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Allens to become Seneca Foods unit in pending merger

Rochester Business Journal
August 12, 2011

The merger of Marion-based Seneca Foods Corp. and an Arkansas processor of canned and frozen vegetables should be completed within 60 to 90 days.
Once it is completed, Allens Inc. will become a subsidiary of Seneca Foods, officials said. Terms of the merger have not been disclosed.

Local operations are not expected to be affected, said Kraig Kayser, Seneca Foods president and CEO, at the Wayne County firm's annual meeting last week.

Seneca Foods and Allens announced last month that they had signed a memorandum of understanding contemplating a merger in an all-stock transaction.

Seneca Foods has been working with the founding family at Allens, which produces vegetables that Seneca Foods does not, Kayser said. Allens operates plants in Brockport, as well as in Bergen and Oakfield, Genesee County, which it obtained as part of a deal with Birds Eye Foods Inc.

During the annual meeting at Seneca's headquarters in Wayne County, Kayser said a drop in selling prices, along with a difficult growing season, had led to lower sales and earnings in fiscal 2011.

Seneca Foods reported in May that its net income for the fiscal year ended March 31 was $17.7 million, or $1.45 a diluted share, down 63.5 percent from $48.4 million, or $3.96 a diluted share, the previous year. Sales fell nearly 7 percent to $1.19 billion.

Higher input costs, as well as increases in fuel and steel prices, are causing the vegetable processor to raise prices. Kayser said it is not known what impact the price increases will have on consumer demand, though previous increases have been accepted because Seneca's products are a good value compared with alternatives.

"Consumers in this economy are looking for ways to stretch their dollars," he said.

Seneca Foods is the nation's largest processor of canned fruits and vegetables. It ranked 22nd, with 397 local employees, on the Rochester Business Journal's most recent list of manufacturers.

Seneca Foods has facilities throughout the United States, including manufacturing plants and warehouses in Marion; Geneva, Ontario County; and Leicester, Livingston County. In addition to its canned-goods operations, the company also owns Seneca Flight Operations, an executive air charter service in Penn Yan, Yates County.

Its products are sold under the Libby's, Aunt Nellie's Farm Kitchen, Stokely's, Read, Seneca Farms and Seneca labels, as well as under private labels and to industrial customers. In addition, under an alliance with General Mills Operations LLC, Seneca Foods produces canned and frozen vegetables sold by General Mills under the Green Giant label.

The company's agreement with General Mills for the production of its Green Giant vegetables also was affected by negative conditions last fiscal year, Kayser said. Seneca Foods sales to General Mills declined 20 percent and case demand also dropped due to higher-than-expected inventories.

A bright spot for fiscal 2011 was Seneca Foods' canned bean business, Kayser said. Its Libby's line, which includes fruit, recently returned to more than 1,000 Wal-Mart Stores Inc. locations across the country.

Capital expenditures in fiscal 2011 totaled $19.5 million, down from $20.8 million the year before. Locally, the company spent $900,000 for a bean expansion project in Geneva.

Kayser said the firm is focused on growing its frozen vegetable business, a move that was strengthened last year with the acquisition of Pennsylvania-based Unilink LLC and its sister company, Lebanon Valley Cold Storage L.P. But it is also expanding its other product offerings, has gotten its products into more big-box and dollar stores and is looking to increase sales of its snack products.

The company recently announced that its healthier snack chips, including Apple Chips, Sweet Potato Chips and Crisp Onions, are now gluten-free.

"This new line of gluten-free products supports our corporate goal to provide great-tasting, healthier snack options for everyone, including those with gluten diet restrictions," said Katherine Sheldon, Seneca Foods vice president of category management.

In February, the business introduced the first microwaveable oatmeal and fruit cup under the Seneca Farms brand. The ready-to-eat product requires no added water or other ingredients. The firm will spend $5 million promoting the product this fiscal year, Kayser said.

On the industrial side of the business, Seneca Foods expects to introduce a low-sodium vegetable product.

The company's export business is improving, Kayser said, as consumers worldwide look for American-made canned and frozen fruits and vegetables. He sees opportunities to export frozen corn to Japan and increase its sale in places such as Latin America.

"We are seeing signs of a strengthening market and expect to end the year in the black," Kayser said.

8/12/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail

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