Beans fueling big expansion at Faribault Foods

FARIBAULT, MINN. – At Faribault Foods' cannery here, beans rule. Black, pinto, navy, kidney — if it's a dried bean, Faribault cans it. And the plant will be churning out a lot more beans as it undertakes a $100 million-plus expansion.

The leap forward stems from the 2014 acquisition of Faribault Foods by La Costeña. One of Mexico's largest canned food companies, La Costeña wants to make a bigger mark in the United States, and it's using Faribault Foods to pave the way.

"We have a very mature market in Mexico," said Albert Hoflack, Faribault Foods' CEO. "The growth and expansion is really in the States."

The Faribault plant employs 319 workers and is the sole U.S. canner of refried beans sold under General Mills' Old El Paso brand. It also makes K.C. Masterpiece beans and several private-label brands for supermarkets.

While canning is generally a low-growth or even declining industry, dried beans are a bright spot. They're a cheap source of protein, and high-protein foods are a big dietary trend. Black beans seem especially de rigueur, making their presence felt in everything from salsa to veggie burgers.

"Families see beans as a protein food, both as a main dish and a side dish," Hoflack said. "It's a very healthy product."

Canning is a historic Minnesota industry, and Fari­bault Foods — founded in 1895 — dates to its earliest days. Today, the state is still home to nine canneries, including two owned by Faribault Foods (the company's other plant is in Cokato).

Most Minnesota canneries focus on "fresh packing" vegetables immediately after they are picked at harvest. After all, the state is the nation's leading grower of sweet corn for processing, and the second-biggest green pea producer. Faribault Foods' Butter Kernel brand of canned vegetables has been a staple in Upper Midwest pantries for decades.

But Faribault Foods cut back significantly on fresh vegetable packing in 2003, increasingly seeing it as a declining and consolidating business. "We had become so marginalized," said Gary Kindseth, Faribault Foods' executive vice president and a 44-year company veteran.

Nowadays, it contracts its Butter Kernel fresh vegetable canning to Del Monte — except for corn, which it still packs in Cokato. Also in Cokato, Fari­bault Foods co-packs pasta and soup for other companies. In 2005, the company bought a sizable plant in Elk River that makes fruit juices under private label brands.

But Faribault Foods' focus is on dried beans.

"Beans have been good for us," Kindseth said. "The growth of our company is going to be in beans."

Faribault got into dried beans with the 1983 acquisition of the Kuner's brand, known best in Colorado at the time, though now common in Twin Cities supermarkets. Later that decade, the company bought the Iowa maker of Mrs. Grimes beans.

Other big bean splashes included a 2006 licensing agreement with Del Monte to produce the S & W brand, and a 2011 deal with Clorox to can the K.C. Masterpiece beans.

Plus, the company packs beans under private labels for such supermarket chains as Kroger, Aldi and Eden Prairie-based Supervalu. Private-label brands make up the biggest chunk of the canned bean market (outside of baked beans), with a 28 percent share for the year ending March 20, according to IRI, a Chicago-based market researcher. Bush's, a privately held Tennessee company, is the biggest branded player with 23 percent; Fari­bault is third with 9 percent.

Faribault Foods is in the middle of America's bean pot as far supply goes. North Dakota is the country's biggest dried bean producer, and Minnesota is third (with Michigan in between), according to the U.S. Department of Agriculture.

"The Red River Valley is the dominant place for dried beans," Kindseth said.

Beans are trucked to the cannery. Then they're bathed in big tanks and softened further through blanching, a quick blast of heat. Brine and ingredients — molasses for baked beans — are added, and the beans are sealed in cans. The cans move into another set of tanks, where they're cooked and sterilized with steam.

By mid-2017, the Faribault plant will more than double in size. Faribault Foods broke ground Tuesday for a 589,000-square-foot building that will be linked to the company's main production plant, which has 332,244 square feet.

While the expansion won't significantly affect employment, when the complex is finished all of the company's production in Faribault will be under one roof. Currently, shiny steel cans of beans are shipped to a separate facility in Faribault for labeling and packaging. Plus, the new complex will produce its own cans — that factory line is already running.

While most canning companies focus just on food production, La Costeña has considered can-making a core business since the firm was founded in the 1920s.

Family-owned La Costeña bought Faribault Foods from descendants of the Vandever/MacDonald family, who had owned Faribault since 1917. The price wasn't disclosed, but Faribault Foods had $280 million in annual sales when it was sold. The company has 564 employees in Minnesota.

La Costeña has $1 billion in annual sales in Mexico alone, where it produces beans, soups, condiments and peppers.

La Costeña bought an old Slim-Fast factory in Tucson in 2006, retooled it and created the Arizona Canning Co. That company was merged with Faribault Foods after the 2014 deal, and La Costeña's U.S. operation is run by Hoflack from a downtown Minneapolis office tower.

Hoflack said La Costeña is looking for more acquisition opportunities, particularly in the eastern U.S., where it has no manufacturing capability. Still, even without any new deals, the expanded Faribault plant will give the company a 30 percent boost in manufacturing capacity.

"With this plant, we are building a stronger foundation for growth in the U.S.," Hoflack said. "We will be more competitive and more aggressive. We will invest more in this market."

Mike Hughlett • 612-673-7003