HANOVER, PA. — Competition from private label is putting pressure on the snacks category. Meanwhile, branded players are stepping up their offerings in the pretzel category. Executives at Utz Brands, Inc. believe the company is well positioned to take on all comers in both categories.
“Competition is a good thing for the category,” Howard A. Friedman, chief executive officer, said during a May 11 conference call with investment analysts. “I think it’s healthy, and I think it’s rational overall.”
In the case of private label, Mr. Friedman said Utz is fortunate in that it has a collection of power brands that appeal to a broad base of consumers. And it also has regional brands that can play varying roles up and down the price ladder.
“So we can go down and sell products that consumers want at pretty much every price point and every configuration that they desire,” he said.
As it relates to pretzels, he said the company has been very happy with the Zapp’s pretzel launch, and the Sinfully-Seasoned Pretzel Stix are performing better than expectations.
“Trial has been great,” Mr. Friedman said. “Repeat has been better than category benchmarks.”
Later in the conference call, Mr. Friedman was asked whether customers who are buying the Zapp’s pretzel products are new to the brand or if they are existing Zapp’s snack customers who are following the brand into the pretzel category.
“We find both — the pretzels launch is not only incremental to the Zapp’s brand, but it’s actually incremental to our portfolio as well,” he said. “So consumers are encountering the Zapp’s brand either through the potato chip offerings that they find or they may encounter them initially through pretzels, they kind of tend to be both. So it has been incremental for us.”
For the first quarter of fiscal 2023 ended April 2, Utz Brands sustained a loss of $14.5 million, which compared with a loss of $31.9 million in the same period a year ago. Adjusted net income, meanwhile, totaled $15 million, equal to 11¢ per share on the common stock, down narrowly from $15.4 million, or 11¢ per share, in the same period a year ago. Adjusted EBITDA totaled $40.4 million, up 10.7% from $36.5 million a year ago.
Net sales increased 4% to $354.4 million from $340.8 million.
Utz raised its forecast for full-year adjusted EBITDA growth to 7% to 10%, up from 6% to 10%, and reaffirmed its net sales growth of 3% to 5%.