Utz Brands is investing in both its marketing and supply chain capabilities as the company continues to operate in growth mode.
The Hanover, PA-based snack company, which grew net sales 17.5% to $350.1 million in the second quarter, is significantly shifting its marketing spend to more dynamic and nimble activities and further away from the multi-year sponsorships of the past, said Dylan Lissette Utz CEO, in a call with investors. As a result, Utz will increase its consumer pool marketing spend by about 40%, primarily in the second half of the year.
Utz includes such brands as On the Border, Chips & Dips, Golden Flake, and Zapp’s in its portfolio, and in addition to leaning into user-generated content across its social media platforms, it also intends to extend its voice to consumers through both advanced targeting of media and earned reach.
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“[W]e are finding success in connecting and engaging with our fans on high attention platforms,” noted Lissette. “Our social media following of both the Utz brand and the Zapp's brand has more than doubled since the start of this year. And we are connecting in a deeper way with consumers through driven marketing, to provide the right message to the right consumer at the right moment at the right place, and then measuring the impact.”
The company went public in 2020 and though Lissette said there hasn’t been a big difference in how it’s operating, it is evolving a few strategies. For one thing, Utz has historically spent very little in terms of marketing and media to drive its brands, he said. “And we want to look for ways that we can increase that over time.”
It’s also increasing its direct-store delivery footprint through a recent pair of acquisitions and moving into Publix stores.
To support this expansion, the company continues to invest in its supply chain and productivity initiatives, both of which it expects to help offset inflation. It will primarily focus on manufacturing efficiencies, logistics, and packaging and product design, and it’s transforming how it approaches demand and supply planning, according to company leaders.
“We are making great progress in our productivity programs, and I'm confident that these actions along with strategic price pack architecture initiatives will result in structural improvements that will drive meaningful long-term margin benefit to the company,” said Ajay Kataria, executive VP and CFO.
Kataria noted that the company’s supply chain is improving thanks to enhanced manufacturing, logistics, and planning capabilities, increasing throughput and efficiencies.
“Our recent acquisition integrations are on track and are allowing us to scale our manufacturing capabilities to efficiently support strong demand for our power brands portfolio,” he added. “Our recent investments in technology are helping to unlock insights that enable several margin enhancing work streams.”
While they’re not out of the woods when it comes to supply chain disruption, things are stabilizing, Kataria said, and the company has “built a lot of muscle around how to tackle that.” The combination of these investments and price increases has enabled the company to offset inflation.
“In our supply chain, manufacturing, logistics, distribution, we made people investments. And we are also optimizing enhancing our manufacturing footprint. So, all of those things, all the actions that we have taken have really helped us from a cost and financial standpoint,” he noted.