Lamb Weston Holdings Profile
Lamb Weston Holdings, Inc. operates as a global producer, distributor, and marketer of value-added frozen potato products.
The company is a supplier of value-added frozen potato products in North America and a supplier of value-added frozen potato products internationally, with a strong presence in high-growth emerging markets. The company offers a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent most of the company’s value-added frozen potato product portfolio.
Segments
In July 2022, the company acquired an additional 40 percent interest in Lamb Weston Alimentos Modernos S.A. (‘LWAMSA’), the company’s joint venture in Argentina, and, in February 2023, the company acquired the remaining equity interest in LW EMEA, the company’s joint venture in Europe. With the completion of the transactions, the company owns 90 percent and 100 percent of the equity interests in LWAMSA and LW EMEA, respectively.
During the year ended May 28, 2023 (fiscal 2023), the company had four reportable segments: Global, Foodservice, Retail, and Other.
Global
The company’s Global segment includes frozen potato products sold in North America and international markets generally to the top 100 North American based restaurant chains and international customers consisted of global and regional quick service and full-service restaurant chains, foodservice distributors, and retailers. The company has included foodservice and retail customers outside of North America in the Global segment due to efficiencies associated with coordinating sales to all customer types within specific markets, as well as due to these customers’ smaller scale and dependence on local economic conditions. The Global segment’s product portfolio includes frozen potatoes and appetizers sold under the Lamb Weston brand, as well as many customer labels.
Foodservice
The company’s Foodservice segment includes frozen potato products sold throughout the U.S. and Canada to commercial distributors, restaurant chains generally outside the top 100 North American based restaurant chains, and non-commercial channels. The Foodservice segment’s primary products are frozen potatoes, commercial ingredients, and appetizers sold under the Lamb Weston brand, as well as many customer labels.
Retail
The company’s Retail segment includes consumer-facing frozen potato products sold primarily to grocery, mass merchants, club, and specialty retailers. The Retail segment’s primary products are frozen potatoes sold under the company’s owned or licensed brands, including Grown in Idaho and Alexia, other licensed equities consisted of brand names of major North American restaurant chains, and the retailers’ own brands.
Other
The Other reporting segment primarily includes the company’s vegetable and dairy businesses, as well as unrealized mark-to-market adjustments associated with commodity hedging contracts.
Joint Venture Relationships
The company holds a 50 percent ownership interest in Lamb-Weston/RDO Frozen (‘Lamb Weston RDO’), a joint venture with RDO Frozen Co., that operates a single potato processing facility in the U.S. The company provides all sales and marketing services to Lamb Weston RDO and receive a fee for these services based on a percentage of the net sales of the venture. In addition, LW EMEA owns a 75 percent interest in a joint venture in Austria.
Sales, Distribution and Customers
The company benefits from strong relationships with a diverse set of customers. The company sells its products through a network of internal sales personnel and independent brokers, agents, and distributors to chain restaurants, wholesale, grocery, mass merchants, club retailers, specialty retailers, and foodservice distributors and institutions, including businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores. The company has long-tenured relationships with leading quick service and fast casual restaurant chains, global foodservice distributors, large grocery retailers, and mass merchants.
The company’s largest customer, McDonald’s Corporation, accounted for approximately 13% of the company’s consolidated net sales in fiscal 2023. Sales to McDonald’s Corporation are included in the company’s Global segment.
Research and Development
The company’s research and development costs totaled $17.2 million in fiscal 2023.
Trademarks, Licenses and Patents
The company’s significant trademarks include Lamb Weston, Lamb Weston Supreme, Lamb Weston Seeing Possibilities in Potatoes (and design), Lamb Weston Seasoned, Lamb Weston Private Reserve, Lamb Weston Stealth Fries, Lamb Weston Colossal Crisp, Lamb Weston Crispy on Delivery, Lamb Weston Twisters, Lamb Weston Twister Fries, Lamb Weston Crisscuts, Sweet Things, and Butler. The company also sells certain products, such as Grown in Idaho and Alexia, which the company license from third parties. The company owns numerous patents worldwide.
International Operations
As of May 28, 2023, the company had operations in 31 countries, with sales support in each of these countries and production and processing facilities in 8 countries.
Seasonality
The company’s product contribution margin percentage, inventory levels, net sales, and cash flows are affected by seasonality. In general, the company’s product contribution margin percentage tends to be highest in the company’s fiscal third quarter (year ended May 2023), reflecting the cost benefit of freshly-harvested potatoes. The company typically harvests potatoes in the Pacific Northwest of the U.S. and Europe in July through October, which is primarily in the company’s fiscal second quarter. While the quality of potatoes affects production efficiency, overall, freshly-harvested potatoes process more efficiently in the company’s production lines and are not subject to storage or secondary transport costs. The company typically holds 50 to 90 days of finished goods inventory on a first-in-first-out basis, so the costs incurred from the company’s fiscal second quarter harvest, which are generally favorable, will flow through the company’s income statement in the company’s fiscal third quarter. Inventory levels also tend to be higher in the company’s fiscal third quarter, requiring more working capital at that time. In general, net sales and cash flows tend to be higher in the company’s fiscal fourth quarter, reflecting customer and consumer buying patterns.
Food Safety and Labeling
The company is subject to extensive regulation, including, among other things, the Food, Drug and Cosmetic Act, as amended by the Food Safety Modernization Act, the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, and the rules and regulations promulgated thereunder by the U.S. Food and Drug Administration (FDA).
History
Lamb Weston Holdings, Inc. was founded in 1950. The company was incorporated in 1950.
