Grocery sales boomed throughout the pandemic. One of supermarkets’ biggest and least-known suppliers missed out.
TreeHouse Foods Inc., based in Oak Brook, Ill., is the nation’s largest manufacturer of store-brand foods. Its low prices and variety helped make it a growing threat to packaged-food giants such as Kraft Heinz Co. , General Mills Inc. and Kellogg Co. over the past decade.
When Covid-19 disrupted the U.S. food sector, however, TreeHouse’s strengths became liabilities, the company’s top executives said, preventing it from benefiting as much as other grocery suppliers during the pandemic. Over the past year, TreeHouse ran into more capacity constraints and supply-chain problems than well-known brands because of coronavirus outbreaks. Cost cuts had to be delayed while labor, packaging, ingredients and freight got pricier. Not prepared to market its products online, TreeHouse fell behind as more consumers took their grocery shopping to e-commerce platforms.
“We had built this supply chain designed for tremendous efficiency but very low volatility,” TreeHouse Chief Executive Steve Oakland said in an interview. “When the pandemic hit, we had complexity meet volatility.”
The company faces pressure from an activist investor. Mr. Oakland said he is investing in technology and slimming down the company’s unwieldy operations, aiming to reverse TreeHouse’s fortunes as the pandemic eases.
