Utz CEO on going from a 100 years family-owned business to 'the next billion dollars of growth'

Utz Quality Brands and Collier Creek announced their agreement to form the the Utz Brands. Collier Creek Co-Founder Roger Deromedi joins Yahoo Finance’s On The Move panel to discuss Utz Brands going public.

Video Transcript

JULIE HYMAN: Collier Creek, which is a special purpose acquisition vehicle, is going to be combining with Utz, the well-known pretzel and chip company. And when that deal closes in the third quarter, Utz, UTZ is going to be the ticker, and it's going to be publicly traded. Right now still trades under CCH.

I want to bring in right now Dylan Lissette. He is the Utz CEO joining us from New Jersey. And Roger Deromedi, he is the Collier Creek co-founder and longtime executive in the snack industry as well. So Dylan, I actually want to start with you. Your company has been around for a long time. What, I believe since 1921? Why go public now? Why did you guys decide to do this deal?

DYLAN LISSETTE: Sure it's a great-- great question. Thanks for having us, Julie, and the Yahoo Finance team. You know, we're on the precipice of 100 years of being in business, of being an iconic brand, developing a great distribution system, having a great portfolio of different brands from not just Utz that you may be familiar with, Julie, from coming out of Baltimore but Zapp's and Good Health and Boulder Canyon and a bunch of different brands that we have. And really, we've grown quite tremendously.

We've embarked on a lot of M&A activity over the last 10 years to grow the business strategically and geographically. We closed a large deal in 2016. We closed another deal in 2017. We closed a deal just a little bit over six months ago in late 2019. And each of these deals kind of expanded our geographic growth and the presence of our brands. And with that, of course, you know, we took on some debt and capital and funding to do that.

And we met up with Roger, who's on the phone with us, and CCH and started talking about a year ago really about a way to combine the fantastic team at Collier from a-- you know, a talent perspective right with a playbook and a background in CPG. And they had the special purpose acquisition vehicle that you mentioned, the SPAC, of CCH which had cash and money and really the ability to kind of-- we've likened it internally-- it just kind of came organically, this term. But we likened it internally to how do we create the next century of growth, right? How do we go from 100 years family-owned business to, you know, the next billion dollars of growth, the next 100 years, the next century.

ADAM SHAPIRO: Yeah, and that's something everybody-- you know, who doesn't love potato chips? But since you brought that up, let me go to Roger because as you get the finances in order, it would seem to me you're poised for even more acquisition, as Dylan was just saying. Can you give us a hint of where that might, you know, take this new company?

ROGER DEROMEDI: Yeah, thank you, Adam. Again, my apologies for not being on video. But it's great to be with you. No, as Collier Creek, it's backwards, decided to provide the capital. And excited to be in this combination because it's perfect for what we can do in working with Dylan and his team. And as you say, acquisitions has been and will continue to be an important platform for the company going forward. And our focus is in the salty snack area. We see a lot of opportunity to have a robust list of opportunities in the salty snack area that will both expand the company's geographic footprint, provide greater distribution opportunities, get into faster growing channels of distribution and subcategories that we may not be as strong in.

So we see it as an important part of the platform. And the funding is there to aggressively go after it.

INES FERRE: Dylan, Roger, this is Ines. What are some of the trends that you have seen over COVID-19 as people have stayed at home? And also I notice that you also sell online too. So have you seen an uptick there?

DYLAN LISSETTE: Yeah, thank you. Very interesting, literally around March 14, March 16, March 18 when things really started to talk about lockdown, talk about stay at home orders, consumers ran to food and grocery. We had a fantastic run. I mean, we-- our-- our sales volume went up precipitously. Kudos to the fact that we're vertically manufactured and distributed. So we were able to very quickly ramp up.

Our team had, like, literally three weeks in a row, Ines, where we had 45%-plus pounds produced out of our factories three weeks in a row. And then, you know, it tailed off a little bit. But salty snacks are not like paper towels, right, or toilet paper. I mean, it really is-- you load up for the weekend, you know, snow storm coming this weekend. You bring it home. All of the kids are out of school. They are all home. Everybody's working from home. The snack consumption goes up tremendously.

And we were really well positioned to take advantage of that. And then our e-commerce has-- has gone up tremendously as well. It's it's up to about 2% of our overall sales. But it's up also over 100% year to date. And that really took off right around the same time. And so that's one of the platforms that, as we look forward into, you know, the rest of 2020 and 2021 and beyond, is an area that we think we have tremendous opportunity to expand that from 2% to 3% to 4% of our overall company sales.

And it's all tied into our social media. And it's working really well. So we're getting a lot of brand recognition and a lot of new households that-- you know, that are seeing our brands and participating and consuming them.

ROGER DEROMEDI: This is Roger. I would just add it to Dylan's comments that COVID is obviously a very sad and difficult situation for so many people. But as he said, the business did well during that period of time as well were feeding people staying at home. But if you think about it longer-term, it's actually been helpful for our brands to get increased household penetration because of increased trial as people are eating at home. And we think that trend will continue and be able to build on that going forward.

DAN HOWLEY: Dylan, I want to ask-- first, settle a bet for me. Is it-- it's "Uhtz" not "Ootz," right? And second, do you expect to see a snap back for-- you know, once people start to come out of-- fully out of lockdowns?

DYLAN LISSETTE: Yeah, so the first one, I think people have been betting on and challenging-- challenging each other on for almost 100 years. So I say "Ootz," which is sort of a traditional Pennsylvania way, "Ootz," you know, from the throat. A lot of other people, newer people say "Uhtz" like "nuts for Utz." I don't know exactly the right answer. We're based in sort of Pennsylvania heritage. If you ask, we have multi-generations, right, of associates that have worked for the company. If you ask them, they are going to say "Ootz," So you know, hopefully that doesn't answer your question. But you know, it gets you partway there.

RICK NEWMAN: Hey, Dylan, Rick Newman here. I thought to have a successful snack food company these days you had to be making snacks out of, like, chickpeas and lentils and beets and carrots. But how venerable is just the plain old potato chip?

DYLAN LISSETTE: It's-- I mean, what's funny is that it took off during the COVID season. It's almost like everybody-- you know, I've read a lot about other people. I've heard them on, you know, the news shows and the traditional food brands and people are flocking to them. They're really flocking also just to traditional forms of snacks, right?

So to your point, there's a lot of better for you that's sort of way out on the fringes of taste and acceptability and whatnot. Potato chips are true and true, one of the oldest snacks-- or categories in the snacking. It's exploded. It's been great. It's literally one of the largest, if not-- I guess it's the largest category within salted snack. And it continues to perform well.

And people continue to innovate. You know, it's not just around adding different flavors to, you know, the same old potato chip. I mean, it's really-- we've expanded, taking potato chips and putting them in-- frying them in avocado oil or olive oil and that really sort of balancing the-- you know, the branding between Boulder Canyon, which is another better for you brand that we own, Good Health, which is a better for your brand, olive oil, avocado oil. There's a lot of opportunity there you still have a better for your snack but have it rooted in potato chips, which everybody loves.

JULIE HYMAN: And Roger, I just briefly, to close out, want to ask you about that as well because you-- you've been around the snack industry, right? You were the CEO of Kraft. You were chairman of Pinnacle Foods. So do you think that the sort of swing towards healthy was overplayed? Or what do you think, you know, over your time in the industry? Where do you think we've landed on that right now?

ROGER DEROMEDI: I think the trend will continue. And what I love about the Utz business is it's well-positioned to take advantage of those trends, as Dylan alluded to between Boulder Canyon and Good Health and other opportunities and acquisitions that we may take. So I think it's all gonna remained balanced. There's going to be a need for consumers across the spectrum of taste and convenience and value and, importantly, better for you.

So it's always been that in the food industry. And it will continue with-- the trends continue towards better for you. But I don't think it'll negatively impact the growth of the salty snack category.

JULIE HYMAN: All right, thank you both, gentlemen. Roger Deromedi is Collier Creek co-founder. And Dylan Lissette is its Utz CEO. Thank you so much gentlemen for joining us. Hopefully we can check back in with you in the third quarter when the deal closes. Appreciate your time.