For more than a century, Blue Bell ice cream has played off its roots as a favorite southern treat from tiny Brenham, Texas, to quietly become one of the nation’s biggest brands — the third-largest ice cream maker last year.
Last year, it sold 6.4 percent of America’s ice cream. Now, it accounts for none.
The company hasn’t sold a scoop since April, when it halted production after Listeria-tainted ice cream sickened people in four states.
But months after the outbreak put the company in dire straits, it may have been tossed a lifeline by one of Texas’ most prominent businessmen. Earlier this week, the company announced a “significant investment” from billionaire Sid Bass, and the company says it may soon be able to start making test batches of ice cream again.
Company spokeswoman Jenny Van Dorf wouldn’t disclose the terms of the deal with Bass, but in May, Blue Bell chief executive Paul Kruse asked the company’s small circle of investors for a shot in the arm, the Wall Street Journal reported. In a letter, Kruse said it needed up to $125 million to overcome “a financial crisis that could force us to close the company.”
Blue Bell, which is privately owned, has been forced to lay off 1,450 employees, more than a third of its workforce, and furloughed 1,400 others since the Listeria outbreak. Analysts estimate the shutdown has cost the company more than $200 million.
“We are pleased Sid Bass has made a significant investment with our company,” Blue Bell chief executive Paul Kruse said in a statement. “The additional capital will ensure the successful return of our ice cream to the market and our loyal customers.”
Bass couldn’t be reached for comment. In a statement from the company, he said, “Blue Bell is the quality leader in the ice cream industry. We believe quality is the principal attribute that ensures the success, growth and longevity of a business.”
Blue Bell wouldn’t say if Bass has invested in the company before, but he comes from a family famous in Texas for its wealth. Forbes estimates Bass is worth $1.7 billion, a fortune he accumulated by investing an oil inheritance he shared with three brothers.
The company’s troubles come as ice cream sales across the U.S. have flattened out in recent years, plateauing in 2012, according to Euromonitor. Sales are expected to stay flat through at least 2019 as consumers continue to eye healthier treats, analysts say.
Blue Bell had bucked that trend, growing into one of America’s largest ice cream brands. Founded in 1907, Blue Bell is sold in just 23 states, mostly in the Southeast, but managed to double its market share over the past decade, according to the market research firm Euromonitor.
It moved into new markets, rolled out new flavors in recent years, helping it keep its loyal fan base, said Beth Bloom, a food and drink analyst at Mintel, a market research firm. “They were definitely on a tear — a positive tear,” she said.
Its revenue reached $680 million last year, according to PrivCo, which estimates the financials of privately owned companies. This year, with the recall weighing it down, Blue Bell’s revenue is expected to fall to $550 million, PrivCo said.
It was the first time in its 108 years that Blue Bell had issued a recall, and it was expansive: 8 million gallons in all were thrown out. (Listeria causes nausea, fever and diarrhea and can be more serious, even fatal, for people with weak immune systems.)
Blue Bell is in the midst of a months-long process to find the source of the Listeria and stop its spread. The company has said it is taking apart its machines to clean them, sanitizing air conditioning systems and re-training employees, among other changes.
On Twitter last week, the company said it planned to begin test production at one of its smaller factories in “several weeks.” Van Dorf, the company spokesperson, said a date isn’t set for testing to start.
Blue Bell says investment necessary
BRENHAM, Texas (AP) — Blue Bell’s chief executive has told shareholders that Fort Worth billionaire Sid Bass will lend the company up to $125 million and that the investment is essential for the popular ice-cream maker to remain in business.
The Bass family would get a one-third stake in the company struggling to recover after listeria contamination forced a crippling national recall in April.
The Wall Street Journal reviewed a letter that CEO and President Paul Kruse sent Monday to investors saying Blue Bell was unable to raise enough capital from existing shareholders to remain operational.