Paul Smucker Wagstaff used to be a Smucker. Well, technically he still is a Smucker, but he’s also not. Wagstaff spent most of his career with The J.M. Smucker Co., the near-ubiquitous Orville-based company whose family name he bears. For some 20 years, he worked his way up the hierarchical ladder, progressively taking on greater and greater responsibilities presumably on his way to one day lead the multi-billion dollar international food company. Then he quit.
Smucker Co. qualified Wagstaff’s curious and, at least from the outside, sudden exit with a statement it submitted to the SEC that said his departure was not done in a climate of ill will. A couple years later, Wagstaff reappeared as president and CEO of Eagle Family Foods Group LLC, a company he created with business partner Jeff Boyle, using a carveout of Smucker’s canned milk business as its foundation. He’s gone on to shape the 300-employee company’s identity by buying up two snack brands — makers of popcorn and veggie snacks — and positioned it as a player in the snacks and baking aisles.
“I’ve always wanted to run my own business. Good or bad, right or wrong, this is my opportunity to do it,” Wagstaff says. “I know it may sound crazy to some people, but to me it’s very exciting to run and create something and create the team. That’s fun to me. That is exciting.”
Leaving the mother ship
Wagstaff says he’s always had an entrepreneurial bent — a desire to create, to build a business of his own — and he had his opportunities at Smucker Co. to do essentially that. He oversaw its U.S. Retail Oils and Baking business as its president, presiding over the multi-branded six-category division that had $1 billion in sales, $100 million in profit, five plants and 700 employees. He also headed the U.S. Retail Consumer Foods Division, with its eight categories, eight plants and 1,300 employees.
Still, even with that opportunity and the institutional latitude to shape massive business divisions, something was missing.
“I loved my time at Smucker’s. I mean, my cousin (Mark Smucker) is still running it and doing a great job and I love everything about it. But the independent piece is something that’s really attractive to me; and the newness of it,” Wagstaff says. “Smucker’s had tons of support, incredible people that work there, really great talent. But even when you’re building something, you’re building inside of a very strong, protective kind of mother ship. For me, I really enjoy the piece of this that is a white slate and you’re on your own. The adventure piece of it is really attractive to me.”
Newly free of his corporate trappings, he and his chief administrative officer, Boyle, pitched early investors — private equity firms, family offices, other groups — on the idea that it was a very good time in the food industry to create a business because a lot of the big CPG firms were looking to right-size their portfolios.
“Our thought process, and kind of our pitch at the time, was I’d be able to gather enough senior-level food talent that we could be in a position to catch some of these food businesses that are these carve-outs that are coming out of the big food manufacturers and/or the family companies that are going through transition.”
Early on, they made a play for the Green Giant brand, which at the time was being shed by General Mills. Eagle Foods lost that bid, but found its next opportunity shortly after when the condensed milk assets became available from Smucker’s Co.
The deal included Eagle Brand, Magnolia, PET, Milnot and private label canned milk products, as well as two manufacturing facilities, 170 manufacturing employees and 14 corporate and sales employees.
“Of course, I knew that brand. I used to run it. So that was a very smooth and simple, roughly speaking, business to bring in because of my knowledge base of the people,” Wagstaff says.
A short time after, Eagle Foods acquired Cornfields Inc., maker of G.H. Cretors popcorn and Hi I’m Skinny veggie snacks. A little later, Eagle Foods picked up Popcorn, Indiana, maker of its eponymous brand.
In choosing its acquisition targets, Wagstaff says he wants brands valued at $15 million or above that ideally have their own manufacturing process that can be improved by the company’s in-house expertise — staffers with pedigree from the likes of Cargill and Nestlé, as well as other CPG companies — and the deal would create scale to help grow the business.
The company’s focus now is on the snack and baking categories, with a lean toward Hispanic consumers. Its product mix is 60 percent branded, 40 percent private label, a mix Wagstaff says he doesn’t imagine will change much.
“In our current mix, as we go and look for other businesses, we’re primarily looking for branded businesses. If we grow and that ratio changes, it’s more likely to change due to acquisitions,” he says.
Boyle says having a balance helps the company because many buyers only want branded or only want private label. The current mix gives Eagle Foods a wider sales net to cast.
Curious entrepreneurs wanted
As Wagstaff adds brands to the business, he’s also building the team.
“To me, it always comes down to people,” Wagstaff says. “I love people. I love building teams. I love bringing people together. And that totally excites me because I know and I’ve seen in the past that once you get a good team and you get them all together and you get them working together, you can accomplish incredible things.”
Among the traits Wagstaff looks for in his hires is entrepreneurial spirit, people who can take ownership of their responsibilities, some of which they’ve likely never had before, in an environment that is evolving daily. They need to be curious, able to manage the chaos inherent in a small, but growing organization, and trustworthy.
During interviews, Wagstaff says candidates are asked how they deal with the unexpected. And as much as he’s listening to their responses, he’s also watching their body language and facial expressions to see whether their eyes light up and they smile, or shy away and retreat. A telling micro-expression could eliminate a candidate from the running.
Wagstaff also wants people who can make tough decisions. When faced with the pressure of being the one to make the call, some people feel empowered while others shrink.
“You’ve got to be fearless,” Boyle says. “You’ve got to be bold. You’ve got to be resourceful.”
Boyle adds that having experience at a big CPG company is good, but it’s a plus for someone to have had a period of time with a small company or have started their own business. To Boyle and Wagstaff, it means the candidate understands how to work within the ever-evolving environment of a burgeoning company.
In the driver’s seat
Now fully on his own with a growing portfolio of brands and dedicated staff, Wagstaff reflects on what it felt like to finally be wholly responsible for every company decision, to operate independent of an established infrastructure and set out into the marketplace on his own volition.
“I loved it, frankly. It was very exciting. It was very fulfilling,” Wagstaff says. “I enjoy the difficulties as much as the rewards. One thing Jeff and I talk about often is when you buy a business, everyone thinks who hasn’t been involved in the whole cross-buying business that it’s a big celebration and that everything’s wonderful. You feel this elation afterwards … And that really doesn’t happen.
“Because of the hard work that goes into an acquisition, it is tough. You have to really enjoy working hard and understand that just when you think that you’ve got all the roadblocks knocked out of your way, there’s going to be six more that pop up, and not get discouraged with that. You have to be able to weather that type of difficulty and be OK with it, and feel energized and empowered and say ‘we’re going to find solutions; we’re going to cut through that.’”
A peek inside the Eagle Foods conference room
At Eagle Foods, the decision hierarchy starts with Paul Smucker Wagstaff and Jeff Boyle. They review opportunities though a list of 15-20 criteria, which breaks out the size of the organization and the category, its share of that business and its growth trend. They also look at the complexity of the business — is it a high-or low-SKU environment? And they look at the level of competition, preferring a higher barrier of entry.
If a company meets enough of those criteria, it gets through the first stage and moves on to be considered by the leadership team.
“Our leadership team would consist of the functional heads,” Wagstaff says. “We’d have a head of finance, we’d have a head of marketing, head of sales, head of operations, head of HR. We’d bring that team together and say, ‘Here’s the opportunity in front of us. Here’s the criteria it met. Here’s the criteria it didn’t meet,’ and then we’d get a sense from the team — literally we walk around and say, ‘Is everyone comfortable going forward?’ And if we get a majority of people comfortable — we like (it to be) unanimous, but if it’s not unanimous, that’s OK — then we take it to the next step, and that is really to meet with Kelso (and Co.), our private equity firm, and give a recommendation of why we think this is an acquisition we really want to run hard for.”
Wagstaff and Boyle want to walk through the buildings of the companies they’re considering for acquisition to see their operations. They also want to understand the people, know who they are, what type of fit they provide and what type of expertise they have.
Boyle says it’s preferential to bring on people through the merger because they have unique, intimate knowledge of the product or brand that is very valuable in the integration, and helps Eagle Foods speed up integration. But with their company’s internal expertise, Wagstaff says adding existing expertise from the integrated company isn’t necessary.
“We will look for an opportunity and if it has the right people and everything else fits, that’s a bonus,” Wagstaff says. “If it doesn’t and it meets all the other criteria, we have the ability to bring it in-house without the human capital. We would much rather have human capital come along, or at least some, but it’s not a must for us.”