Utz Brands Completes Acquisition of Strategic Distribution Rights of National Food Corp

Rhea-AI Summary

Utz Brands, Inc. (NYSE: UTZ) has completed the acquisition of ~65 direct-store delivery (DSD) routes in South Florida from National Food Corp. This strategic move enhances Utz's local distribution capabilities and supports geographic expansion in key areas including Miami, Fort Lauderdale, West Palm Beach, Naples, and Fort Myers. This is Utz's second transaction with National Food, following a 2021 acquisition of 21 DSD routes in Central Florida.

Florida, the third-largest U.S. state for Salty Snack Category sales ($2.6 billion), is a important expansion market for Utz. Since 2021, Utz has grown its Florida retail sales to $103 million, with a 28% CAGR and increased market share from 2.7% to 3.9%. To capitalize on further growth opportunities, Utz plans to increase investments in distribution facilities, sales management, and route systems in the region.

Positive

• Acquisition of ~65 DSD routes in South Florida enhances local distribution capabilities
• Utz's retail sales in Florida grew to $103 million with a 28% CAGR since 2021
• Market share in Florida increased from 2.7% to 3.9% since 2021
• Plans for increased investment in distribution facilities and sales management in Florida

Negative

• Current market share in Florida (3.9%) remains below Utz's average Core geographies share of 6.9%

Financial Analyst

Utz Brands' acquisition of 65 DSD routes in South Florida marks a strategic move to enhance its distribution capabilities and market presence. The company's focus on Florida, the third-largest U.S. state for Salty Snack sales at $2.6 billion, shows a clear growth strategy. Utz has demonstrated impressive performance in Florida, with retail sales reaching $103 million and a 28% CAGR over three years. However, with a current market share of 3.9%, there's significant room for growth compared to their 6.9% share in core geographies. This acquisition positions Utz to capitalize on untapped market potential and drive further revenue growth in a key expansion area.

Market Research Analyst

Utz's strategic acquisition in South Florida demonstrates a calculated approach to market expansion. By increasing its DSD routes from 21 to over 200 in Florida since 2021, Utz is positioning itself for accelerated growth in a lucrative market. The company's plan to increase investment in the region, including enhanced retailer support and expanded distribution facilities, signals a commitment to long-term growth. This move aligns with consumer trends favoring convenient, branded snack options. With Florida's large consumer base and Utz's strong brand recognition, the company is well-positioned to capture a larger market share, potentially closing the gap with its performance in core geographies.

Supply Chain Expert

Utz's acquisition of 65 DSD routes in South Florida is a strategic enhancement of its distribution network. This move will likely result in:

• Improved service velocity and product freshness
• Better control over the last mile of distribution
• Enhanced ability to respond to local market demands
• Potential cost savings through optimized logistics

By consolidating its distribution capabilities, Utz can better manage inventory, reduce lead times and potentially improve profit margins. This vertical integration strategy could give Utz a competitive edge in the fast-moving consumer goods sector, where efficient distribution is important for success.

The acquisition includes ~65 routes in South Florida to enhance local DSD capabilities and to support geographic expansion opportunities to drive growth

HANOVER, Pa.--(BUSINESS WIRE)-- Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading U.S. manufacturer of branded Salty Snacks and a small-cap value and growth Staples equity, is pleased to announce that it has entered into a definitive agreement to purchase certain distribution rights in South Florida from an existing third-party direct-store delivery (“DSD”) distributor, National Food Corp (“National Food”).

This acquisition of ~65 DSD routes in South Florida, covering Miami, Fort Lauderdale, West Palm Beach, Naples, and Fort Myers represents Utz’s second transaction with National Food. The first transaction occurred in March 2021, and involved the acquisition of 21 DSD routes in Central Florida. Utz now oversees more than 200 independent operator-run routes in Florida, from the panhandle to the southernmost part of the state.

Florida is a key expansion geography for Utz, as it represents the third largest U.S. state in terms of Salty Snack Category sales, with $2.6 billion of retail sales⁽¹⁾. Since 2021, Utz has increased its retail sales in Florida to $103 million, representing a three-year compounded annual growth rate of 28%, and has also increased its market share from 2.7% to 3.9%⁽¹⁾. While the Company has enjoyed very strong growth, this transaction shows that there is still significant market share opportunity in Florida which remains below the average Core geographies share at 6.9%⁽¹⁾. We believe that Florida’s large consumer base, combined with strong recognition of the Utz^® portfolio brands, uniquely positions us to continue this growth trajectory. To support this expansion, Utz plans to increase its investment in the region and provide enhanced retailer support with increased distribution facilities and sales management, higher service velocity, and an expanded route system.

“We are very excited to announce this transaction, as we continue to execute the expansion strategy that we outlined during our December 2023 Investor Day,” said Howard Friedman, Chief Executive Officer of Utz. “Strengthening our regional foothold and bolstering our customer relationships in Florida is a key focus, as the state represents an important expansion geography for Utz. We look forward to expanding our distribution and offering our portfolio of iconic snacking products to more consumers in this important geography.”

⁽¹⁾ Source: Circana MULO-C, last-52 weeks ending 6/30/2024.

About Utz Brands, Inc.

Utz Brands, Inc. (NYSE: UTZ) manufactures a diverse portfolio of savory snacks through popular brands, including Utz^®, On The Border^® Chips & Dips, Zapp’s^®, and Boulder Canyon^®, among others.

After a century with a strong family heritage, Utz continues to have a passion for exciting and delighting consumers with delicious snack foods made from top-quality ingredients. Utz's products are distributed nationally through grocery, mass merchandisers, club, convenience, drug, and other channels. Based in Hanover, Pennsylvania, Utz has multiple manufacturing facilities located across the U.S. to serve our growing customer base. For more information, please visit the Company’s website or call 1‐800‐FOR‐SNAX.

Investors and others should note that Utz announces material financial information to its investors using its Investor Relations website, U.S. Securities and Exchange Commission (the “Commission”) filings, press releases, public conference calls, and webcasts. Utz uses these channels, as well as social media, to communicate with our stockholders and the public about the Company, the Company’s products, and other Company information. It is possible that the information that Utz posts on social media could be deemed to be material information. Therefore, Utz encourages investors, the media, and others interested in the Company to review the information posted on the social media channels listed on Utz’s Investor Relations website.

Forward-Looking Statements

Certain statements made herein are not historical facts but are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. The forward-looking statements generally are accompanied by or include, without limitation, statements such as “will”, “expect”, “intends”, “goal” or other similar words, phrases or expressions. These statements are based on the current expectations of the Company’s management and are not predictions of actual performance. These statements are subject to a number of risks and uncertainties and the Company’s business and actual results may differ materially.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240812933065/en/

Investors

Kevin Powers

Utz Brands, Inc.

kpowers@utzsnacks.com

Media

Kevin Brick

Utz Brands, Inc.

kbrick@utzsnacks.com

Source: Utz Brands, Inc.

FAQ

What is the significance of Utz Brands acquiring distribution rights in South Florida?

The acquisition enhances Utz's local DSD capabilities in South Florida, supporting geographic expansion and driving growth in a key market. It covers ~65 routes in major areas like Miami and Fort Lauderdale.

How has Utz Brands (UTZ) performed in the Florida market since 2021?

Since 2021, Utz has increased its retail sales in Florida to $103 million, representing a three-year compounded annual growth rate of 28%. Its market share in Florida has also grown from 2.7% to 3.9%.

What are Utz Brands' plans for expansion in Florida following this acquisition?

Utz plans to increase investment in the region, provide enhanced retailer support, increase distribution facilities and sales management, improve service velocity, and expand its route system to capitalize on growth opportunities in Florida.

How does Florida rank in terms of Salty Snack Category sales for Utz Brands (UTZ)?

Florida is the third largest U.S. state in terms of Salty Snack Category sales, with $2.6 billion of retail sales, making it a key expansion geography for Utz Brands.