March 26, 2010 Prize Potatoes

Volume 6 | Issue 1

Golden County Foods placed itself on the map by enhancing the flavor profile of the lackluster potato. But as the Plover, Wis.-based company

Established in 1991, Golden County Foods Inc. (GCF) became a leading producer of innovative frozen-food offerings. Demonstrating extraordinary creativity, the company developed innovative entrees, appetizers and snacks. But potato-based products represent one of its greatest strengths. After all, GCF is headquartered in Wisconsin, a state that resides within the heart of America’s enormous Midwest potato-growing region.

As GCF subsequently evolved into a versatile organization, it now complements its potato product line with vegetable, meat and cheese offerings.

In addition, to round out its portfolio, the company can boast co-ownership of Sadlers Bar-B-Que. “It’s the nation’s largest pit-smoked meat business,” says Terry O’Brien, founder and chief executive officer of Wholesome Holdings Group LLC and chairman of GCF. The 60-year-old enterprise offers fully cooked, hand-trimmed premium meats accentuated with proprietary spice rubs and a slow-smoking process. Another company under the umbrella is Impact Confections. Founded in 1981 and based in New Mexico, Impact developed into North America’s largest supplier of niche novelty candy products including large lollipops and sour candy. With this acquisition, the company also became the proud possessor of the 90-year-old Melster Candies, a Wisconsin-based confections operation renowned for peanuts, salt water taffy, coconut toasties and, most especially, chocolate-covered marshmallow products. “Behind Russell Stover, it’s the second-largest chocolate-covered marshmallow confectioner in the country,” says O’Brien.

Many of these developments occurred during an 18-year existence characterized by horn-of-plenty abundance. In that relatively short period, the company emerged as one of Wisconsin’s fastestgrowing food product developers and suppliers, forging a bold presence and establishing strong relationships with retail, food-service and private-label customers across North America and in Europe.

All of this took place in a small, quiet town called Plover, which could have placed the business beyond the radar range of many food industry observers. However, a group of investors closely monitored the development of this resourceful enterprise. At the right time, they engineered a mutually beneficial acquisition.

A “GOOD THING” RECOGNIZED

In 2007, a group that includes Wholesome Holdings LLC, Brazos Private Equity Partners LLC and some blue-chip lenders, purchased GCF. They knew a good thing when they saw it. “We recognized a very high-quality, under-leveraged frozen potato and appetizer opportunity,” says O’Brien. “We viewed GCF as an exciting acquisition with enormous growth potential related to frozen appetizers, snacks and side dishes.”

For one thing, the company had already established large partnerships and developed its own branded business, O’Brien says. In addition, the acquisition proved appropriate to Wholesome Holdings’ business direction. “We are always looking to find strong niche suppliers that rank number-one or number-two in their markets,” he points out.

With such forward-directed acquisitional aggressiveness, the Frisco, Texas-based Wholesome Holdings, which was founded in 2006 by O’Brien, became one of the most active middle-market business purchasers in the food sector.

BUILDING ON SUCCESS

As far as the GCF acquisition, Wholesome Holdings is looking to expand the business by increasing distribution in all channels and fostering continued product innovation. The company is well positioned because of its high level of talent, being a great blend of newcomers with additional marketing ideas, and key executives that include a CFO, vice president of marketing, vice president of sales, and director of procurement, all of whom have extensive food backgrounds from brands such as Coca-Cola, Con Agra and Dean Foods.

The company is additionally focused on the specialty frozen appetizer market for potato-based products. “This niche market is already strong, but we feel it still has potential for even greater growth,” says Golden County Foods Vice President of Marketing Kevin Tucker. “In general, frozen food represents a growing segment, as it now includes entrees, appetizers and snacks. Consumers are eating more snacks but, at the same time, they seek more options related to high-value meal alternatives. The frozen-food segment meets that demand.”

Already, GCF’s freezer-case product range included filled potato skins (the company currently leads the nation with this offering) and fried potato products as well as other side dishes, dips, breakfast items and battered, breaded and coated snacks and appetizers (e.g., onion rings, bruschetta, etc.). It also produces fried and parfried items (e.g., cheese sticks, pizza rolls) and its product portfolio even includes ethnic specialties such as quesadillas.

By dint of these selections, GCF garnered a customer list that includes some of the largest food companies in North America and Europe, as well as restaurant chains, mass merchants and retail grocers. GCF supplies retailers with branded frozen snacks and co-manufactures prominent national frozen branded products.

One more thing that attracted Wholesome Holdings to the company

is GCF products’ recession resilience. Tucker explains: “Consumers continually strive to feed their families in economic fashion, and this goes across the board with low-, middle- and high-income customers. The common circumstance is that everyone is ‘time starved.’ This has been especially aggravated by the recent recession, when everyone seeks greater convenience at better prices. But nobody, no matter their income level, is willing to sacrifice quality for convenience. So, all consumers place greater emphasis on food value, and this involves taste as well as quality.

GCF, with its strong orientation to the retail side, has been able to offer products that address these concerns and meet the needs created by prevalent eating patterns.”

FLEXIBLE PRODUCTION CAPABILITIES

Also, the company’s production elasticity has enabled it to position itself upon the crest-in-the-wave of retail consumer traffic. “GCF’s range extends from the high-end hors d’oeuvre to the lowcost, most convenient appetizers,” says Tucker. “In addition, the facilities’ high-speed, high-batch equipment lends itself well to the current recession environment, as the technology enables us to produce value-oriented, high-quality offerings.”

GCF’s production facilities are small town-positioned but state of the art. “We have two plants that are about two miles apart,” informs Tucker. “One measures about 70,000 square feet and the other measures 50,000 square feet. Both include high-speed lines that have been customized to accomplish high-touch productivity levels. This is one of the elements that allowed GCF to establish partnerships with the largest food manufacturers.”

These partners looked to GCF to provide product innovation, and GCF never let them down. “That gets back to what attracted Whole Holdings to GCF in the first place,” says Tucker. “GCF had already secured endorsements from leading food companies. Wholesome Holdings now wants to build upon these established relationships.”

To realize this goal, Wholesome Holdings and its investment partners channeled significant investment into the development of an advanced production line envisioned to at least double capacity.

FOCUS ON FOOD SAFETY

But no matter how far GCF extends its capacity, it will never relent on its adherence to food safety. That has always been, and will continue to be, a non-negotiable focal point. To minimize safety and security risks, GCF monitors food production processes with the vigilance of an obsessed superhero. “From 2004 to the present, GCF has achieved a 93-percent-or-better rating in the independent audits conducted by Cook & Thurber,” reports O’Brien. “We view safety audit scores as a primary measure.”

Also, every employee is trained to apply GMP (Good Manufacturing Practices) and HACCP (Hazard Analysis Critical Control Points) principles to ensure safety of all products that come out of the facilities. “Our employees realize the critical importance, and we celebrate high audit scores in the same way that we and other companies celebrate high-profit months,” says O’Brien.

Safety efforts include continuous monitoring of plant sanitation. This is accomplished through measures such as ATP-bioluminescence technology application and weekly environmental testing to monitor and eliminate microbial contaminants. Also, finished product sampling is performed daily for overall quality.

Beyond the technological adaptations, GCF deploys strict food security procedures, such as employee background checks and controlled access to production facilities, to guard against food tampering.

Along with food safety, GCF is strongly focused on research and development. “That gets back to the company’s customer-oriented founding principles,” relates O’Brien. “About three years ago, it invested in an advanced R&D culinary section for its plants. As a result, we can now pilot and develop innovative products in a manner that you’d typically only find in a very large-sized food company. That points to an aspect of GCF that strongly separates it from similar companies: We go the extra mile, which involves extraordinary lengths for a company this size, to innovate new products. The same goes for our safety efforts.”

All of that underscores GCF’s embracement of challenge toward it pursuit to excellence. The company targets higher standards. That’s its primary motivation. As the company reports, it takes its work personally. And, presumably, it hopes that no one has to endure the blandness of a boiled potato, which no amount of parsley sprinkling will make palatable.

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