Go Behind the Scenes of Herr's Snack Empire
Founder Ed Herr will soon hand over the legacy of his Chester County-based snack brand to a younger generation of Herrs.
From left: Herr's top execs Troy Gunden, Ed Herr, Jim E. Herr and Jeremiah Thomas at the company's Nottingham headquarters.//Photo by Tessa Marie Images
Ed Herr figured he'd be facing a safe audience when he took the podium at a recent Christian conference, where he spoke about the values his family has embraced and how they've been applied to his company. After he finished speaking, someone from the audience stood and addressed him.
"How do you sleep at night?" asked the woman, upset over how salty, fatty snacks were impacting the country's overall health.
Herr assured the woman that he didn't have problems getting the rest required to continue as president and CEO of the company his father started seven decades ago. Then he told a story of a guy who lives in Philadelphia and may not have had the best upbringing. He didn't get a great education, and he wasn't working a job that provided him with a substantial income. His home was modest, to say the least, and he didn't have a lot of material things to bring him happiness.
But every afternoon, he enjoyed a soda and a bag of chips. It was his treat—a small dose of pleasure. "Snack foods, when consumed the right way—in moderation—add fun," Herr says.
Herr's president and CEO, Ed Herr.// Photo by Tessa Marie Images
Obviously, Herr wants sales to remain robust. But he's also a man committed to activity, good health and, well, sufficient sleep. And yes, he's in a tough spot when confronted with evidence that, no matter how many of us say we want to eat healthier foods, a lot of us don't head in that direction when it comes time to make a purchase. U.S. sales of salty snack foods continue to grow (4 percent in 2017), while those of healthy snacks have dropped (2.2 percent).
Herr wants to help people transition to nourishing snacks, and Herr's has a division committed to producing foods that are healthier for consumers. But there's a problem. "The supermarkets won't give us space for them," Herr says. "They won't 'turn.'"
That's food industry talk for "turnover." Good-for-you products don't sell fast enough, and the local grocer isn't interested in stagnant inventory on the shelves—even if pretzels made from sprouted whole grain are better for you than those made with enriched flour. Simply put, people want their chips, puffs and curls. For 72 years, Herr's has provided them for the Philadelphia area and beyond—and the outlook for the next 72 years is sunny.
In an industry dominated by the likes of Frito-Lay, Campbell's, Kraft and Nabisco, Herr's Snacks continues to thrive as a privately held, family-run company. While it has no illusions of challenging monolithic conglomerates like Frito-Lay, Herr's does compete with Hanover, Pa.-based Utz Quality Foods in the family-owned category. Founded in 1921, Utz is the nation's largest privately held salty snack company in the nation, distributing its products across the U.S. from 11 manufacturing plants. In October of last year, Utz told investors it planned on borrowing $660 million to pay off private investors and continue its expansion. It has been quite aggressive over the past several years, acquiring companies like Bachman, as well as the Golden Flake and Dirty Potato Chips brands. "We love that we have great competition," says Herr. "We think it raises the bar for everybody."
His company, meanwhile, continues to follow a pattern of steady growth as the third generation moves into positions of influence and prepares to take over for the current regime. "What we're talking about is sustainability," says Herr. "We want to keep it going."
From left: Herr's top execs Troy Gunden, Ed Herr, Jim E. Herr and Jeremiah Thomas.// Photo by Tessa Marie Images
Though it won't be happening too soon, the company has come up with a plan to create a clean, successful transfer. This past September, three grandsons of founder Jim Herr moved into positions of greater responsibility. The ultimate plan is for them to become the top executives.
Jim E. Herr, the son of executive chairman J.M. Herr, is now the VP of marketing and research and development, and will eventually become a senior VP. Jeremiah Thomas, son of Martha Herr Thomas and current senior sales and marketing vice president Daryl Thomas, is VP of manufacturing and on track to direct the company's supply chain. And Troy Gunden, son of June Herr Gunden, has risen to executive vice president, reporting directly to Ed Herr. He will take over as president in 2020 or '21.
Upon stepping aside as president, Ed Herr will remain as CEO and chairman and plans to retire in seven years. "We have some horsepower coming in to help us perpetuate the business," he says.
It isn't always easy to keep a family business going. As the generations move onward, sometimes the younger folks don't want to be part of future plans. Interests go in different directions; animosity can develop. In some cases, the only option is a sale.
Not so at Herr's. The second generation has a fully stocked "farm system" on which it can call to fill future executive positions. It also has propagated a philosophy that integrates the production of snack foods with a rich Herr family life. The result is not so much a family business as it is a family culture—one that thrives in and away from the company's southern Chester County headquarters.
"It's about history and legacy and everything the company stands for," says Jim E. Herr. "It's an opportunity to usher it all into a new age. We look at this as a good mix of continuing the legacy and taking the company to the next level."
On a warm Monday morning, as the sun is still climbing, Ed Herr walks into the office carrying boxes. "Can you hold that door for me?" he asks, as if he were some middle manager with the fruits of a little weekend work.
In reality, it was Herr's first day back after a family retreat in Hershey with nearly 75 people on hand. There was some golf, some eating and some drinking. The goal was to build the bridges necessary to promote succession while refreshing the family message. There's even a Herr constitution, which executive VP Troy Gunden estimates is about 60 pages in length.
When Herr says, "the family is good for the business, and the business is good for the family," one can understand that there isn't much of a difference at all between the two entities. "Our family and the business are built on loving God and loving people," Ed says. "We're a faith-based family, and we really believe in high standards for integrity and trusting other people. We respect everybody, regardless of their backgrounds and perspectives. We want people to be the best they can be."
The Herr's story begins in Willow Street, a farming community south of Lancaster. Born on Aug. 6, 1924, Jim Herr was the second of five children raised by Ira and Mary Herr. Less than a year after his birth, Herr's parents bought an 86-acre farm for $5,000 and began to raise poultry and tomatoes that they eventually sold to Campbell's for soup.
Ira required his children to work on the farm until each was 21. If they didn't want to be involved after that, they could go elsewhere. When he hit that age, Jim decided he didn't want to be a farmer. "[It was] too lonely for me," he wrote in his 2012 book, Life With Flavor: A Personal History of Herr's.
Pondering what he wanted to do, he happened upon a newspaper advertisement for the sale of Verna's Potato Chips. The owners wanted $1,750, so Jim went to the boss of his future wife, Miriam, and asked the successful attorney for a loan. He secured the funding and purchased two iron kettles, each capable of holding 100 pounds of lard; a three-potato slicer; a peeler that held 10 pounds of potatoes; and a 10-year-old 1936 Dodge panel truck. Then he rented space and hired one part-time employee.
Herr's operations have come a long way since its founding in 1946.// Photos by Tessa Marie Images
Verna's previous owners initially agreed to spend two weeks teaching Jim the business. They bolted after two days. Three months later, Jim realized he didn't like it all that much anyway.
But he persevered. In April 1947, he married Miriam, and they changed the name of the company from Verna's to Herr's. From their new location in a vacant tobacco shed on the Herr family farm, they were making $36 a week in sales. The hours were long—4 a.m. to 11 p.m.—and they sold door-to-door at first. Jim hated collecting from people, so he decided to focus more on selling to stores.
In the late 1940s, Jim moved the business from the farm to a 3,600-square-foot former bakery in West Willow, beefing up his sales staff with family members and friends. After a 1951 fire destroyed the factory, he settled in Nottingham on 37 acres he bought for $18,000. He and his wife had been working with the Mt. Vernon Mennonite Church (both were raised in that religion) in nearby Oxford and were familiar with the area. They built a 4,500-square-foot factory for $11,000 and were back in full operation by the spring of 1952.
The timing was perfect. Thanks to the post-World War II economic boom and the shift in population from rural areas to urban and suburban locales, people in the U.S. had more leisure time and were looking for ways to relax, entertain and enjoy life. The result was a booming snack food industry. By the 1970s, Herr's had dramatically increased its market share, in large part due to a partnership with Acme Markets.
The growth was indeed profound. In 1961, Herr's had 26 employees, 10 routes within a 50-mile radius of its headquarters and a weekly payroll of $2,000. Five years later, sales hit the $1 million mark, with 30 routes. In 1986, those numbers were $50 million and 250. By 2007, sales had hit $200 million, and the company had nearly 450 delivery routes. The most recent numbers from 2017 have annual net sales exceeding $260 million, and the number of company-owned and distributor routes at 775.
In 1961, Herr's had 26 employees and a weekly payroll of $2,000. In 2017, net sales exceeded $260 million.// Photo by Tessa Marie Images
In his book, Jim Herr reveals that he and his family kept the business private so they could focus on long-term decision-making that would ensure security and prosperity, instead of having to make choices to placate shareholders in the short run. Sometimes, that means spending a little more in the present to reap the benefits down the road. And by building a strong family that's committed to its members and the business, Herr's can operate according to a collection of values that might not work for outside investors.
Ed became the face of Herr's in 1988, and he's appeared in a variety of commercials, including a summer 2018 spot that had him in Nottingham, England, introducing Herr’s pub pretzels to the locals. "I was a little nervous," Ed recalls. "The English can be snooty, and they don't eat a lot of pretzels. But the film crew got there early and bought everybody a round of drinks. By the time I got there, everybody was in a good mood."
Herr's brother, J.M., is the executive chairman of the company and previously served as president and CEO, the positions Ed now holds. Each will move away from day-to-day work as the coming years pass. "It's going to be fun," says Ed. "These [young] guys have an energy, and they care about the business as much as I do."
Spend a little time with Jeremiah Thomas, Jim E. Herr and Troy Gunden, and one thing is clear: These guys can't wait to have a bigger say in the family operation. All of them started in the business doing the most basic tasks, and they've spent plenty of time learning. They're not youngsters, either: Gunden is 40, Herr is 33, and Thomas is 36. "We don't want to do things differently," says Thomas. "We see it more as continuing the legacy."
Thomas grew up in the Philadelphia area and started working part-time in a Herr's warehouse at 16. He also spent some time at Herr Angus Farms, a little-known division that began as an outlet for discarded potatoes, chips and pretzels. They're mixed and fed to the cattle, along with more conventional food for livestock. Other run-off from the production of snacks—like water that could be recycled—also made its way to the farm. Recently, it has begun to market its beef to restaurants and butchers.
Most members of the Herr family who live in the area work for the company in some capacity. They may give tours in the visitor center, or work in the warehouse like Thomas did, before joining the Marine Corps at 18. After four years, he began at West Chester University, where he earned a business management degree. While working for Herr's, he completed a food marketing MBA at Saint Joseph's University.
Thomas will train in the plant for two years before he takes over for Steve Moran as senior VP of manufacturing. He'll also be responsible for supply chain, marking the first time the two areas will be supervised by one person. "It's an exciting time for us and other stakeholders," says Thomas. "There could also be a certain level of anxiousness about how things continue. When the first generation handed off to the second, the transition was smooth. There was a lot of effort and thought put into it. The same thing is happening with the second and the third. We're even talking about the fourth generation."
FROM LEFT: HERR'S TOP EXECS Jim E. Herr, Troy Gunden, Ed Herr and Jeremiah Thomas// PHOTO BY TESSA MARIE IMAGES
Born and raised in Georgia, Gunden was 27 when he came to the area. He'd been working in banking in Colorado and was starting to think about his next steps. He and his wife, Laura, considered starting their own business before it sunk in that they already had access to a well-established company. So they moved east.
In his new capacity, Gunden will report directly to Ed Herr while overseeing several company concerns, including quality assurance and "high-level corporate projects." Within three years, he'll be company president. His wife, meanwhile, is in charge of the Herr's healthy snack initiative.
Gunden notes that those moving toward the top will do things a little differently. "Our generation is more team-based," he says. "That separates us from previous generations."
When young members of the Herr's family begin in the business, they don't draw soft assignments. Jim E. Herr was 16 when he began in the warehouse, stacking boxes, loading trucks and pulling product. "A lot of my friends got cars when they turned 16," he says. "I got a job." Herr earned his bachelor's degree from Shippensburg University and an MBA at Elizabethtown College. He's job-hopped through Herr's, taking on positions in sales, the plant and R&D. "I have a good base knowledge of the company," he says. "That's not typical. A lot of people specialized."
For Gunden, his grandfather's experience building Herr's—not to mention his desire for future generations to work in capacities other than the executive wing—is "the opposite of nepotism." So while it might make sense that those within the Herr family would ascend to positions of authority, they haven't been fast-tracked to the top.
And they understand the company's personality well. They want to continue to grow Herr's within its regional footprint, while targeting certain international markets with specific products—jalapeño cheese curls, for instance, are big in the global marketplace. They know that increases in sales are possible as the snack foods industry grows as a whole. "We're not trying to be anybody else," says Gunden says. "We're trying to be the best we can be."
"We're trying to be the best we can be," says Troy Gunden, Herr's executive vice president.//photo by Tessa Marie Images
And that means remaining a family-owned company. "There's a lot of volatility in our industry," says Thomas. "Manufacturers and retailers can create some uncertainty. Hopefully, this is a good way to reestablish our intentions for the future."
Although the succession plan that was announced is in place and moving forward, Ed Herr doesn't envision a life of ease when he steps down in seven years. "I'm not a big retirement guy," he says. "I'm not going to sit on the porch and smoke cigars. I see myself as always involved in something."
As he considers his role in the succession process, Herr looks beyond the corporate campus and to the opportunities he and the company have to impact others within a framework he has helped build. "What does it look like to be a family business that is sustained, makes money, and then gives it back to employees and the community?" he proposes. "It's all about purpose. When I get closer to retirement, I want to move away from operations and deal more with vision and purpose."
Those characteristics have been established, honed and implemented during a 72-year run. "It's important to know who we are and know our strengths and weaknesses," Herr says. "The young guys coming into the business are going to push us all."
And move Herr's forward.