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By Maureen Flanagan
In the mid-1980s Joel Wishnick, Texas entrepreneur and founder of Future Food, Ltd., developed recipes for dips and spreads using surimi, imitation crab meat made from Pollack fish. These recipes, which were tasty and more affordable than real crab, created a new market niche and led to expansion into retail food channels throughout the country. Today Future Food is the country's largest producer and marketer of refrigerated seafood dips, spreads, and salads, with revenues significantly greater than its largest competitor. Based in Carrollton, Texas, Future Food is sold in 45 states through retailers that include Wal-Mart, Costco and major grocery chains such as Winn-Dixie, Albertsons, Safeway and Giant.
In a July 23, 2004 transaction, American Capital Strategies, Ltd (Nasdaq: ACAS) acquired the company from several different partnership groups. American Capital's investment took the form of a senior term loan, senior and junior subordinated debt with warrants and common partnership interests. Texas Capital Bank, the subsidiary of Texas Capital Bancshares (Nasdaq: TCBI), provided a revolving credit facility and a senior term loan. Management also invested in the common stock.
American Capital adds Future Food to its portfolio of over 100 middle market companies which include several leading brands in the food sector.
For more information about American Capital's portfolio click here.Since 1997, American Capital has invested more than $3 billion in the middle market.
"With Future Food, we see opportunities for growth and increased sales through acquisitions, new customers, new products, and cross-selling opportunities," said American Capital Principal Jeff MacDowell.
 Future Food offers nearly 50 recipes and over 170 product lines with recipes such as Cajun Krab Dip™, Jalapeño Krab Dip™, Spinach Dip with Water Chestnuts™, and Raspberry Chipotle Dip™. The company's products are sold under the Santa Barbara Bay brand in deli departments of retail grocery stores and in mass merchandise and club stores. The company's Salads of the Sea brand is sold in seafood departments of retail groceries. The Salads of the Sea line offers 20 core and 10 specialty recipes, which include imitation crab meat, imitation smoked salmon, and shrimp. The company also provides private label products for grocery chains such as Raley's, Safeway, and Ball's Supermarket. Pictured above are Future Food's Seafood Dip Party Trays, a tasty choice for entertaining guests.
As the largest player in the niche seafood salads, dips and spreads market, Future Food is one of only a few companies that can service large retail, mass merchandiser, and club store customers on a system-wide basis. While national, branded producers offer a limited selection of traditional, non-seafood recipes such as French Onion and Ranch, smaller companies are limited in their geographic coverage. Future Food, with its national brand and distribution network, provides both a wide choice of offerings and geographic coverage.
Since 2000, the company's sales have grown at an annual rate of over 10%. This growth has been driven by the addition of new customers, cross-selling to existing customers (going from the deli to the seafood section and vice versa) and adding more product lines. In 2001 Future Food acquired Matsukas Food Company, Inc., an acquisition that gave the company the Santa Barbara Bay brand and a manufacturing operation in Buellton, CA. Production is split between the company's facility in Buellton, California and co-packers in Texas.
"Further acquisitions present an attractive opportunity in this highly fragmented market," said David Watts, the company's CEO. "These opportunities will enable Future Food to continue to add customers and penetrate new regions as well as eliminate redundant costs and generate higher gross margins through greater raw material purchasing power."
Over the last two years, Future Food's market segment has grown at twice the rate of the overall food industry. The growth for refrigerated salads, spreads and dips is projected to continue in excess of the industry.
stores have accelerated this growth. Club stores have increased category sales by 10% annually and are projecting a 9% growth. Sales are also expected to remain robust at traditional grocery stores, despite the anticipated loss of overall market share in this segment.
In addition, the growing demand for convenience foods in time-pressed American households has made foods like dip and salad offerings increasingly attractive. Snacking, favorable demographics and customer taste for innovative flavorings have motivated retailers to increase the number of dips and salad product lines they sell in seafood and deli departments.
Future Food is positioned to take advantage of the current trends. It also has opportunity to expand its distribution to key markets.
Future Food's time has come. Since Wishnick developed his imitation crab recipes almost 20 years ago, Future Food is a market leader with a feast of opportunities still ahead.
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