Foods division. Following these divestments, Curtice-Burns had six divisions: Comstock Michigan Fruit, Nalley's Fine Foods, Southern Frozen Foods, Snack Foods Group, Brooks Foods, and Finger Lakes Packaging. In October 1996, to further focus on core operations, Curtice-Burns sold Finger Lakes, a maker of sanitary food cans, to Silgan Containers Corporation for $30 million.

Meanwhile, during the early stages of this restructuring, Curtice-Burns itself was for sale. This change-of-control process was initiated in April 1993 when Agway Inc. announced its own restructuring and its intention to sell its controlling stake in Curtice-Burns, about one-third of the company's stock. Agway was a farm supply cooperative based in Syracuse, New York, which had played a key role in the formation of Curtice-Burns and in the establishment of the relationship between Curtice-Burns and Pro-Fac. It initially appeared that Curtice-Burns would be bought by Dean Foods Company, which in June 1994 offered $20 per share, or about $456 million. But disputes between Curtice-Burns and Pro-Fac over how much of the proceeds from the sale should go to Pro-Fac members led Dean Foods to withdraw its offer. Then, in September 1994, Curtice-Burns accepted a $19 per share offer from Pro-Fac, about $433 million, and became a wholly owned Pro-Fac subsidiary, thus cementing the longstanding relationship between the two firms.

With the restructuring complete, in large part, and the question of ownership resolved, Curtice-Burns set out in the mid-1990s to bolster its core businesses and solidify its relationship with Pro-Fac by making acquisitions and entering into partnerships that would enable it to buy more crops from Pro-Fac members. In July 1995 Michigan-based food processor Packer Foods was acquired for $5.4 million and was merged into Comstock Michigan Fruit. In mid-1996 Curtice-Burns bought Matthews Candy Co., which was placed in the Snack Foods Group. In April 1997 the company entered into a partnership with Flanagan Brothers, Inc., of Bear Creek, Wisconsin, through which the two companies would merge their sauerkraut production operations.

In January 1997 Dennis M. Mullen took over as CEO of Curtice-Burns. Mullen aimed to reduce debt at the company, improve its profitability, and eventually increase sales from the $739 million of 1996 to $1 billion. As part of his recovery program, Mullen sold off the canned vegetable business to Seneca Foods Corp. and divested can manufacturing unit Finger Lakes Packaging Inc.

Renamed Agrilink Foods in 1997

Curtice-Burns Foods, Inc. was renamed Agrilink Foods, Inc. in September 1997, while three of its businesses—Comstock Michigan Fruit, Southern Frozen Foods, and Brooks Foods— were consolidated into one business unit under the name Curtice-Burns Foods. The newly named fruit and vegetable processing unit accounted for more than half of Agrilink's business. (The other units were Nalley's Fine Foods and Tim's Cascade Chips, Snyder of Berlin, and Husman Snack Foods.)

Agrilink made a number of important acquisitions in 1998. It bought Delaware's DelAgra Corp., a family-owned processor of private-label frozen vegetables, in March of that year. Another privately owned business, C&O Distributing Company of Canton, Ohio, was acquired in the same month. C&O had been a snacks distributor for Agrilink's Snyder of Berlin unit since 1975. Another longtime Snyder distributor, J.A Hopay Distributing Co., Inc. of Pittsburgh, was added in July 1998. Seyfert Foods Inc. was acquired from Heath Capital Investment in April 1998. Seyfert employed 275 people and made snacks under its own brand and private labels. The company was founded in 1934 and, between 1982 and 1994, had been owned by Borden Inc.

Agrilink's largest acquisition was the purchase of Dean Foods Vegetable Company (DFVC) in September 1998. DFVC had sales of more than $500 million a year and owned the venerable Birds Eye brand. Agrilink gave Dean Foods Co. $400 million, plus its $100 million aseptic business. DFVC also owned the Freshlike and Veg-All brands. The Dean acquisition also brought Agrilink into the market for "home meal replacements," or one-step frozen meat and vegetable combinations, via the new Voila! brand. The buy made Agrilink a $1 billion business.

Origins of Birds Eye and the Frozen Foods Industry

The Birds Eye brand dated back to the 1920s. Clarence Birdseye ("Bob" to his friends) was considered the founder of the modern frozen foods industry as well as the company that bore his name. Birdseye's innovations extended to machines for automatically cleaning and trimming fish filets.

Like many innovators, Clarence Birdseye was a man of eclectic interests. "I have more hobbies than the law allows. Some are sissy. Some have hair on their chest." Birdseye's activities as a naturalist can be filed among the latter.

Birdseye was born in Brooklyn on December 9, 1886, into an Episcopalian family of English descent. He was an avid outdoorsman from his youth. During his three years at Amherst College (which in 1941 would award him an honorary Master of Arts degree), he picked up the nickname "Bugs." He left college in 1910 due to financial pressures. He then began working summers as a field naturalist for the U.S. Biological Survey of the U.S. Department of Agriculture; his postings included the Southwest and Montana. During winters he held a variety of jobs back east.

He began trading in furs during this time, and spent several years collecting fox pelts in Labrador. There he observed natives' methods of freezing fish, and experimented with freezing cabbage and fish to provide for his new family, who had joined him in Labrador in 1916.

The Birdseyes returned to the States after the United States entered World War I in 1917. Clarence held various jobs in Washington, D.C., before becoming involved with the wholesale fish industry in 1922.

Clarence Birdseye was not the first to try to commercially produce frozen foods, but he was the first to make quick freezing practical. Since the Civil War, fishermen from northern Norway had shipped their naturally flash-frozen catch to the East Coast of the United States packed in barrels of ice and salt. A trade in "cold pack" fruits in the Northwest dated back to 1912, according to Quick Frozen Foods.

An early venture, Birdseye Seafoods Inc., began operating in 1922 out of Manhattan's Fulton Fish Market. According to the detailed profile of his life in the March 1980 issue of Quick Frozen Foods, Birdseye pioneered shipping techniques there, packing insulated cartons with fish and dry ice and sending them as far west as Chicago. This particular venture failed after two years, however, due to the bankruptcy of one of its backers.

Birdseye continued to innovate. According to Quick Frozen Foods, he conducted some of his research at the Bayonne, New Jersey plant of the Clothel Refrigerating Company, a division of the Electric Boat Company, the famed submarine manufacturer. He eventually developed the technique of freezing foods packed in cartons under pressure. Calcium chloride brine was used as the refrigerant for the metal plates that chilled the food. General Seafood Corporation was formed in 1924 to market this new process. Birdseye soon invented the double belt freezer (he called it a "froster"), which is considered the beginning of the modern frozen foods industry. In 1925, a plant was established in Gloucester, Massachusetts, a leading fishing port. General Foods Company was later created as a parent company for General Seafood. His company produced 1.7 million pounds of frozen fish in 1928, more than it could distribute.

In June 1929, a venture between the Postum Company and Goldman-Sachs Trading Corporation bought General Seafood for $22 million, renaming it General Foods Corporation. The patents alone accounted for $20 million, believed to have been a record at the time. Clarence Birdseye's personal share was less than $1 million, according to Quick Frozen Foods. Postum Company was renamed General Foods Corporation later in 1929.

Clarence Birdseye remained active in the research and development department of the Birds Eye Frosted Foods division. He soon hired Donald K. Tressler, an accomplished pioneering food technologist. (From 1930 to 1934, Birdseye also operated a company to market a window display lamp of his own design.)

Building a Market in the 1930s

A range of Birds Eye frozen foods (primarily fish and meats, but also berries, peas, and spinach) was test marketed in a number of stores (reported as either ten or 18) in Springfield, Massachusetts, beginning on March 6, 1930. The participating stores were given display freezers worth $1,500 and allowed to sell the products on consignment. The test campaign lasted 40 weeks, according to Quick Frozen Foods; other trials followed four years later in Syracuse and Rochester, New York.

For many consumers of the day, freezing was synonymous with the spoilage that accompanied frosts. In New York, there were even laws against the sale of frozen food. The reason slowly frozen food tasted bad was because ice crystals formed, destroying the cell walls. Birdseye's process froze more quickly at much lower temperatures, avoiding this outcome.

Frozen foods were slow to catch on in the retail sector during the Depression since refrigeration was expensive. Birds Eye hired American Radiator Corporation to produce affordable display freezers in 1934. These were rented to stores for $10 to $12.50 per month.

In 1933, the company had 516 outlets, most in New England, noted Michael Gershman in Getting It Right the Second Time. According to Gershman, the turning point for the company was its focus on the institutional market. Cafeterias embraced frozen foods for the convenience they brought to foodservice. Institutions were also a good venue in which to introduce the product to large numbers of consumers. The famous Waldorf-Astoria Hotel began buying, giving Birds Eye a valuable endorsement. Another future industry leader, Seabrook Farms in southern New Jersey, began packing frozen lima beans in 1931 using equipment obtained from Birds Eye.

Birds Eye made its first profit in 1937, according to Gershman. In the late 1930s, noted Quick Frozen Foods, 60 percent of the frozen food industry's sales were to bulk users such as makers of preserves, ice cream, and baked goods. Institutions accounted for 30 percent; only 10 percent went to grocery stores.

1940s Acceptance

Acceptance was growing. Even department stores were beginning to sell frozen foods, some 60 years before the megastore phenomenon. Macy's installed a freezer at its New York store in 1940, according to Quick Frozen Foods; it sold a short-lived, second line from Birds Eye called "Coldseal."

Birds Eye stopped leasing display freezers to retailers in 1940 in favor of outright sales. The company also began allowing stores to set their own retail prices. By 1941, reported Quick Frozen Foods, the industry had up to 15,000 freezer cabinets installed at retail stores.

During World War II, noted Gershman, Birds Eye was able to keep going by pointing out to the U.S. government that frozen foods were a great alternative to canned, since they were packed in paper, not valuable steel. Birdseye worked to develop a new, anhydrous process for dehydrating foods to satisfy a government mandate. It was not ready until after the war, when demand evaporated. The company also pioneered refrigerated shipping when it leased insulated railway cars in 1944.

Birds Eye spawned a separate, industry-leading business in Europe. Frosted Foods Ltd. was formed in 1938 to develop the Birds Eye brand in the United Kingdom. General Foods was partial owner. Unilever took over the Birds Eye brand in Britain in 1943; food rationing from 1940 to 1954, however, presented unique challenges. Around 1945, the first Birds Eye factory in Europe was established at Yarmouth, in southern England. By the end of the decade, 900 shops were carrying Birds Eye products in Europe. The operation was packing about 12 million pounds of frozen foods a year. European sales were about $3 million in 1951, when the business turned a profit of about $300,000. The number of shops had grown to 4,600, according to Quick Frozen Foods. The Birds Eye brand in Europe, controlled by Unilever, did $120 million in business in 1963, according to Quick Frozen Foods. By the end of the decade, British Birds Eye would be larger than its American counterpart or any other frozen food company in the world.

Clarence Birdseye passed away on October 7, 1956. He had maintained a wide variety of interests, forming a light bulb business that became part of Sylvania Company, and introducing innovations in fishing gear and paper manufacturing.

Philip Morris acquired General Foods, owner of Birds Eye, in 1985. Philip Morris bought Kraft Inc. three years later. Kraft General Foods sold Birds Eye to Dean Foods Company in 1993 for about $140 million. This was the first national brand for Dean, which dated back to the 1920s. Private-label business accounted for a large part of its $200 million in annual sales. Birds Eye added sales of $290 million a year.

Agrilink's Reorganization: 1998–2002

Agrilink made a number of other acquisitions following the 1998 purchase of DFVC/Birds Eye, and also divested some units. Agrilink sold its Adams Peanut Butter to the J.M. Smucker Company in January 1999. It acquired Erin's Gourmet Popcorn of Seattle soon after, to be combined with the Tim's Cascade Chips unit.

In 1999, Agrilink owner Pro-Fac Cooperative acquired the frozen vegetable business of troubled Agripac, Inc. of Oregon, while parts of Agrilink's Midwest private-label canned vegetable business were sold off. Agrilink reorganized under a one-company structure in July 1999. In 2000, the company's Tacoma, Washington pickle business was sold to Dean Foods Co. and a Wisconsin cannery was closed.

Around this time, the Birds Eye brand was extended into fresh produce through a deal with Rexburg, Idaho's Wilcox Marketing Group. Several different vegetable suppliers were involved.

The Birds Eye brand was extended further into the prepared foods category with the October 2002 test market of a new line of single-serving, microwaveable frozen soups called Hearty Spoonfuls. Until then, frozen soups had been offered mostly by regional players in the United States. Agrilink also had begun offering grilled vegetables under the Simply Grillin' brand.

Renaming As Birds Eye Foods in 2003

Vestar Capital Partners acquired majority control of Agrilink from Pro-Fac Cooperative in 2002. Pro-Fac continued to be Birds Eye's largest supplier and a significant minority owner. Agrilink Foods, the largest processor of frozen vegetables in the United States, was renamed Birds Eye Foods, Inc. effective February 10, 2003.

Several plants were closed during the year. Birds Eye divested a few other lines of business in 2003: Veg-All, sold to Arkansas-based Allen Canning Company in July; popcorn, sold to Gilster-Mary Lee; and applesauce, sold to Knouse Foods. Flanagan Brothers, based in Wisconsin, bought out Birds Eye's share of the Great Lakes Kraut L.L.C. joint venture. Freshlike canned food was sold to Allen in August 2004.

Net income rose 53 percent to $31.9 million in fiscal 2004; sales were $843.4 million, down 2.3 percent. During the year, Birds Eye Foods bolstered its West Coast operations with the acquisition of California & Washington Company, which produced the region-leading C&W brand of frozen vegetables.