Here’s a basic strength of Orange County’s economy that often goes overlooked amid the software makers, medical device manufacturers, apparel brands and financial firms here: food.
OC’s cluster of food makers and distributors range from a company that makes billions of hamburger patties for McDonald’s to a brand of stuffed olives—with ramen noodle makers and salad dressing specialists in between.
There are dozens of them here, accounting for thousands of workers and more than $10 billion in annual revenue, according to Business Journal estimates.
More than $8 billion of the estimated total comes from a couple of food makers that also rank among OC’s largest businesses overall.
The leader of the local pack is Irvine-based Golden State Foods Corp., which had $5.8 billion in revenue last year. GSF is one of the largest food companies nationwide and employs 4,200 workers overall, with about 55 in OC, where it is the second-largest private company based on revenue.
GSF serves the fast-food industry, supplying some 25,000 restaurants around the world. It makes meat products and various sauces at manufacturing facilities in Conyers, Ga., and City of Industry, where it’s currently installing a lab for research and development. International locations include its New Zealand and China plants.
GSF perhaps isn’t all that well known among retail customers because “we don’t sell anything with our own name,” said Neil Cracknell, chief operating officer. “Everything we supply goes out in our customers’ names.”
McDonald’s Corp. has been a good name to have as a customer for more than 50 years. Golden State is the fast-food giant’s largest supplier of liquid products, including ketchup and sauces, and its third-largest beef supplier in the U.S.
GSF’s services go beyond McDonald’s, with a client roster that includes Chick-fil-A, Taco Bell and Starbucks.
“A large part of our life, 55 years of it, we were solely dedicated to McDonald’s,” Cracknell said. “A decision was made [about 15 years ago] to diversify away from being a sole McDonald’s supplier. That’s when a rapid growth of the company took place as we took other customers.”
That’s also when Los Angeles-based investment firm Yucaipa Cos. and St. Louis-based management company Wetterau Associates LLC acquired GSF for an estimated $400 million. Wetterau Associates bought out Yucaipa’s shares for 100% ownership in 2004.
Mark Wetterau, cofounder of the St. Louis firm and a member of the Business Journal’s recently published OC’s Wealthiest, has been serving as chief executive of GSF since 1999, when the company had about $1.5 billion in sales.
Larger Mix
Fast-food chains have been good to Golden State, while the larger field of restaurants and retail grocers has fueled growth for other food distributors and manufacturers here. It’s a mix of big and small businesses that’s scattered throughout OC and remains difficult to measure definitively.
Among the standouts are Brea-based Ventura Foods LLC, which had $2.5 billion in revenue through in the 12 months through March 2012.
Ventura specializes in salad dressings, dips and oils, producing them at a number of manufacturing facilities nationwide, including in Ontario and Thornton, Ill. Its retail brands include Smart Balance and Dean’s Dairy Dip.
Ventura has about 2,600 employees, including 230 here. Most of its workers are based in the manufacturing plants, according to Ventura Chief Executive Christopher Furman.
Business for Nature’s Best, also in Brea, has been helped by the growing consumer interest in natural and organic food products, according to Chief Executive Jim Beck.
Nature’s Best is a wholesale distributor of natural food products, supplying retail stores throughout the U.S. and abroad with 25,000 or so organic and specialty food items.
The company notched $543 million in revenue last year. It employs 650 workers total, with about 75 in OC.
Ingardia Brothers
Many of the food companies in OC are family-owned and go back decades.
Brothers Joe and Sam Ingardia own Ingardia Brothers Produce Inc. in Santa Ana, a distributor of produce and seafood, which sells to restaurants, schools and hospitals in and around OC.
Sam Ingardia oversees the day-to-day operations of the business, which had $72 million in sales in 2012 and is on pace to top that this year.
Ingardia Brothers, which currently employs about 170 workers, began as a smallish retail store in Costa Mesa in 1973, selling fruits and vegetables out of a 2,400-square-foot storefront. The brothers later introduced seafood into their mix and started deliveries to local restaurants by request.
“We went into more and more food-service distribution, and about 10 years into the business, we figured that it was best to let [the retail side] go,” Sam Ingardia said. “We went straight into distribution.”
Ingardia Brothers moved into its current headquarters and distribution center in 2008.
“It was not great timing, but it worked out well,” he said. “It gave us a bit more time for our growth. We’ve grown at a great pace.”
Sam Ingardia, who designed the layout of the 65,000-square-foot distribution center, estimated the warehouse carries more than 5,000 items across a range of categories of fruits and vegetables, fish and dairy items. It also sells dry groceries, such as spices.
“Restaurants, even though they’ve had their problems during the recession, still did pretty well,” he said. “They may have slowed down in payments, but they stayed open. They were imaginative and came up with specials for lunch and dinner.”
Stuffed Olives
Brian Giuliano also saw the resilience of food-oriented businesses in recent years.
“The food business is probably the last to go” in a challenging economy, he said, adding that his family business, Giulianos’ Specialty Foods, has seen sales grow “about 30% over last year, which also was up 30% from the year prior,” despite rising costs of operations.
Garden Grove-based Giulianos’ has been making pickled peppers for more than 50 years. The family patriarchs—Giuliano’s grandfather and dad—started as distributors of Italian food products to delis, but dissatisfaction with a supplier that packed peppers for the Giulianos led them to start pickling on their own. The variety has since grown to reach nearly 20 types, including pepperoncini, jalapeno and cherry peppers.
The company, which has 35 employees in Garden Grove, expanded its product list about 15 years ago to include various types of stuffed olives and more recently introduced pickles.
Today, Giuliano oversees sales and marketing. His brother, Corey, runs the day-to-day operations at the plant, and their father, Errol, serves as owner and chief executive.
About 75% of Giulianos’ business comes through sales to retail stores, including large grocers, such as Ralphs and Walmart.
Other long-standing local food manufacturers include Anaheim-based Bridgford Foods Corp., maker of meat products and frozen bread dough.
It has a processing plant in Anaheim, with other facilities in Chicago, Dallas and Statesville, N.C.
Bridgford recently had a total of about 500 employees, according to its website. The company’s products, including buttermilk biscuits, garlic Parmesan bread and sliced Italian salami, are sold in 50 states and abroad, including Canada.
The publicly traded company had $127 million over the 12-month span through last November. Members of the Bridgford family own more than 80% of the common stock, according to the company.
Stremicks
Santa Ana-based Stremicks Heritage Foods LLC specializes in dairy products, including several types of milks and creamers.
The company registered about $450 million in revenue last year. It has 850 employees total, spread throughout its facilities and offices in Cedar City, Utah; Joplin, Mo.; and Riverside. Its OC headquarters houses about 165 employees.
Relationships among manufacturers and distributors are clearly a key element in the food-service industry. Some companies, such as Stremicks and Ventura, have made efforts to integrate both aspects under one umbrella for a more streamlined process.
Much of those relationships and personal ties are “multi-generational” for Jenny and Willie Rosoff, siblings who run Village Green Foods Inc. in Irvine.
Their father, Hal, ran food businesses in OC for decades, including Meyerhof’s Catering in Irvine and The Back Bay Rowing & Running Club at the South Coast Plaza in Costa Mesa.
“We grew up working for dad, swearing we’d never be in the food business,” Jenny Rosoff said. They eventually joined him in the early 1990s, working in catering and restaurants.
They then went on to launch Village Green.
The company makes salad dressings, soups, pie fillings and other “pourables” that sum up to more than 100 different products. It has 25 employees and serves about 30 restaurants and other food manufacturers nationwide, including local chains, such as Wahoo’s Fish Taco and Ruby’s Diner restaurants.
Village Green’s location squarely in mid-OC has served the Rosoff family well.
“I think it’s a great place for restaurant businesses,” Rosoff said. “We’re not far from main hubs, and we have convenient transportation.”
Korean Connection
Those were key reasons cited by South Korea-based food company CJ Foods Inc. when it made the decision earlier this year to shift its U.S. corporate headquarters to La Palma from Commerce. The move, involving about 60 employees initially, began at the end of July and is expected to wrap up in coming weeks.
The relocation follows CJ Foods’ $8.2 million investment in a dumpling manufacturing facility in Fullerton in March.
CJ Foods specializes in Asian food items and marinades, and it sells to Trader Joe’s and Costco Wholesale Corp., among other grocers. The Fullerton unit is expected to bring in more than $95 million in revenue in the next five years, estimated to be about 20% of the company’s overall revenue.
CJ Foods is part of Seoul-based CJ Cheiljedang, the largest food company in South Korea, with more than $6 billion in 2012 revenue.
Other ethnic food manufacturers here include ramen noodle maker Maruchan Inc., owned by Toyo Suisan in Tokyo. Maruchan has been in Irvine since the late 1970s. Toyo has another Maruchan facility in Richmond, Va.
Marukome USA Inc., also in Irvine, makes miso, a Japanese seasoning made from fermenting soybeans and rice. Parent company Marukome Co., based in Japan, is billed as the “No. 1 miso company in Japan and throughout the world.”
Up-to-date revenue figures are not available, but Marukome’s corporate profile showed it had $290 million in revenue in 2006. It had 350 employees at the time.
Private Equity
Food businesses here and nationwide have been drawing interest from private equity funds, though firms that solely focus on the industry are relatively few—29 globally, according to Preqin Ltd., a research group with a main office in London and additional locations in New York City and San Francisco.
Part of that has to do with growing consumer spending amid the economic recovery.
“When the recession came and consumer spending decreased, the interest in consumer-driven businesses dropped off,” said Bill Simpson, partner in the Costa Mesa office of Los Angeles-based Paul Hastings LLP, and chair of the law firm’s private equity practice. “Now that consumer spending has increased, there is a high demand for investments in food companies.”
Preqin’s data show San Mateo-based Paine & Partners LLC to be one of the top funds focused on food companies, with about $1.2 billion raised over the past 10 years and $300 million or so in “dry powder.”
Paine & Partners in March acquired Placentia-based strawberry grower SGF Produce Holdings LLC, which for the past five years had been part of Sun Capital Partners Inc.’s portfolio. Boca Raton, Fla.-based Sun Capital invested a reported $32.5 million in SGF Produce in 2008 and sold it for an undisclosed amount.
Choctál, a chocolate and vanilla specialist that relaunched its brand this summer, recently said it’s starting to look for private investment opportunities, hoping to tap angel investors in OC. It maintains an office in Pasadena, while its ice cream products are made by Brothers International Desserts Inc. in Irvine.
Forty-year-old Brothers International has about 160 employees and operates out of a 30,000-square-foot facility here, making more than 500 different ice cream and dessert products that ship across the U.S.
“Our ice cream is produced in OC, and we have packaging, storage and a whole bunch of vendor partners in OC and in L.A.,” said Choctál Chief Executive Michael Leb, who called himself “a lawyer by training and a foodie by passion.”
“We’re targeting our first round, looking to raise $1.5 million to $2 million, the bulk of which will be spent in marketing activity, everything from store demos and events,” Leb said. “But really, our philosophy is to get this product in the consumers’ mouths.”
