Crystal clear: Merger ends a capital era
By Jon Ortiz and Jim Wasserman - Bee Staff Writers

Published 12:00 am PDT Thursday, May 10, 2007
Story appeared in MAIN NEWS section, Page A1

One of Sacramento's signature home-grown businesses, the 106-year-old Crystal Cream & Butter Co., has sold itself to one of the nation's biggest dairy products companies.

The deal with HP Hood LLC of Chelsea, Mass., closed Tuesday for an undisclosed sum. Crystal employees, who now work for Hood, were told about the merger Tuesday night and Wednesday morning.

Crystal executives declined to comment on the sale. But Mary-Courtney Hansen Whamond, whose grandfather Carl Vernon Hansen was Crystal's president from 1957 to 1972, called the sale "the end of a legacy."

"It's sad," said the 37-year-old Whamond, who now lives in Massachusetts but worked at Crystal during the summers while she was in high school and college. "But we're being bought by a great company. Hopefully, the Crystal name will survive and they will make things even better."

Hood spokeswoman Lynne Bohan confirmed the sale and said that "at this point, it's business as usual," for Crystal. She wouldn't say whether the company planned any new brands, local investments or job cuts.

"It's too early to start speculating about that," Bohan said from Hood's headquarters in Massachusetts. "Over the next several weeks our team will meet with Crystal's team and evaluate plans for the future."

The sale continues a consolidation trend in the fiercely competitive retail dairy industry, where every inch of grocery shelf space is a fight.

Hood has been a leader in dairy industry mergers and acquisitions, growing from a small New England player to the seventh-largest dairy products seller in the country with $2.3 billion in annual sales. The company operates 25 plants in a dozen states, but none in California until now.

In Crystal, Hood has bought a company that started in the back of Hensler Grocery at 728 K St. George and Caroline Knox churned butter and made ice cream there before he died at age 45 in 1918. Carl F. Hansen bought the business in 1921.

Under the Hansen family's guidance, Crystal enjoyed a sterling reputation in the dairy industry, said Jim Gomes, a Lemoore-based industry consultant.

"The Hansens were recognized as leaders," Gomes said. "They pioneered a lot of modern technology. They showed people here how to do it."

Crystal was one of the last large independent dairy processors in Northern California, bottling about 160,000 gallons of milk daily at its Sacramento production plant on Belvedere Avenue near Power Inn Road.

The company employed about 500 workers there and at six distribution centers around Northern California. Its annual sales reached $180 million.

Keeping with those independent roots, Crystal was known to reach out to small grocers like Food King in Sacramento.

The three-store chain's relationship with Crystal goes back 37 years, said Valen Lee, son of the company's owner. At the time Crystal helped launch grocery stores like his father's with low-cost loans in exchange for selling Crystal products.

"They probably assisted every grocery that has had any length of history in this community," Lee said. "I think most of us had a great deal of loyalty in respect to the girl who brought you to the dance."

Lee's refrigerated shelves at his Sutterville Road and Franklin Avenue store brim with Crystal milk, orange juice, cottage cheese, butter, sour cream, yogurt, whipping cream and buttermilk. By contrast, Crystal's products at Safeway's midtown store at R and 19th streets are nearly invisible amid major displays of other brands.

"We've had many options to purchase milk and ice cream from dairies in Fresno, Modesto and Oakland," Lee said, "but we felt a kinship with the business in our community. They are going to support our community more than other institutions."

It apparently wasn't enough. Like so many other businesses, the dairy industry has been consolidating as larger companies gobble up smaller ones in a relentless search to improve profits through efficient expansion.

Roy Ratkovich, a Sacramento-based industry consultant and former Crystal executive, said it was common knowledge Crystal had been looking for a buyer for some time. The company had been talking to Dallas-based Dean Foods Co., the nation's biggest dairy processor with $10.1 billion in sales. When those talks failed, Hood stepped in.

Crystal remained a Hansen family affair to the end. When the company sold to Hood this week, Carl Hansen's grandson, Don Hansen, was Crystal's chairman, and great-grandson Kevin Nagle was the firm's marketing director. Mike Newell, Don's stepson, was president.

Crystal staffers were asked not to speak with reporters, nor to allow the media to enter the premises. Union officials say layoffs aren't expected.

"They've only sent us limited information that everybody is going to keep their jobs," said Jim Tobin, secretary-treasurer of Teamsters Local 150, which represents more than 200 Crystal production employees. "It looks like it's going to be OK for our members."

Reaction to news of the sale was a mix of sorrow and hope.

"It's always sad when a locally owned company is sold or bought out by someone who isn't based here," said Matt Mahood, president and chief executive of the Sacramento Metropolitan Chamber of Commerce. "But in this case, you have a much larger company buying Crystal and making their first presence on the West Coast. It looks like they'll use this as a launching pad for more business here."

Food King's Lee said he was sad to hear of the sale.

"The affinity for the community and the customer base changes," he said. "Now it's about what's the bottom line. Those guys are not going to think about the local Little League, the local Boys and Girls Club and all that. You lose that when all those big companies come into any community. They just have a different mindset."