How Utz went from local to national, and its plans to continue expanding 

On August 27, 2020, Utz Quality Foods completed a merger with special purpose acquisition firm Collier Creek and made its debut on the New York Stock Exchange four days later as the new Utz Brands, Inc. 

Soon after going public, the Hanover-based salty snack manufacturer announced that it would acquire ON THE BORDER, a Texas-based manufacturer of tortillas, salsa and queso dips. 

Utz’s acquisition of ON THE BORDER rocketed the company to the third largest manufacturer of tortillas in the country. The $480 million purchase couldn’t have been done without the access to capital that Utz now had as a public company, said Dylan Lissette, CEO of Utz.  

The acquisition gave Utz the opportunity to not only manufacture ON THE BORDER products in-house instead of through third party manufacturers, it also allowed it to integrate the products into its own routes, immediately bringing ON THE BORDER to more store shelves. 

For Utz, an acquisition can mean expanding the company’s geographic reach, breaking into a new product market and expanding into new regions.  

Since going public, the manufacturer has continued to expand through acquisitions, adding Chicago-based snack food maker, Vitner’s;  Nebraska-based filled-pretzel brand, H.K. Anderson; and most recently, Michigan-based R.W. Garcia Holdings and RW Garcia, maker of tortilla chips, crackers and corn chips. 

“What we really wanted to do [when going public] was make the company able to compete on a national scale within the US,” said Lissette. “We could continue to do the things we were good at, which was organically growing the brands that we have and own today, expanding the distribution of those brands across the US, and acquiring brands that made strategic sense for us Having access to capital and going public ramped that up.” 

Strategic growth 

If Frito Lay can serve every retailer in a market selling snack foods today, so can Utz, said Lissette. 

Today Utz serves every region on the East Coast with truck routes reaching every major city from Augusta, Maine to Miami, Florida. 

Nationally, the brand is currently a national player with a strong business in the Pacific Northwest with brands like Tim’s Cascade, Hawaiian and more. 

The company has a wide array of options when it expands to a new city or state or widens its net on an existing market. For example, when it acquired Vitner’s, Utz catapulted its ability to serve the Chicago market by using Vitner’s route system. Simultaneously, it allowed the company to incorporate its power brands, such as Zapp’s and Utz potato chips, alongside Vitner’s products. 

“Some of the mergers and acquisitions are geographic, some are brand-oriented, some are opportunistic,” said Lissette. “We look at it as a core foundational thing that we can do as the Utz company.” 

With its mergers and acquisitions, Utz is building on its already established distribution network with new products that are similar to potato chips such as other potato chip brands, pretzels and tortilla chips. Those products can all be delivered on the same truck, expanding efficiencies for the company, said Gerald Morrison, a business attorney with Harrisburg-based law firm Smigel, Anderson & Sacks. 

Morrison has represented and sold hundreds of businesses, including potato chip company Charles Chips, founded in Lancaster County. 

“The goal is to drive down the cost of operations so you can afford to pay [shelving fees] for that shelf space,” said Morrison. “You drive down cost by selling those snacks on the same truck and selling through the same salesperson.” 

Outside of its mergers and acquisitions, much of Utz’s growth has come from organically expanding its brands through leasing or buying new distribution centers, utilizing or buying a third-party distributor, entering partnerships with businesses and more. 

National growth 

Utz is currently ranked second in the salty snacks market among its core geographies and third nationally. The company operates 17 manufacturing facilities, selling nearly 7 million pounds of snacks per week at more than 100,000 retail stores across the country. 

In its Third Quarter 2021 Financial Results Summary, Utz reported net sales of $312.7 million—a 26.1% increase from the company’s $248 million in the third quarter of 2020. The company also saw net income increase from $18.2 million in the third quarter of 2020 to $25.6 million this year. 

By the end of 2021, Lissette estimates that the company will sell over $1.1 billion in product. 

Utz reported in its December 2021 Investor Presentation that it expects to continue to expand its reach  by focusing on key expansion markets in the South, Midwest and Colorado; and key emerging markets in Florida, Texas, California and the West. 

Utz’s “core” geographies include: Maine, New Hampshire, New York, Maryland, Connecticut, Rhode Island, Pennsylvania, New Jersey, Delaware, Massachusetts, Washington D.C., West Virginia, Virginia, Washington, Louisiana and Alabama. 

The company considers its expansion markets to be: Virginia, Ohio, Illinois, Colorado, Arkansas, Mississippi, Tennessee, Georgia, South Carolina and North Carolina. The remaining states are considered “emerging” markets. 

“We have a plant outside of Seattle, Washington, and a plant in Goodyear, Arizona. There are fourteen hundred miles between those two,” said Lissette. “We believe, and we are seeing this in our emerging and expanding markets, that that is a huge future market for us to continue to develop.” 

Lissette added that Utz has the brand power to grow in the region as well as the product consumers want. If the company doesn’t have the manufacturing capabilities to meet that demand, it will look to invest further. 

“We want to be sure we focus our time on the areas with the best return for us in terms of access to people, demographics, retailers and customers,” he said. “A lot of that will be the South East and the West.” 

Utz’s national footprint has been growing steadily over the past ten years, with its most rapid growth taking place in the past five years.  

To operate the 17 plants it has under its wing today, Utz must ensure that there is solid communication between them, but it must also maintain the culture, said Lissette. 

“The first year or two is the toughest because you are talking about integration,” he said. “I remember when we purchased Zapp’s over ten years ago and learned their New Orleans team took a company holiday on Mardi Gras (this year, it takes place on March 1, 2022). We don’t do that in our network, but we didn’t change it either. We work hard to be nimble.”