Kent Ratzlaff ran up to the podium to receive the Rising Star award at the Business Journal’s CFO of the Year Awards, followed by lively cheers from the crowd—a bit more than a typical financial industry’s “attaboy” applause.
“I was humbled by it, I didn’t expect to win, there are so many good candidates,” Ratzlaff, chief financial officer at Niagara Bottling LLC, said of his win at the Jan. 28 event (see related stories, pages 1, 5, 6 and 7). “Those business people that stood up for me, they are all partners of mine, relationships we developed over the years. I couldn’t have done it without them.”
Even in his current position managing finances for the country’s second largest water bottling company, he said he’s indebted to past working relationships with the company’s owners, the Peykoff family.
McGladrey & Pullen
Ratzlaff, 45, handled Niagara’s taxes for five years while running the tax department at Irvine-based accounting firm McGladrey & Pullen.
“[McGladrey was] a much smaller business at the time,” he said. “They had one location in Irvine.”
The business relationship gave him a good understanding of the company’s health. And when incoming Chief Executive Andrew Peykoff II, the founder’s son, approached him with a job offer in 2003, it made it that much easier to accept the job.
“First, I understood the financial aspect of the business, where it is going. And second, I understood the family. It was a great family,” he said. “They are wonderful to work for, they are smart, they are hard-working, they are fair.”
The company had a CFO at the time who was getting ready to retire, and “Andy was looking for someone to backfill,” Ratzlaff said. “The day came when he retired, so fortunately I was at the right place at the right time.”
Ratzlaff, along with five other managers who came on board around the same time, helped the company grow strong enough to compete with national giants, such as the country’s No. 1 water bottler, Nestle USA.
Niagara, which holds the No. 2 spot, has some 2,000 employees working at 18 bottling plants across the country, including five plants that were added after it bought a smaller bottling company.
“[Acquisitions are] not in our cards,” Ratzlaff said. “We tend to grow organically, but if there is ever the right opportunity, we’ll take it.”
When he came onboard, the company’s revenue was about 5% of what it is today, and it continues to grow 25% to 30% each year, he said.
“I don’t think any of us expected this type of growth, no one in their wildest mind,” Ratzlaff said.
Vertical Integration
He attributes the success to several factors, including vertical integration, packaging innovation and the company owners’ management style.
Each of Niagra’s bottling plants has technology to manufacture its own packaging.
“We were (the) first in the country to be vertically integrated in the water bottling industry,” Ratzlaff said. “Everything is done in-house at the same facility. We do our own injection molding, not only the bottle but the caps as well.”
Packaging has also improved environmentally and cost wise.
Ratzlaff said the company’s bottles use 60% less plastic than its original bottle manufactured in 1998.
“Water is commoditized, so if you don’t focus on the cost structure, it’s going to be very hard to compete,” he said. “So that’s what Niagara does: We focus on cost components, we keep taking packaging cost out of it while maintaining a low price at the retail shelf.”
And then there’s the company’s “bureaucracy-free” management style.
“Andy gives us a long leash,” Ratzlaff said. “He doesn’t know much about accounting, taxes or finance, so it’s kind of, ‘You’re in charge, go figure it out.’ He just puts a lot of faith and trust in us to do what’s best for the company. And he has high expectations on the flipside.”
Ratzlaff is in charge of accounting, finance and taxes. He also oversaw the information technology department and the 2007 implementation of enterprise resource planning software, which he said was one of his hardest challenges. ERP allows an organization to automate back-office functions, including marketing and product planning.
“We learn a lot by hitting our head on the table,” he said. “We tried to get it up within 12 months, which [we did], but it was a hard ‘go live’ experience. We lost visibility to orders, had customer service failures because of the bugs in the system, and needed training. If I would do it again, I would get executive and management buy in to the whole software itself, because their departments have to use it.”
And when others criticized the shaky Obamacare website launch in September, “I could sympathize,” he said. “That’s successful in my world.”
