Consumer Products-Private Equity Case Studies-Swander Pace Capital (SPC)

Investment case studies

Beverage Company, Foodservice and Specialty Distribution equity investments

Fleischmann’s Vinegar Company, Inc. is the largest industrial vinegar manufacturer in North America, commanding over 50% of the U.S. industrial vinegar market. The Company manufactures vinegars and cooking wines for the industrial marketplace that are sold to food manufacturers.

SPC Investment Date
November 2002

SPC Investment Thesis

Opportunity to grow sales and earnings through increased focus on business – Fleischmann’s was a small division of a large international food company
Bolster Fleischmann’s sales and marketing resources to proactively target new business
Capitalize on the trend of large food companies like Heinz, Kraft, and Pinnacle Foods seeking to outsource their vinegar production
Consolidate the fragmented industrial vinegar market through acquisition
Expand Fleischmann’s into adjacent food ingredient categories

Key Sources of Value Creation

Spin-out: Worked closely with management to separate Company from parent’s infrastructure
Strategic Investment: Made strategic investments in plant infrastructure to produce competitive advantage
Pricing and Cost Strategy: Worked closely with the Company to insulate the business from increases in ethanol input pricing by strategically modifying pricing strategies
Customer Introductions: Introduced the Company to several key customer accounts

Exit
SPC sold Fleischmann’s to American Capital Strategies Ltd., a private equity firm, in June 2007

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