Ralcorp Splurges on Crackers

\"\"In yet another story about private brand manufacturing giant Ralcorp and acquisitions, it was announced that Ralcorp has acquired North American Baking, formerly known as PL Foods. North American Baking is a manufacturer of premium private label specialty crackers in North America.

North American Baking will continue its operations in Georgetown, Ontario. In a separate transaction, Ralcorp acquired JT Bakeries, a manufacturer of private label and co-branded gourmet crackers. JT Bakeries will continue its operations in Kitchener, Ontario.

Both of these transactions are part of the company\’s snacks, sauces and spreads segment. Ralcorp anticipates the transactions will be slightly accretive during the remainder of its 2010 fiscal year. Terms of the transactions were not disclosed.

Kevin Hunt, co-CEO and president of Ralcorp Holdings, said: \”We welcome the North American Baking and JT Bakeries management teams and employees to the Ralcorp family. We believe the products manufactured by both of these companies will enhance Ralcorp\’s premium and gourmet cracker offerings. These transactions will allow us to continue Ralcorp\’s growth strategy on our existing private-label cracker platform.\”


Ralcorp: Decides Cereal & Pasta Taste Great Together

\"\"Typically I avoid stories that are primarily manufacturer focused in favor of stories that speak to building brands, however news of mega Private brand manufacturer Ralcorp acquiring American Italian Pasta Co. (AIPC) is news by any standard.

According to the Ralcorp press release:
“We are excited about the addition of AIPC to the Ralcorp family,” said Kevin Hunt, co-CEO and president of Ralcorp. “This transaction strengthens our position as a diversified provider of private label and branded food products, and we anticipate that by adding AIPC’s No. 1 position in private label dry pasta, strategically located production facilities, solid brands and top-tier consumer base to Ralcorp’s capabilities, we will be able to better address a broader spectrum of customer and consumer needs.”

As the economy improves manufacturer consolidation has the potential to significantly impact the creation and growth of engaging Private Brands. Ralcorp has purchased more than 20 companies in the past decade

Only time will reveal the impact of this significant move.


Buy Private Brand Stock Before the Lemmings Raise Their Numbers.

I have included Mad Money host Jim Cramer in a post before and it illicited a significant response both here and in LinkedIn groups, so it is interesting to hear him push Private Brand HBC manufacturer Perrigo. Love him or hate him, Cramer is polarizing and I think he is write Perrigo’s stock has “much more room to run,” he said, “especially if you can buy it before the deal closes and all the lemming analysts raise their 2011 numbers.”

Over-the-counter drugmaker Perrigo [PRGO 59.00 — UNCH (0) ] just made a “smart takeover,” Cramer said, that extends its reach into yet another aisle in your local pharmacy. He had already recommended the stock in February – it’s up 27% since – but this new deal “makes the story even more compelling.”

Perrigo was largely known as the world’s largest manufacturer of over-the-counter private-label drugs, but the company also dabbles in generic drugs and active pharmaceutical ingredients. Then on March 23, management announced they were buying PBM, a privately held maker of store-brand infant formula and baby food for $808 million. Wall Street immediately blessed the deal, taking PRGO up 12% in just one day.


Perrigo Continues Private Brand Aquisitions in Australia


Private Brand HBC manufacturer Perrigo announced that it has signed a definitive purchase agreement to acquire Orion Laboratories Pty, Ltd. for approximately $48 million in cash. This is the second significant acquisition by the company in the last few weeks as Perrigo announced that it would buy privately held PBM Holdings Inc, a Private Brand baby food and formula manufacturer, for about $808 million in cash.

Based in Perth, Western Australia, privately-held Orion is a leading supplier of over-the-counter (OTC) store brand pharmaceutical products in Australia and New Zealand. In addition, the company manufactures and distributes pharmaceutical products supplied to hospitals in Australia. The acquisition is expected to add more than $30 million in sales annually and be accretive to earnings in the first year.

Perrigo Chairman and CEO Joseph C. Papa stated, \”The acquisition of Orion expands our global presence, complements our existing business and increases value for our shareholders. By leveraging Orion\’s product pipeline and local marketing and distribution expertise, Perrigo is expanding its ability to meet the world\’s growing need for quality, affordable healthcare.\”

The Company also confirmed that it closed its previously announced sale of the Israeli Consumer Products business to Emilia Group on February 26th, 2010. The proceeds from this divestiture will be used to fund the strategic acquisition of Orion Laboratories.


Private Brand Awarded $13.5 Million Damages from National Brand

This Businesswire press release details the results of the multi-million false advertising lawsuit filed by PBM Products against Mead Johnson Nutrition Company.  It will be interesting to see how this precedent impacts other National Brand advertising.

\"PBMMead Johnson, Maker of Enfamil, Loses Multi-Million Dollar False Advertising Case Against Store-Brand Infant Formulas

PBM Products, LLC, a leading infant formula company that supplies store-brand infant formulas to Walmart, Sam\’s Club, Target, Kroger, Walgreens, and other retailers, has received a favorable jury verdict and a $13.5 million damages award in its false advertising lawsuit against Mead Johnson & Co., the operating subsidiary of Mead Johnson Nutrition Company, the makers of the national-brand Enfamil LIPIL Infant Formula. Mead Johnson is 83 percent-owned by Bristol-Myers Squibb.

PBM’s lawsuit claimed that Mead Johnson engaged in false and misleading campaigns against PBM’s competing store-brand of infant formulas, suggesting they do not provide the same nutrition as Mead Johnson’s brands. PBM’s store-brand infant formulas cost up to 50 percent less than Enfamil LIPIL. The $13.5 million in damages awarded by the jury in the United States District Court for the Eastern District of Virginia is one of the largest damages awards ever for a false advertising case.

“This decision by a jury of the people confirms that Mead Johnson’s ads have been false in suggesting that there is a nutritional difference between our store-brand formula products and their products, when in fact the only major difference is price,” said PBM CEO Paul B. Manning. “Despite Mead Johnson’s scare tactics, parents are assured that PBM’s formula products are as high quality and nutritious as Mead Johnson’s.”

U.S. District Court Judge James R. Spencer issued his written rulings yesterday following the November 10th jury verdict. Judge Spencer’s written rulings permanently enjoined Mead Johnson from making any false statements concerning PBM\’s infant formula, including the claims Mead Johnson previously made in Enfamil advertising that \”It may be tempting to try a less expensive store brand, but only Enfamil LIPIL is clinically proven to improve brain and eye development,\” and \”there are plenty of other ways to save on baby expenses without cutting back on nutrition.\” The Court also ordered Mead Johnson to retrieve from the public domain all advertising or promotional materials containing these or any other false claims about PBM\’s store brand infant formula.

The details of the decision and the complaint are posted online in full at:

The nutritional supplements under examination in the case are two fats, DHA (docosahexaenoic acid) and ARA (arachidonic acid), which Mead Johnson calls “LIPIL®” solely for marketing purposes and touts as promoting infant brain and eye development. PBM’s claim focused on Mead Johnson’s direct mailing to more than 1.6 million parents of an alarming blurry picture of a child’s cartoon duck next to a clear picture of the same image which suggested that anything other than the Enfamil LIPIL blend of ingredients is inferior and will result in poor eye and brain development. Other parts of the false advertising campaign consist of statements that only Enfamil LIPIL has been proven to confer visual and mental benefits on infants, and store-brand formulas are a “cut-back in nutrition” compared to Enfamil.

PBM successfully argued that these advertisements were false and misleading especially since PBM store-brand infant formulas have the same nutrients at the same levels as Enfamil. PBM infant formulas are formulated to contain DHA and ARA, and are sourced from the same supplier in amounts, which equal or exceed the DHA and ARA in Mead Johnson’s Enfamil LIPIL.

This decision marks the third time PBM Products has sued Mead Johnson for false advertising claims. On the prior occasions Mead Johnson admitted that it made false claims about PBM’s products. It is also the first false advertising case to focus on the issue of DHA and ARA nutritional ingredients in formula, which were introduced into the market in 2003 and have become a staple in recent years by many brands as key components for infant development.

“This jury verdict should send a significant and clear message to Mead Johnson about the way it conducts marketing and advertising for its brands,” said Manning. “This lawsuit also demonstrates our complete commitment to defending our products and the valuable brands of our retail partners.”

“As a parent and supporter of children’s medical research, I take a personal responsibility in assuring our customers that the products we produce are healthy and nutritionally equivalent to brand names like Enfamil® LIPIL®. It is important, especially now, for parents to know that there are lower priced yet highly nutritious store-brand formulas that will provide the same benefit to their children as any national brand name formula product,” Manning added.

The U.S. infant formula market is estimated at $3.4 billion and the global market is estimated at $7.9 billion.

All of PBM’s formulas, and for that matter all of U.S. infant formulas, are subject to the exacting standards of the U.S. Food and Drug Administration (FDA), pursuant to the Infant Formula Act of 1980. This legislation vested FDA with the authority to ensure that all infant formula products sold in the United States provide the necessary levels of identified nutrients required for the growth of healthy babies. For more information, visit this FDA link.