By Agnieszka Opalka
Petaluma Poultry Processors, Inc.'s acquisition of B3R Country Meats and Coleman Natural Products, two major natural beef processors, strengthens Petaluma's presence in the natural meats industry as it takes steps to build a natural and organic meats platform. A California-based company, Petaluma Poultry Processors is a leader in the production of organic and natural chickens. An American Capital portfolio company since January 2002, Petaluma has achieved dominance in the growing organic poultry market in the Western US and has become the second largest poultry processor in California. The acquisition of B3R and Coleman enables Petaluma to expand its product line, customer base, geographic presence as well as benefit from economies of scale in numerous operational functions.
The B3R and Coleman acquisition was closed on October 11, 2002. American Capital Strategies, Ltd. (Nasdaq:ACAS) provided $18 million in senior notes and senior subordinated debt. American Capital initially invested in Petaluma in January 2002 by supporting Booth Creek Management's recapitalization of Petaluma.
"Coleman is the premier processor of natural and organic beef and lamb in the country, and is the most recognized brand name in natural meats. The B3R management team is one of the most highly regarded in the industry. The alliance between them creates a strong base from which to better serve the customer," said American Capital Principal John Thornton. "Further, offering Coleman and B3R beef with Petaluma chicken gives customers two key anchor proteins in the natural meat case."
Founded in 1969, Petaluma Poultry Processors was originally focused on serving the ethnic poultry populations in the San Francisco Bay Area. Through the years, the company opened a processing plant and expanded to create a complete poultry raising operation. In the 1980's, Petaluma entered the emerging natural foods market by producing natural and organic chickens and created the well-known brands "Rocky the Range ChickenT" and "Rocky JuniorT." In 1999, Petaluma set the national standards for organic poultry and meat production when it became the first company in the United States to offer a USDA-certified organic chicken.
While similar, there is a clear distinction between natural and organic meats, with organic status consisting of stricter standards. According to the USDA guidelines, a meat product may be labeled natural if it does not contain any alterations to its natural state, such as artificial flavoring, coloring, chemical preservatives, growth stimulants and hormones. Certified organic meats on the other hand, in addition to being free of any alterations to their natural state, originate from animals that were fed a certified vegetarian diet, free of animal byproducts and fats, and raised without the use of antibiotics. Furthermore, organic status is verified by third party monitoring to ensure the correct raising procedures were used.
Coleman Natural Products was formed in Colorado in 1979 to market natural beef. In 1980, Coleman became the first USDA certified natural beef processor. Its certified status, along with its high quality of beef, has established great brand equity for the Coleman name and helped it excel in the industry as the largest natural beef processor. Coleman's product line ranges from natural beef tenderloin to natural ground beef.
B3R Country Meats was founded in 1986 in Texas as a natural beef processor. B3R's focus and dedication to providing flavorful, healthy and natural beef to customers has enabled it to obtain a strong position in the industry.
While a fairly new industry, the natural and organic meats industry, unlike commodity meats, has experienced continuous double digit growth through recent years due to numerous demand driving factors. Americans are becoming more health conscious and concerned over the use of pesticides, genetics modifications, and diseases such as Mad Cow and Foot and Mouth. The demand is further fueled by the large baby boomers population - the majority of natural and organic consumers - whose numbers are projected to continue to growth reaching 35% of the US population by 2010. In addition, the success of natural food supermarkets has contributed tremendously to the increase in Americans' awareness and education of the benefits of natural and organic foods.
As Americans become more health conscious, increasing numbers of consumers will turn to find alternatives to the commodity meats that currently flood the market. As Petaluma builds its natural and organic meats platform, it will be prepared to meet this increasing demand and provide consumers with a variety of healthy and safe meat alternatives.
