The 'working' CEO
March 17, 2015
Timothy Fallon, president and CEO of Columbus Foods, plans to retire at the end of 2015. Until then, he remains involved in everything that's going on at Columbus Foods.
Tim Fallon, the CEO and president of Columbus Foods, a company that’s been making Italian meat products since the founders of the company arrived here from Italy 98 years ago, is up to his elbows leading a company that has many irons in the fire before his recently announced retirement at year’s end. While running and expanding the company, he’s also in the process of closing an obsolete plant plus building a brand-new one in Hayward, Calif., in the San Francisco Bay area. And at the same time, he’s also operating a joint venture with Harris Ranch. Whew!
“Yes, I’m really busy. But that’s nothing new,” Fallon says with a laugh. And he’s not kidding. It’s nothing unusual for this veteran CEO with 40 years of experience leading food and beverage companies.
While Fallon’s company is based in the San Francisco Bay area, he actually hails from the Philadelphia area, where he grew up and got his degrees – a BS in Food Marketing from St. Joseph’s Univ., and his MBA from Temple Univ.
Before coming to Columbus Foods, Fallon was general manager and president of Kettle Foods, a leading snack-food manufacturer of natural and organic potato chips, tortilla chips and nut products, and he led the company successfully through two private-equity ownerships. Before that, he was an operating executive and chairman of Annie’s Homegrown, a maker of organic and natural foods. He was also CEO of Vermont Pure Holdings, a publicly-traded office water and coffee service provider, and before that he held senior-level positions at Cadbury Beverages and Pepsi Cola. He started his career in sales management at Proctor & Gamble.
|Fallon examines floor plans for new Hayward facility.
But he brings great business strengths to Columbus, as well as to the other companies he led previously. Those strengths are in the operations side of the businesses, as well as great financial expertise, extensive sales experience and marketing skills. His marketing abilities have driven Columbus and his previous employers far ahead, and he has been able to apply this expertise and these skills in the private-equity environment.
He’s also been good at increasing the financial performances of Columbus and other companies he’s been at by increasing the EBITDA margin as a percentage of sales.
“Most of my background has been in sales, marketing and operations.” After selling Kettle Foods in 2010, Endeavour Capital, which purchased Columbus Foods in 2006, “brought me in to enact a turnaround. This was my first foray into the meat business.” Two years later, Fallon executed the sale of Columbus from private-equity firm Endeavour Capital to Arbor Investments, which owns the company today.
From marketing to meat
What attracted him to work with a meat-specialty business on the West Coast and to Columbus Foods, was its focus on a niche that showed great potential for growth. “I strongly feel it was the premium position of these kinds of products in the meat-processing world,” he says. Since its founding, Columbus Foods has operated as what is known in Italy as a salumeria, making salame and deli meats. “I believe the company to be the best in the world, making small batches with only the finest cuts of meat,” he says. “We make the products the same way the company’s founders made them in 1917; the same kind of curing and fermentation. We encourage mold growth on the outside casing. As our salame cures, it acquires a mold similar to Brie cheese.”
Fallon explains the process: “It’s called ‘fiore’, a soft, white coating of aromatic mold, a secret of the premium-salame process. During the dry-aging process, fiore develops to protect the salame from excessive drying and enhances its flavor. The fiore is removed from some of the products, but the superior flavor of the product is maintained.”
The company’s products are called salumi in Italian and refer to products made from pork that are salt-cured and fermented, but not necessarily encased. Products like salame, prosciutto and coppa are traditional salumi.
In addition to salame, Columbus Foods makes premium deli meats using turkey, ham, beef and chicken.
“Our products include artisan salame, hand-stuffed and tied using natural casings and aged from 21 days to as long as 90 days,” Fallon says. “Classic salames can include Calabrese Salame, Sopressata, Toscano Salame, Genoa Salame, and Italian Dry Salame, to name a few. Then we bring the same craft to our deli meats, delicacies like corned beef, Italian roast beef, pastrami, hams and poultry.” The company sells a wide range of products like capicolla, mortadella, prosciutto, pepperoni, and pancetta.
The company is national, with its strongest sales right now in 10 western states, but the brand is being expanded from west to east. At this point, the company is growing into the central and southeastern US, with plans to later go further into the Northeast US, as well as into the international sphere.
In addition to 100 percent pork salame, the company makes premium-quality deli meats using cuts of turkey, ham, beef and chicken. Like a lot of other foods and beverages today, there’s a new-found and growing interest in charcuterie meat products, which are made by curing, salting or smoking.
“We do this by keeping Columbus loyal to the three basic principles of simple Italian cooking – using only the highest-quality ingredients, taking the extra time to hand-craft and slow cook and keeping recipes wholesome with no binders, fillers or additives – we make sure that our salumi and deli meats are always a cut above standards,” Fallon says.
And in his view, the company has been doing extremely well by concentrating on these basic principles and on this particular segment of the market. “On the premium side, we’ve never experienced negative volume growth, always positive. In 2010, sales were $150 million. Now, annual sales are $250 million. We have between 300 and 350 full-time and part-time employees.”
Columbus Foods headquarters, brand-new slicing facility and cold storage are located the "East Bay" between Oakland and San Jose.
The company has three manufacturing facilities, and is in the process of closing one and consolidating into another. “We’re consolidating the salame-curing operations into a facility that we’re actually adding onto,” he explains. The plant being closed, located in South San Francisco, is 50-years old and it was built by the original owners. It’s landlocked and Columbus needed to find a way to expand on its deli-meat growth capability. The other two plants are in Hayward, Calif., in the San Francisco Bay area; one is the salame curing facility. “We’re expanding, adding 55,000 sq. ft. to that, it replaces the South San Francisco plant and adds 40 percent to our facility,” he says.
The headquarters building, brand-new slicing facility and cold storage is in Hayward, which is located in what’s called the “East Bay,” south of Oakland, between Oakland and San Jose.
This consolidation is part of a two-phase operation. “Last year, Harris Ranch built a deli-cooking facility for us in Selma, Calif.,” Fallon says. That’s a joint venture between the two companies. The idea was for Columbus to team up with Harris Ranch to expand its deli-meat production through a partnership with Harris Ranch, based in the San Joaquin Valley and the largest cattle feeder, beef processor and beef marketer in California. Both companies invested more than $10 million in the joint project. Initially, it was built to allow 25 million lbs. of deli meat cooking and processing, but that could be expanded to another 50 million lbs. of capability.
“Basically, this was an issue of space,” he says. “We couldn’t build a new deli-processing plant or expand it in our existing facility. We could only do the salame in the plant we were in and that wouldn’t work; we needed more room for the deli. It was mutual interest from Dave Wood [from Harris Ranch] and me; we were looking for a partnership.
“That was the first piece of business we were transitioning into,” he adds. “The second is the salame-curing facility being added to Hayward, with ground for the facility broken last October – and the construction should be finished by next month.”
Fallon admits the project is quite a challenge. “I’m not doing this myself,” he jokes. “We have a very strong engineering group mapping out this project. But it’s still quite a big deal when we’re running our current business.” He says the South San Francisco plant will be closed this July. “All our employees have been offered positions in the new facility,” he adds.
Columbus Foods’ venture with Harris Ranch, with Cooper Farms doing their turkey processing, means the company has a relationship with two vertically integrated companies, allowing Columbus to concentrate on what it does best – Old-World Italian meat products, Fallon says.
“Our strategy was to align further down the supply chain. Why? Because we’re relatively small and we’re competing against larger companies. By having these partnerships involved in our supply, we can stay true to our ideals and concentrate on making these unique products,” Fallon says.
For Fallon, keeping the company true to its roots is very important. Six years after the great San Francisco earthquake, Italian immigrants began arriving in San Francisco’s North Beach neighborhood. While many Italian immigrants were fishermen and found a welcome spot for that work in the San Francisco area, the mild climate and ocean breezes were also welcoming to another Italian tradition – salame making. The company’s founders from Tuscany – Peter Domenici and Enrico Parducci – saw a chance to bring a taste of Italian food to the area, and began making salame and other Italian meat products.
Columbus Foods' herb salame
Today, Columbus, originally called the San Francisco Sausage Company, is continuing that Italian tradition. “For example, our products are ‘slow-aged,’ an Old-World tradition of processing salame that’s been done for hundreds of years,” Fallon says. “During the slow-aging process, salame hangs at a lower temperature for a longer period of time to heighten the flavors and complexities of the salame. This is done to avoid cooking the meats and as a way to ensure the traditional flavors.”
Fallon’s priorities include concentrating on making differentiated products and expanding the growth of the company, similarly to what he did at Kettle Foods and the other companies he worked for previously. “We have a great history here and a great workforce,” he says. “I like to get involved in this kind of company and effort, whether it is protein products like what we’re doing here or potato chips. The emphasis and concentration on unique products is the same.”
Not surprisingly, Fallon is a hands-on type of guy. “Yes, I’m pretty hands-on,” he agrees. “We’re really a small business – not tiny, but small in the world of meat processing. We have fewer resources. So, I’m a working CEO.” He has a management team that works with him and an executive team that includes sales and finance. But he’s constantly involved in what’s going on.
“Being involved is a strength that small businesses have over very large ones, I think,” Fallon says. “You can make decisions quickly; there are not layers and layers of management to go through. I like that. I have five talented executives working with me on sales, HR, finance, operations and the supply chain. Between us, we can handle everything.
“For example, I get weekly updates on the construction that’s going on, I’m not involved every minute because the engineers are taking care of it,” he adds. “I’m not running everyone’s job. But at the same time, I’m not sitting in my office and have everyone come to me. That’s not how small business works. I’m out there and involved in everything that’s going on. All the companies I’ve ever worked for have been like that. And that’s the way I like it.”