River Ranch Fresh Foods LLC

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River Ranch Fresh Foods LLC

1156 Abbott Street
Salinas, California 93901
U.S.A.
Telephone: (831) 758-1390
Toll Free: (800) 538-5868
Fax: (831) 755-8181
Web site: http://www.riverfreshfoods.com

Private Company
Founded: 1981 as Fresh Western Marketing
Employees: 800
Sales: $183 million (2005)
NAIC: 311423 Dried and Dehydrated Food Manufacturing

Maintaining its headquarters in Salinas, California, River Ranch Fresh Foods LLC is a leading supplier of packaged salads and cut-vegetables to both the foodservice and retail channels. Products are sold under the River Ranch label, as well as the Popeye label for spinach. River Ranch also maintains a strong private label program and offers a variety of ancillary services, including package design, marketing support, and category management. Processing is done at facilities located in Salinas and El Centro, California. At the heart of River Ranch’s success is the company’s proprietary packaging which employs the FreshHold membrane seal that controls the flow of oxygen and carbon dioxide to extend the shelf life of shredded lettuce and cut-vegetables. Once picked, produce respires, taking in oxygen and using up sugar and starch, leading to spoilage. River Ranch’s packaging retards the respiration process, extending produce shelf life to at least 17 days. The company is owned by its senior management team.

COMPANY FOUNDED: 1981

River Ranch was founded in 1981 by Thomas Church and four others in the Salinas Valley as Fresh Western Marketing Corporation. Church had been employed by Bruce Church Company, a family business that was a pioneer in the shipment of lettuce. In 1985 he was joined by his brother, Steve, who had previously worked at Grower’s Exchange. The Church family had originally come to the valley to cut timber and raise stock. Bruce Church, born in 1900, became involved in produce shipping after earning a business economics degree from the University of California at Berkeley. He struck out on his own in 1926, buying a field of head lettuce with $3,000 provided by a partner and then shipped the produce packed in ice to Eastern U.S. markets, where they fetched a premium price and resulted in a $100,000 bounty. Church followed up this success with further shipments and, according to company lore, Easterners began to hail the arrival of his lettuce by shouting “The icebergs are coming, the icebergs are coming!”—thus was the origin of the iceberg lettuce name.

Bruce Church leveraged his success in shipping to become one of the most prominent lettuce growers in Salinas Valley. After his death in 1958 son-in-law Edward “Ted” Taylor assumed control of the business. Like his predecessor, he became a pioneer in the area of value-added produce. In the mid-1960s lettuce growers sought to increase their profits by producing and selling shredded lettuce. However, consumers were not especially interested, mainly because the cut produce spoiled too quickly due to inadequate packaging. The foodservice industry held more promise because the product was not intended to sit on the shelf for very long, but, although some restaurants became customers, shredded lettuce would not provide significant sales until packaging improved.

In 1966 Taylor acquired TransFresh Corp., a Whirlpool unit that had been experimenting with controlled- and modified-atmosphere packaging. He then formed Trim Fresh in 1968 with the goal of developing a foodservice packaged salad. Because the technology was not mature enough, the idea was shelved until 1978 when advances in packaging film revived Taylor’s interest. A new unit, Red Coach Foods, was created and began selling packaged shredded lettuce to fast-food chains such as Burger King and McDonald’s. In 1981 Red Coach began a concerted effort to develop a consumer package salad product, but the necessary technology was still not in place. The company knew that respiration needed to be better controlled, but the makers of packaging materials were not up to the task until later in the decade. In 1987 Red Coach changed its name to Fresh Express, successfully developed a proprietary film and a method of introducing nitrogen into the packaging to hinder respiration, and became the trailblazer in packaged salad, establishing a lead in market share that it would not relinquish.

TESTING BEGINS ON NEW PACKAGING: 1988

Fresh Western was not immediately interested in following the lead of its cousin company in bagged salad. Instead, it sold bulk commodities under the River Ranch, Green Barn, and Big Chief labels. Yet the packaged salad concept was in keeping with the company’s goal of developing innovative ways to field pack produce and make it available to customers as quickly as possible. Companies in addition to Fresh Express were also working to control respiration. One was Hercules Inc., a 75-year-old Wilmington, Delaware, chemical company whose subsidiary, Hercules Engineered Polymers Co., made candy wrappers and potato chip bags and developed what it called the FreshHold System. Hercules began working with Fresh Western in 1988 to develop packaging that could be adjusted to the respiration rates of different produce. Broccoli was the first test subject, followed by strawberries.

Hercules sold the FreshHold technology to Fresh Western which, in the early 1990s, began offering packaged produce employing the FreshHold seal through its Fresh Valley Produce subsidiary. While Fresh Express and Dole had staked out dominant positions in the bagged salad category, Fresh Western was able to take advantage of opportunities in the private label arena, launching a highly successful program around 1992. In effect, Fresh Western leveraged the power of regional supermarket brands. In a 1999 Supermarket Business article, Mike Domingos, a group vice-president of marketing for River Ranch, explained: “In Dallas, Albertson’s name is more recognizable to the consumer than Fresh Express, River Ranch, Dole, any of them. If you go into Boston, Shaw’s name would be known better than any national brand. We have not started a private label program in this company that has not been successful.”

Fresh Western was more than just a salad packager, of course. By the end of 1993 it was generating $200 million in annual sales from a variety of activities in addition to fresh-cut processing, including the growing, packing, and marketing of about 60 varieties of fruits and vegetables, sold at home and abroad to the foodservice and retail channels. The company caught the attention of the Albert Fisher Group, PLC, a London, England-based international food processor and distributor with operations throughout Europe and North America. In early 1994 Albert Fisher acquired Fresh Western for a reported $32.2 million.

COMPANY PERSPECTIVES

Recognizing that fresh vegetables are among the most healthful foods you can eat, River Ranch Fresh Foods, LLC, takes seriously our responsibility for the health of our consumers, employees and environment. As a company with local, regional, national and international connections, River Ranch policies and ideals reflect a respect for individuals within the company and around the global community.

Albert Fisher was established by its namesake in Lancashire in 1920 as a fruit and vegetable wholesaler. The company grew across England in the early 1960s but remained small until 20 years later when a new chief executive, Tony Millar, launched an acquisition spree that took the company well beyond its original fruits and vegetables distribution business. Millar soon turned his attention to North America, where he began snapping up wholesalers and other companies. By the 1990s Albert Fisher’s revenues topped the $1 billion mark, but in many respects it become an unwieldy collection of companies, including paper products firms and a car dealership. Millar’s successor, Stephan Walls, adopted a new strategy when he took over in 1992. He cast off noncore assets and shifted the company away from low-margin, commodity-based businesses and toward value-added processing activities. Fresh Western, with its FreshHold technology, was a good fit with this approach.

After Albert Fisher acquired the company, Tom Church stayed on for a while, serving as chief operating officer, but soon he left and with his brother Steve launched Church Brothers Produce, LLC, returning to their roots in growing, sales, and marketing. They would also organize Fresh Kist Produce with six independent grower-shippers, and would handle their sales and marketing needs.

Under Albert Fisher’s ownership, Fresh Western continued to fill out its product lines, adding new lettuce blends and salad kits that included name-brand dressings, croutons, and a line of cole slaw kits. The company also used it packaging technology to expand well beyond the bagged salad business, adding a wide variety of cut vegetables, mixed vegetables, and cut fruits. Fresh Western furthered its private label business as well. Notable new deals included supplying the 3,500 supermarkets of the Supervalu chain with fresh-cut vegetable products, as well as store-brand products packaged for the Albertson’s chain.

In addition to a thriving supermarket private label program, the company pursued licensing deals, taking advantage of the power of national brands. The most important was the Popeye trademark, controlled by King Features Syndicate. The Popeye sailor character made his debut in a comic strip in 1929. The subsequent animated cartoons later became perennial favorites, with the advent of television. In each cartoon feature, Popeye was beaten and belittled and outfoxed until he guzzled a can of spinach, which provided him with superhuman strength and a chance to turn the tables on his opponent, who was, more often than not, the burly Bluto (although in some versions, Popeye’s nemesis was a similar character named Brutus). Generations of parents cajoled reluctant children into eating spinach because of Popeye. Even in the 1990s the character’s connection to spinach remained strong and helped sell Fresh Western’s bagged cut spinach. Fresh Western also acquired the Weight Watchers license for salad kits, and teamed up with Dean Foods to offer a line of fresh-cut bagged produce under the Birds Eye Farm Fresh label, taking advantage of Birds Eye’s long association with frozen vegetables, a category that was no longer enjoying strong growth. However, it was the Popeye brand that proved the most successful.

While Fresh Western enjoyed steady growth in the second half of the 1990s, its parent company endured a period of transition. A new management team was installed in 1998 and Albert Fisher began divesting assets in order to pay down debt and focus solely on value-added businesses. Fresh Western did well individually, but heavy debt plagued the parent company, which also had to contend with poor results from its frozen food operations. In 2002 Albert Fisher was unable to keep up with interest payments and turned to lenders in hopes of restructuring its debt. When that effort failed, the company had no choice but to allow the banks to appoint administrative receivers. Because there were no parties interested in acquiring the entire company it was sold piecemeal over the next few months.

MANAGEMENT BUYS COMPANY: 2002

Albert Fisher’s primary North American assets were concentrated in the River Ranch Fresh Foods processor unit. Its executive team, led by CEO Jim Lucas, formed River Ranch Fresh Foods, LLC, to acquire the assets in June 2002, leaving the same organizational and operational structure in place. Aside from gaining its independence, the company hoped to benefit from the elimination of an entire level of management.

KEY DATES

1981:: Company founded as Fresh Western Marketing.
1988:: Testing begins on FreshHold technology.
1992:: Private label business launched.
1994:: Albert Fisher Group acquires company.
2002:: Management acquires company, renamed River Ranch Fresh Foods LLC.

River Ranch found itself well positioned to take advantage of consumers’ increasing preference for fresh-cut vegetables and fruits. Helping to spur that demand were new dietary guidelines issued by the U.S. Department of Agriculture in early 2005 recommending that adults consume 4½ cups of fruits and vegetables daily. In order to reach that amount, many people took advantage of fresh-cut produce which was increasingly available at supermarkets and delis. According to Supermarket News, fresh-cut produce generated $8.8 billion in sales in 2003. Two years later that number was in the $10.5 billion range and continuing to climb. River Ranch took advantage of the trend. Seeking to leverage its star brand, Popeye, the company introduced a line of Popeye Snacks, including such conveniently packaged items as carrot chips, celery sticks, snow peas, snap peas, and snap peas mixed with carrots. The company made further use of the brand by introducing a line of Popeye Microwavable Spinach.

In late 2005 River Ranch gave the Popeye label an extensive makeover, developing a new logo and graphics and significantly increasing the package viewing window to allow consumers a better view of what they were buying. Several months later, however, it was what consumers could not see that scared them. In the autumn of 2006 an outbreak of E. coli –induced illness was linked to baby spinach. River Ranch was named as an implicated company, and was said to have distributed some of the contaminated baby spinach in its “spring mix,” which was sold under a number of brand names. However, in the end no contamination was traced to River Ranch facilities and the company was cleared. Nevertheless, the outbreak cost the company money and blunted, at least temporarily, the growth of the fresh-cut produce category. River Fresh and other companies in the industry took steps to study the E. coli problem, make changes, and reassure consumers about the safety of their products.