Utz Brands, the Pennsylvania-based company behind Utz and ON THE BORDER chips, delivered record net sales this quarter. During Q2 2022, Utz produced net sales of $350m, an with organic sales increasing 13.6% from the prior year. Most impressive, the company grew its category share. For the 13 weeks ending on July 3, retail sales grew 16% versus an overall category increase of 14.8%. Based on the success and limited price elasticities, Utz Brands raised sales guidance for the year. “We now expect total net sales to grow 13% to 15% and for organic net sales to grow 10% to 12%,” CEO Dylan Lissette told investors on the earnings call.
One of the biggest standouts is the ON THE BORDER brand, which grew 15.4% in the quarter. The company bought the tortilla chip brand in 2020. Today, management estimates that it’s a $350m a year brand and projects it to grow to $450m. Not bad for an investment of $480m.
The Fast Follower Strategy
The fast follower strategy is a common strategy within the CPG world. Here, second-tier brands mimic the strategies and pricing of dominant brands. They get away with it because they’re typically lower priced. Companies maintain reasonable margins because they spend less on R&D. Utz Brands will never have the first exciting entrant in a category, but they’ll always follow shortly after.