Good day, and welcome to the B&G Foods third quarter 2020 earnings call. Today's call is being recorded. You can access detailed financial information on the quarter in the company's earnings release issued today, which is available at the investor relations section of bgfoods.com. Before the company begins its formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer you to the company's most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact the company's future operating results and financial condition. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
The company will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, and base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Ken Romanzi, the company's President and Chief Executive Officer, will begin the call with opening remarks and discuss various factors that affected the company's results and selected business highlights. Bruce Wacha, the company's Chief Financial Officer, will discuss the financial results for the third quarter as well as expectations for the remainder of 2020. Ken will wrap up with his thoughts regarding the priorities for the remainder of 2020 and beyond. I would now like to turn the call over to Ken.
Thank you, operator. Good afternoon, everyone. Thank you for joining us today for our third quarter earnings call. With a portfolio of brands and products very well-suited for the stay-at-home, work-from-home, cook-from-home, and eat-at-home world, B&G Foods delivered another strong quarter of sales and earnings. Our portfolio of Green Giant vegetables, spices and seasonings, condiments, baking products, and other brands for all day parts, consumers needed to feed their families at home out of necessity at first, then out of a rediscovery of their love for cooking and baking. This resulted in another great quarter for our business, with net sales increasing 22% and adjusted EBITDA growing 21.3% as compared to the third quarter of last year. These results drove a forward-looking adjusted diluted earnings per share of $0.74 for the quarter, an increase of 37% compared to last year.
We experienced tremendous strength in almost all of our brands, with nearly 80% of our brands growing net sales versus last year, and nearly 70%-60% of those at a double-digit pace. Throughout this pandemic, we have remained focused on our three major priorities: protecting the health and safety of our employees, continuing to meet customer and consumer demand, and making the investments necessary to ensure the long-term financial health and success of B&G Foods. Our operations team continues to do an incredible job ensuring that our supply chain meets the unprecedented increase in demand for our products by keeping our manufacturing facilities operating efficiently while at the same time ensuring the health and safety of all of our employees. I'm pleased to report we have been very successful keeping our employees safe.
Keeping them safe is not only the right thing to do, but we believe it has been a competitive advantage as it has allowed us to keep our supply chain humming to production to meet this unprecedented surge in demand. Our supply chain has been a clear contributor to our growth among the best in the industry. While we have seen some supply shortages in about half a dozen of our product lines, we've maintained excellent customer service levels on the vast majority of our 50-plus brands throughout the pandemic. I cannot thank our frontline workers enough for working tirelessly around the clock for many months to meet our customer and consumer needs during this time. They continue to be our true heroes. Our impressive growth in net sales across our portfolio was driven by the continuation of strong, sustained consumption growth throughout the quarter.
For the 13 weeks ending October 3rd, as reported by Nielsen, the total B&G Foods portfolio consumption grew 18% versus last year. This was nearly 50% greater than the total packaged food growth rate of 12.4% for the same time period, keeping B&G Foods consistently among the fastest-growing publicly traded packaged food companies in the U.S., both for the quarter and the entire period since the beginning of the pandemic. In addition, we continue to gain or hold market share in nearly 2/3 of our brands and categories.
Our largest brand, Green Giant, grew 39.5% in net sales, driven by strong Nielsen consumption growth of 46.6% in shelf-stable vegetables, where we gained 2.1 share points in the canned vegetable category and more than 13% consumption growth in frozen vegetables, where we gained share in the frozen vegetable category by 10.6%. Our spices and seasonings grew net sales 30%, despite a material expansion to the food service channel. Strong retail consumption growth of 29% for the quarter drove strong net sales growth. Many of our other brands also had a strong third quarter. For example, net sales of Victoria increased 55.9%, net sales of Cream of Wheat increased 17.2%. Our baking products really benefited the most as consumers newfound love for baking. Powered by our Clabber Girl line of baking products, which increased 23.2% versus last year.
Speaking of baking, before turning the call over to Bruce with recent exciting announcement. As you all likely have seen, we recently entered into an agreement to acquire the iconic Crisco brand of oils and shortening from The J.M. Smucker Company. This acquisition is the second largest in B&G Foods company history, and one about which we are absolutely thrilled. Crisco is an excellent complement to our existing portfolio of baking brands, including Clabber Girl, Davis, Rumford, Grandma's Molasses, and our pure maple syrup brands. The acquisition of Crisco is consistent with our long-standing acquisition strategy of targeting well-established brands with leading market positions and strong cash flow profiles at reasonable purchase price multiples. Crisco has a strong heritage as the original all-vegetable shortening that transformed the way people baked and cooked over 100 years ago.
Crisco is the number one brand of shortening, the number one brand of vegetable oil. It also holds leadership positions in other cooking oils and sprays. In keeping with our acquisition strategy, we expect the acquisition to be immediately accretive to our earnings per share and free cash flow. I'll come back later to share more about how we plan to continue to capture the many opportunities we have with Crisco and all of our brands, after Bruce provides you with more details on our third quarter financial performance. Bruce?
Thank you, Ken. Good afternoon, everyone. As Ken just outlined, we continue to see the same elevated business trends during the third quarter that we saw during the first two quarters of the year, largely as a result of the ongoing COVID-19 pandemic and its impact on consumers. Our Q3 2020 results include net sales of $495.8 million, adjusted EBITDA of $104.6 million, and an adjusted diluted earnings per share of $0.74. Adjusted EBITDA as a percentage of net sales was 21.1% for the quarter. Our net sales increased by $89.5 million or 22% in the third quarter of 2020 when compared to last year's third quarter. The increase in net sales was almost entirely driven by increased volumes, while the impact of M&A, pricing, and foreign exchange were negligible. Similarly, base business net sales increased by $89.1 million or 21.9%.
Our volumes increased by $89.8 million, primarily driven by the elevated trends resulting from COVID-19. In addition, the third quarter also benefited from an extra week. Our average weekly sales in the third quarter of 2020 were approximately $35 million. Third quarter net sales included strong performance across the majority of the brands in our portfolio, with nearly 60% of the brands in our portfolio generating double-digit percentage growth in the third quarter of 2020 when compared to last year. Among our larger brands, net sales of Green Giant, including Le Sueur, increased by $37.9 million or 31.5%. Net sales of our spices and seasonings increased by $24.3 million or 29.5%. Net sales of Victoria increased by $6.3 million or 55.9%. Net sales of Maple Grove Farms increased by $3.2 million or 18.2%. Net sales of Cream of Wheat increased by $2.4 million or 17.2%.
Net sales of Ortega increased by $1 million or 3%. Net sales of all other brands in the aggregate increased by $14 million or 11.1%. Gross profit was $136 million for the third quarter of 2020, or 27.4% of net sales. Excluding the negative impact of $0.1 million of acquisition, divestiture-related and non-recurring expenses during the third quarter of 2020. Gross profit would have been $136.1 million, or 27.5% of net sales. Gross profit was $108.8 million for the third quarter of 2019, or 26.8% of net sales. Excluding the negative impact of $1.5 million of acquisition, divestiture-related and non-recurring charges during the third quarter of 2019, our gross profit would have been $110.3 million, or 27.2% of net sales.
While we have continued to see significant operating leverage within our gross profit as a result of our increased sales, these benefits were offset in part during the third quarter by COVID-19 preventative costs, enhanced compensation during the pandemic for employees at our manufacturing facilities, and approximately 100 basis points of freight rate inflation. Our COVID-19 costs, including the enhanced compensation for our manufacturing employees, continue to run about a million and a half dollars per month, or approximately $4.5 million in the third quarter. Meanwhile, on a rate basis, increased freight rates cost us about $5.5 million in the quarter. Selling, general, and administrative expenses were $43.4 million in the third quarter of 2020, which was an increase in dollar terms, but favorable by about 60 basis points as a percentage of net sales. SG&A costs increased by $5.3 million compared to the year ago third quarter.
The dollar increase was composed of increases in consumer marketing, including investments in e-commerce of $3.8 million, general and administrative expenses of $2.7 million, selling expenses of $1.8 million, and warehouse expenses of $0.3 million, partially offset by a decrease in acquisition divestiture related and non-recurring expenses of $3.3 million. Expressed as a percentage of net sales, selling, general, and administrative expenses were 8.8% for the third quarter of 2020 compared to 9.4% for the third quarter of 2019. We generated $104.6 million in adjusted EBITDA in the third quarter of 2020 compared to $86.2 million in the prior year quarter, which represents an increase of approximately $18.4 million, or 21.3%. The increase in adjusted EBITDA was primarily driven by an increase in net sales volume.
Adjusted EBITDA as a percentage of net sales was 21.1%, which was in line with adjusted EBITDA as a percentage of net sales in the prior year third quarter of 21.2%. Year to date, adjusted EBITDA as a percentage of net sales is now 19.8%, approximately 20 basis points higher than the prior year period. We generated adjusted net income of $47.9 million, or $0.74 for adjusted diluted share in the third quarter of 2020 compared to $34.9 million or $0.54 for adjusted diluted share in the third quarter of 2019. Earlier this year, like many in our peer group, we suspended our annual guidance at the onset of the COVID-19 or coronavirus pandemic.
While we noted that the world had changed and that forecasting our business would be challenging due to the many factors outside of our control, we expressed our belief that we would materially exceed the financial forecasts that we had made earlier in the year of $1.66 billion-$1.68 billion in net sales and $302.5-$312.5 of adjusted EBITDA, and we certainly have. While life has not returned to normal yet, given where we are in the year, we believe we are in a position to provide guidance for the remainder of fiscal 2020, and we certainly expect to see continued elevated performance throughout the remainder of the year.
When factoring in our guidance, however, please keep in mind that while we are very excited about the announced acquisition of Crisco from Smucker, this transaction has not yet closed, and therefore, our guidance excludes the expected impact of the pending acquisition. Here it goes. Through the first nine months of 2020, we generated $1.458 billion in net sales compared to $1.19 billion in the year ago period, an increase of $267.5 million, or 22.5%. Similarly, through the first nine months of 2020, we generated $287.9 million in adjusted EBITDA compared to $233 million in the year ago period, an increase of $54.9 million or 23.5%.
While we don't expect to remain at the same toward +20% area growth rate into perpetuity, we do anticipate growth in the fourth quarter to remain elevated or up as much as 10% or more for net sales, which will drive the rest of our model. Based on our first nine months of performance and our outlook for the fourth quarter, we expect this strong performance that we are seeing to continue throughout the remainder of the year, and we expect to generate between $1.95 billion and $1.97 billion in net sales for 2020. We expect to generate between $360 million and $370 million in adjusted EBITDA. We expect slight improvements in our adjusted EBITDA as a percent of net sales, as operating leverage from increased volume is expected to continue to boost margin.
However, similar to prior quarters, we expect some of these margin benefits to be offset by increased costs relating to the pandemic, as well as the continued uptick in freight inflation. We are also providing adjusted diluted earnings per share guidance for the full year fiscal 2020 in the range of $2.30-$2.40. We expect to spend approximately $40 million-$45 million for the year in CapEx. Based on our latest estimates and our continued debt paydown efforts, we are trending toward a net debt to adjusted EBITDA before share-based compensation of approximately 4.5x before the acquisition of Crisco. Pro forma for the pending acquisition of Crisco, we expect to remain well within our target net leverage ratio of 4.5x-5.5x .
Based on our latest forecasts and our estimates for the acquisition, we now expect to finish the year at approximately 5 x- 5.1x net debt to adjusted EBITDA pro forma for the acquisition. Ken discussed some of the highlights earlier, explaining why we are so very excited about the acquisition. I would also like to provide some additional financial information. Similar to many other brands in our portfolio, Crisco has seen elevated performance throughout the pandemic, boosted by strong double-digit increases in consumption as Americans are re-embracing their kitchens and rediscovering the joys of baking. As previously announced, we expect Crisco will generate approximately $270 million of net sales and approximately $65 million-$70 million of adjusted EBITDA in 2021. We expect Crisco will be accretive to our adjusted diluted earnings per share by approximately $0.45-$0.50.
We also expect Crisco to add approximately $7 million to our annual CapEx needs. We are also very excited about the free cash flow generation profile of this business and expect it to help accelerate our deleveraging goals. We expect the acquisition to close during the fourth quarter, and we expect to finance it initially through a combination of cash on hand and revolver draw. I would now like to turn the call back over to Ken to highlight our plans going forward. Ken?
Thank you, Bruce. Our plan going forward follows the same blueprint we began implementing before the onset of the coronavirus pandemic. We call it our Vision for Growth, and it's anchored in three strategic priorities: drive organic growth, improve margins, and make accretive acquisitions. Keeping our base business healthy with modest organic growth and good cost management so we can keep our cash flow strong and balance sheet ready for accretive acquisitions. For the purpose of returning a substantial portion of our excess cash to our shareholders in the form of dividends, has always been the core of B&G's value proposition. The pandemic simply powered our Vision for Growth into overdrive.
With tremendous organic growth this year, combined with expanded margins delivering outsized cash flow, we've been able to reduce our leverage from over 6x at the end of last year to 4.5x projected this year. This has allowed us to get back on the acquisition hunt and as we mentioned before, Crisco is a classic B&G Foods acquisition about which we couldn't be more excited. Furthermore, last week, our board of directors declared our 65th consecutive quarterly dividend since going public in 2004. How do we keep all this going? To drive organic growth, we will capitalize on the growth we're seeing, driven by both existing users and the addition of new users. We believe much of the increased consumption of our brand is due to lasting changes in consumer behavior.
We believe many more consumers will be working from home even after a vaccine is available, and we participate in great categories with well-known leading brands that cater very well to the work-from-home crowd. Whether it's baking, meals, condiments, spices and seasonings, or vegetables, we have high-quality, tasty products in our portfolio that really satisfy consumers' basic needs. Our vast portfolio of branded products is driving growth in multiple ways, from gaining new households, increased consumption in existing households, and both. In the latest 12 months, ending in September 2020, 83% of U.S. households purchased at least one B&G Foods product, and that increased from 79% last year. That equates to approximately 5.7 million more households. The majority of our major brands have seen positive gains in household penetration, including Green Giant, Ortega, Clabber Girl, Cream of Wheat, Weber, and Victoria.
These new households love our products just like our existing consumers, with a repeat rate of 53%. Our broad portfolio of brands is driving growth in multiple ways, as I mentioned before. Brands that are getting most of their growth from new buyers include Clabber Girl, Mama Mary's, Victoria, and Spice Islands. Brands that are getting most of their growth from existing buyers include Green Giant and Ortega. We have brands that are seeing growth more evenly split between new and existing buyers, including Cream of Wheat, Bear Creek, and Weber. We expect future growth to continue mostly from existing users as consumers have fundamentally changed their behavior and will continue to cook and eat more at home.
All one has to do is read the report about how many companies are planning to have their employees work at home more in the future, regardless of whether or not there's a COVID vaccine. Our brand portfolio will be there for them, meeting their needs with new recipes, usage ideas, and innovation as they have been throughout the pandemic. Regarding new households, I stand by my belief I have shared in the past that they are like the fountain of youth for any brand, particularly legacy brands like ours. We expect they will add icing on the cake to our future growth opportunity. To retain those new households and keep our strong base of existing households keep coming back, we've been increasing our marketing investment and shifting those investments to more usage-oriented marketing with an emphasis on e-commerce.
Examples of our recent efforts include partnering with leading media companies to promote our brands and recipes on high-impact sites like delish.com and allrecipes.com. We have also launched an exclusive online interactive kitchen with a digital pantry and freezer stuffed with our brands and a host of recipes, tips, and tricks to make eating at home with the family easier and more enjoyable. Additionally, we've partnered with Catalina Marketing to strategically target the new incremental households we gained during the pandemic by delivering these new consumers recipes and usage suggestions online at home, on their mobile device, and in-store to help encourage consumption of our brands already found in their household and encourage repeat purchases thereafter. We've also partnered with a leading provider of household panel data to deliver enhanced consumer demographic, attitude, and purchase behavior insights.
These insights will not only aid in driving sales by better positioning ourselves to existing consumers and retail partners, but also among opportunity consumer segments that would be incremental to our business. Lastly, I'm pleased to report that the Jolly Green Giant is back on national television with a fall advertising campaign teaching consumers how to get more vegetables into their diet, featuring much of our frozen innovation. Regarding e-commerce, we estimate that the portion of our sales through e-commerce has grown 140% this year and represents approximately 7% of our consumption sales as reported by Nielsen. This remains only an estimate, as retailers have not yet completely broken down our sales to them between traditional click and mortar sales and click and collect and click and deliver. We know it's growing very fast and becoming an increasingly important part of our business.
Our largest brand, Green Giant, is also our largest brand in e-commerce by far. According to Nielsen reporting, our share of frozen vegetables via e-commerce is more than 50%, approximately four times that of our retail share. On this front, we've invested in much of the foundational work necessary to set ourselves up for success, including internal and external search functionality, where to buy, assortment optimization, key images, and keywords. In addition, we're partnering with e-commerce retail partners to test and learn what's most impactful for consumers of B&G Foods products. This foundational work and testing is critical to our continued success in e-commerce in the near future and we believe will allow us to hit the ground running even faster in 2021. Last but not least, product innovation will remain a major driver of our business going forward.
While retailer reset delayed many new product introductions during the pandemic, we certainly didn't need the sales volume this year. We have focused our efforts on keeping the supply chain full of our best-selling products. This delay had a hidden benefit. The delayed reset gave us six to nine more months of lead time to develop new products. This is a rare luxury in the world of new product development. As a result, our new innovation pipeline is even more robust. Some of the highlights of new product introductions late this year and early 2021 include, we'll keep the innovation train rolling onto Green Giant by introducing additional products that deliver on Green Giant's mission to help people get more vegetables into their diet.
Our focus will continue to be to introduce new products made from vegetables that offer delicious carbohydrate replacement alternatives to large carbohydrate-filled categories such as pasta, rice, and bread. This quarter, we will continue the rollout of Green Giant cauliflower gnocchi and cauliflower breadsticks. In addition, we've begun the rollout of Green Giant cauliflower-forward vegetable-based veggie fries and veggie rings, our take on traditional onion rings. Early retail movement in these first few retailers that launched these new items is very promising. Next year, we plan to introduce a line of outstanding cauliflower-based pastas, including ravioli, fettuccine, and mac and cheese. These are delicious. One would never know they're made from cauliflower and other vegetables, and will be gluten-free. We will not forget our core vegetable franchise, so we're introducing Green Giant vegetable seasoning with our Dash salt free seasoning, our first cross-brand product innovation.
For our second-largest brand, Ortega, we're bringing the magic of our cauliflower to a category that really needs better-for-you innovation. We're introducing Ortega cauliflower and corn taco shells and tortillas, one of the first product formulation innovations in this category in quite some time. We will complement this launch with the introduction of Ortega Street Tacos sauces in three flavors in squeeze bottles to capitalize on the growing food truck craze. In spices and seasoning, we are constantly innovating with new blends, like our Dash Everything But the Salt blend, which allows people to enjoy the taste of an everything bagel without the salt. In addition, we've launched new Weber grilling blends, including our Weber Cowboy and Savory Steakhouse seasonings. The next one's very exciting. Under a licensing agreement, we just recently launched Cinnamon Toast Crunch Cinnadust seasoning blend, inspired by the second best-selling cereal in America, Cinnamon Toast Crunch.
This product was introduced to much fanfare. Consumers on their social media pages and the media alike have been obsessed with the product, delivering over $2.7 billion media impressions since we announced it in late August, and our initial sales results have not disappointed. Cinnadust has quickly become the fastest-selling spice blend within our entire seasoning portfolio at a major wholesale club partner, and we'll be expanding distribution of this terrific new product in early 2021. Our second strategic imperative of our vision for growth is improving margin. At the core of this is better price management and our cost productivity program, which continues to bear fruit across our supply chain in the area of logistics, product and package initiatives, and manufacturing. We set a goal of driving $20 million in annual cost savings and delivered that in 2019.
In 2020, we expect to deliver $17 million in cost savings from further optimizing our transportation costs, product weight- outs, package cost reductions, and repatriating products from co-packers into our manufacturing facilities. The $3 million gap between our expected savings and our goal was a decision we made to delay several manufacturing projects due to our desire to not disrupt our facilities as they significantly ramped up production at the beginning of the pandemic and have not slowed down since. We will begin implementing our manufacturing cost reduction programs as we catch up with COVID demand, and we will share more on our plans in this area at our year-end earnings call. Better price management is the second driver of our margin improvement imperative, and COVID certainly helped in this area. Through the first three quarters of 2020, we've garnered over $24 million of improved pricing.
Although we returned to more normalized promotional levels in the third quarter, we expect most of our year-to-date pricing to stick this year. Going forward, our new trade promotion management system will allow us to continue to optimize promotional price points for better efficiency and effectiveness. Our last strategic imperative of our vision for growth is, of course, making accretive acquisitions. As I mentioned before, this is why B&G Foods was built, and we have a great track record of building value for our shareholders with this strategy. Clabber Girl was a terrific addition to our portfolio, and the Crisco brand is yet another perfect fit with our strategy. With strong cash flows from these acquisitions, plus a healthy base business, we expect to continue to reduce our net leverage post-acquisition to ensure our balance sheet is in shape to continue to add accretive businesses.
Lastly, before I turn the call back over to the operator, I wanted to acknowledge and thank the entire B&G Foods organization of almost 3,000 people for their tireless efforts to produce the results we shared today, all while taking care of one another to stay safe and healthy, yet remaining extremely productive as we do our part to keep our nation's food supply flowing. Our frontline employees are showing that they continue to be heroes throughout this pandemic. I cannot thank them enough for their efforts. I would also like to take this opportunity to publicly welcome the Cincinnati-based Crisco employees that we expect will join the B&G Foods family later this year, subject to the closing of the pending acquisition. This concludes our remarks for today. Now we'd like to begin the Q&A portion of our call. Operator?
Thank you. To signal for a question today, please press star one on your telephone keypad. We do ask that you limit yourself to one question and one follow-up so that everyone has an opportunity to ask questions. Again, that is star one to signal. We are going to take a brief break while we assemble the queue and before we answer your questions. We ask that you please remain on the line. Again, ladies and gentlemen, thank you for your patience. Again, that is star one to signal. Our first question today comes from Brian Holland with D.A. Davidson.
Yeah, thanks. Good afternoon. Congratulations on the continued strong performance this year. First question, shipments up, I think, base business up low 20s, 21%, something like that, I believe I heard in the prepared remarks. Consumption up 29%. Can you help triangulate sort of going forward? It feels like, I think you talked about some supply issues that you were managing as well. As we kind of go forward here, are inventories pretty tight with retailers? Are we going to see a setup there where you're going to have to grow shipments ahead of consumption in subsequent quarters to kind of catch up for that? Maybe help us understand maybe the progression of that over the next few quarters, like how quickly you can make that up, if you will.
Certainly if you look at our inventory, this is definitely the quarter where we increase inventory. On a broad basis, we are building our own inventory. On a specific basis, obviously, we're operating call it seven, eight months into a pandemic, and there is always on occasion certain brands and categories that are in heightened demand. Therefore really need to uptick our efforts from a supply standpoint. I think we're just going to continue to watch it. I think you have seen certainly distortion from time to time around holidays and other things where buying patterns look a little bit different. We're certainly in the holiday buying area today as we speak in November heading up towards Thanksgiving. We also have seen periods like we talked about earlier in the year after the second quarter where you didn't see a big lift for 4th of July.
Some of those are a little bit tougher to predict where they're going to be. As Ken mentioned earlier in the call, we're doing really everything we can to maximize supply and make sure that we've got product on the shelf throughout and continue to react to the needs of the retailers and ultimately the consumers.
Okay. Fair enough. Maybe just taking a step back here. Obviously your portfolio effectively positioned within COVID where the consumer is migrating to from a category standpoint, baking, frozen, et cetera. Your share in the aggregate has improved through this. I'm wondering if you can kind of just take a step back here and maybe help us understand where you think your consumption is improving across grocery, obviously. Where are you guys taking share right now? Where is either the execution improving or where is kind of the connection with the consumer? Where is that most acute right now? I think it's worth noting that your share has improved in this dynamic. It hasn't worsened.
Yeah. I appreciate your recognizing that and pointing out. Sorry, Ken, do you want to answer that?
Well, I was just going to say some of our biggest share gains are baking powder, molasses, and frozen vegetables and shelf-stable vegetables. I mean, just go by category, some of those larger share gains. 2/3 of our brands have gained or held shares, so kind of hard to pinpoint. Big swings in baking powder, shelf-stable vegetables, even some late gains in some segments of our seasonings business.
Yeah. Brian, one of the key things to remember on that too is just what we've been saying for some time is just the ability to execute and owning as much or the right amounts of your supply chain and having good relationships with your co-packers for the manufacturing that you don't own is just crucial at this point in time. Our ability to execute and keep the factories running has been a key factor in terms of keeping product on the shelf as it's moving in really heightened levels to the consumers.
Okay. I'll leave it there for now. Best of luck.
Yeah. Certainly the supply chain, we've had our issues as well. We have been getting great feedback from our customers that on whole, we're executing well in very important categories, keeping them in stock, which I think is a driver, certainly a contributor to driving share gains.
Appreciate the color, Ken and Bruce. Best of luck.
Our next question comes from David Palmer of Evercore ISI.
Hi, it's actually Kevin Lehmann on for Dave. Thanks for the question.
No worries. Thank you.
Ken. Hey guys. Thank you. Ken, in the past, you guys have talked about the opportunity to expand some of the smaller regional brands being used acquired over the years into more mainstream or national retailers. You mentioned just a few minutes ago, Victoria, for example, sales up, what was it, 55% in the quarter? If you look at the scanner data, ACV distribution for that brand is up almost 600 basis points. Clabber Girl saw a similar ACV increase. We're all wondering how sticky consumer trial will be, but is the pandemic demand also bringing forward some ACV gains that may have otherwise taken several years to actually achieve? If so, how sticky do you think those distribution wins will be in 21 and going forward? Thanks.
Yes, it's a good point. It does help. Certainly, pasta sauce would help because again, that's another one where we were doing very well on supply and some competitors were having some issue with supply, so it gained distribution. If the products do well, it can be very sticky. Distribution is only sticky if the product turns well. We expect that some of those distribution gains we've seen in pasta sauce, in seasonings, in Pop-Tarts, we've seen some gains. Canned vegetables, we've actually seen some gains. We were there ready to supply customers when they need us and with the product performing well. Let's just say we're very focused on distribution, and we don't want to give any of it up. The COVID-19 has helped that as well.
Thank you.
We'll go next to Michael Lavery of Piper Sandler.
Thank you. Good evening.
Hey, Michael.
You mentioned how important the relationships are with your co-packers and co-manufacturers, but do you have a sense of how much, even though growth is looking like it's continuing at elevated levels, it's showing some deceleration. It's moderating a bit certainly from the spring. Do you have a sense of how much you may be able to lessen your dependence on co-packers next year, and if there's a margin benefit we should expect that would come from that?
I'm not really sure the COVID-19 situation is going to make a big difference in lessening our dependence. You have to remember that about half of our volume is done internally manufactured and half co-pack. It's really We're an amalgamation of the businesses we purchased. Some came with manufacturing, some didn't come with manufacturing. For the most part, our co-packers came through really well through COVID-19, and could go continue with them. There were a handful, less than a handful, that actually weren't able to keep up, and we've started to now either add more or actually repatriate the product in our own facility to expand the capacity because they were tapped out. We certainly don't want the fill rates to continue to be low.
In some cases, we're actually making some product that were traditionally dedicated to co-packers. The bigger driver of whether we produce or don't produce is going to be based on cost. Part of our cost savings initiatives will include where it makes financial sense for us to move product from co-packers to internal manufacturing. That is part of our cost savings going forward. We're not going to dramatically change the mix overnight. If we're 50/50 today, we'll be moving a few percentage points every now and again internally. It'll be a product line by product line decision. I hope that answers your question.
Yeah, that's helpful. It sounds like it hasn't been a big shift in favor of co-mans during the surge. You've handled it on both internally and externally managing capacity up.
Yes. For the most part, our co-mans have come through. It's not like we haven't had any issues, but if you look at the drivers of our lower fill rates, it was really two or three product lines, most of which was in our house, and there wasn't a lot of excess capacity to be had. We're in the process of building more.
That's great. Just a quick follow-up on canned corn. Any sense of how that supply looks like you'll be positioned for the next year, and if you feel like there's any constraint that might come there?
We believe that the entire canned vegetable category is gonna be tight because we have to make the decision on how much volume we need well in advance. The way the business works for everyone is you got to let the farmers know early in the year what you need them to plant in the spring to be harvested in the summer and the early fall. All of those demand plans were put together, kind of put to bed by January, COVID hit in March. Now, we went back out to look for more in May and got more, but didn't get nearly as much as we needed. COVID demand was even stronger and longer than what we even got back in May. We're starting to see an uptick of some stockpiling in the fall on that category.
It's going to be a tight category for the next season, next summer.
Okay. Thanks for the color.
We'll go next to Karru Martinson of Jefferies.
Good afternoon. Just quick housekeeping. I thought I heard you say with Crisco pro forma, you're expecting 5x- 5.1x leverage. Is that correct?
Correct.
Yep.
Okay.
In terms of the welcome delay giving you guys more time to formulate the product innovation pipeline here, has that changed in terms of the cadence of where you're rolling out? You constantly hear the stories of, we're focused on the core, we're not adding new stuff. How are you getting new stuff on the shelf, and when should we expect that to flow through the upcoming year here?
It's a retailer-by-retailer decision whether or not they're going to reset their shelves. It's a very hard thing to generalize because it's done retailer by retailer. Some retailers, depending on the category, changed from second to third quarter rollouts of 2020 to fourth quarter, and some changed it to next year. Some categories, they said, "We're not even going to reset the category next year." The good news is we've got the products developed, and we're ready to launch when the customer is ready to launch.
When you look at the new product development, how are you tying that into the online shopping experience, or can you formulate your product such that it can be more easily accessible to hearing a lot of grocery stores putting in online shopping centers to the store? Are you finding placement in those locations, or are you participating in that?
Not to a great extent. When we do launch something, we are making sure now that a lot of the requirements in online have certain package requirements, not necessarily product formulation. We are keeping in mind the case pack and the ability to be able to be sold online. We're certainly using some of the online retailers for early marketing because it's a great way to get out there and get some buzz behind the product.
Thank you very much, guys. Appreciate it.
We'll go next to William Reuter of Bank of America.
Hi. I guess my first question, I assume, given the big, relatively large acquisition, that you're probably going to pause on share repurchases going forward. I guess, is that the case?
I think obviously our focus right now is the acquisition and the integration and, depending on where sales, EBITDA, cash flow, leverage all shake out over time, share repurchase is one consideration, but I think you're highlighting something appropriately that focus right now is on acquisition and integration.
Okay. My other one, given some capacity constraints and challenges with regard to supply chain, I think you guys manufacture about half your product. Have you thought about changing that mixture of self-manufacturing versus third parties?
I think the biggest driver on how that could change in a big way is just resulting to M&A. Certainly, as Ken mentioned on the call earlier, we want to be more efficient where it makes sense and where it makes sense for us to bring in manufacturing to do it in-house, that makes sense, and in some cases, the asset-light model works well from a co-packer standpoint. Real big thing is to be important within our co-packers, as opposed to being a small player with a large co-packer.
Great. That's all for me. Thank you.
Thanks.
We'll go next to Carla Casella of JPMorgan.
Hi. I have one question on the capital structure and one on the business. With the big acquisition in, you've got a callable debt in your structure. Any thoughts of doing refinancing and potentially using longer-term financing for the acquisition rather than your revolver?
Yeah, I think that's certainly something that we're going to look to evaluate over time and be opportunistic within the market context.
Okay.
That's it.
When we look at the brands, I just have a couple on brand categories. Any of the strengths in this quarter, is any of it driven by timing, where the shipments came in third quarter this year versus fourth quarter next year?
No. In fact, we got off to a good start in October, so our shipments and consumption were pretty close in the third quarter, so it really wasn't negatively affected at all.
Okay. As we go into holiday, where I'm assuming canned will may get some refocus, are you seeing any pickup in promotional activity, or can you just talk about the cans category in general and what you're seeing competition there?
I'm sorry, what category are you asking about?
Green Giant shelf.
Oh, canned vegetables.
I think I called it canned. Yeah, sorry.
I'm sorry. Yeah. Yeah, Thanksgiving and Christmas and Hanukkah holidays are big, but it is the season for canned vegetables. We expect normal activity. As has been all year long, we do expect elevated pricing in the category versus a year ago. It's still going to be promoted.
Okay, great. Thanks.
Our next question comes from Hale Holden at Barclays.
Thanks for taking the question. I just had two quick ones. On the Crisco acquisition, when you guys bought Green Giant, it took probably about nine months or into the following fall before you got your own innovation into the brand. Is that something we should expect for Crisco, or is there an innovation pipeline that's coming faster than that with the brand?
I would say that we don't see as much innovation with Crisco as we did in the frozen vegetable category. There is some things that are on the book that are intriguing to us. Right now we want to focus on integrating the acquisition really well. It's a big business. We don't see it needing quite the level of innovation that Green Giant needed. Having said that, I'm sure within the first year, we'll start to share with customers the most attractive pieces of innovation that Smucker Company has developed if there are some nice ideas in there that they would have loved to have launched if it was a higher priority for them. This will certainly take a hard look at them, given it's going to be a very important brand in our portfolio.
Sounds good. Bruce, you gave two things. You gave a pricing increase year to date that I heard around $23 million, $24 million that you guys had realized through price increases. Also outlined a bunch of new tools to try to, I guess, go to consumer better and have better consumer insights. I was wondering, when you combine those, what your confidence level on holding that pricing increase into a more normalized environment, potentially in 2021 when demand becomes a little bit more flatter than what you're seeing right now.
I think the real thing to follow, there's a couple things. One, obviously as an organization, we're smarter today than we used to be. That new tool was really part of the program that we started to put in place last year with pre-COVID-19, a trade spend optimization program and how we were looking at things. That definitely was a part of the gain and benefit that was truly in the business that we expect to hold on to, as was the list price increase that we took in the spring of 2019 that we lapped in the beginning of this year. That truly is.
There certainly was in the March, April, May time period, even probably still into June, July, a good amount of trade spend programs being canceled, put on hold as the grocery stores were dealing with COVID and trying to just keep product on the shelf. I think we've probably started to see a little bit more of a normal environment or a less abnormal environment in the third quarter, fourth quarter than we did earlier in the year. I think it's starting to settle a little bit. A lot of the benefit that we took, we have in place and we expect to continue to keep some of that in place.
Sounds good. Thank you very much.
Our next question comes from Eric Larson at Seaport Global Securities.
Yeah. Thank you for taking the question. Good afternoon, everyone.
Hey, Eric.
Just a couple questions. I think Ken you alluded to, and I think all the companies are talking about this, and if you could maybe put some quantification on it. The total marketing spend, you're trying to increase your spending at a time when your household penetration is up. You want to retain as many of those customers as possible. Can you give us a sense of either in a dollar number or a percentage of sales or in some measurement, how much your marketing spend is actually going up in total?
Yeah. Year to date, Bruce. Let me get our numbers on. For the first half of the year, our marketing spend actually was down because we were clamping down on spending until we were trying to get a hold of what's going on with the consumer and catch up with demand. Year to date, our marketing spend was roughly about 10% higher than a year ago, but down as a percentage of sales.
Got it.
The first half of the year, it was down in absolute and it came back and as Bruce mentioned, we spent more in the third, $53 more in the third quarter than we did last year. We expect that to continue and spend even more in the fourth quarter versus a year ago. All in our marketing spend this year will be up at least 15%.
15% absolute?
15%. Yeah.
Got it.
We're not the largest spenders in marketing, but-
Right.
That's a nice increase for us, especially the way we're targeting it and using it for both online shopper marketing and then getting Green Giant back on air again is critical given there's so much innovation we have with all the different segments we're going after. It's critical that that innovation got some awareness in trial in accelerated fashion.
Got it. My follow-up question here is, obviously we've all known that there's some freight inflation, actually quite a bit. I mean, $5.5 million, I think, in your quarter. It's different that, obviously your sales are a lot higher than they were a few years ago when it was +$5 million to +$10 million. Is this because home delivery Is this a situation that could get similar to what we had, kind of a hyperinflationary period several years ago? How should we be looking at freight cost?
Yeah, it's interesting because we were looking for some freight increases this year throughout the year, was our model and what we were expecting. Probably the first six months of the year, we just weren't seeing it. We actually had some favorability. It ticked up a little bit in the third quarter. We are continuing to watch it. Certainly because of a lot of the moves that we made following that late 2017, early 2018 increase that you referenced. I think we're better able to deal with it today than we were back then. We're more efficient. We've taken a lot of miles out of the system. Feel a little bit more efficient, but certainly watching it. It was something that we expected to happen this year, and then there were delays.
Don't think it's hyperinflation from a freight standpoint, but certainly it's something that's ticked up a little bit and people will adjust to it if necessary.
Okay.
Yeah, I would say that it's basically a shortage of capacity. That's what's driving it. You even hear some of the online delivery companies saying, "If you want to order something for Christmas, you better order now." "Don't wait till the last minute because it's not going to arrive on time." It's really a shortage of capacity. To Bruce's point, we're seeing similar 8% increases, but we're offsetting that because we've got long-term logistics efficiency programs in place that, number one, are sending more from spot to contract. Spot rates have really spiked, contract rates not as much . More from spot to contract and a lot more in truckload versus less than truckload, and that's a huge driver. On top of all the strategic moves we made to relocate some of our warehouses to take, as Bruce mentioned, a ton of miles out.
With those three things, we're implementing those. A rate increase, the same rate increase doesn't seem to have the same negative effect it had a few years ago.
Got it. Yeah, I remember when you added your West Coast distribution center. I think that took out a huge number of miles, if I recall correctly.
Huge numbers. We're still saving money on that and on our little East Coast move we did as well. That's really helping out a lot as rates rise.
Okay. Thank you.
We'll go next to Ken Zaslow of Bank of Montreal.
Hey, good afternoon, everyone.
Hey, Ken.
I know it's early, but can you give us some puts and takes of how we think about 2021? As I see, even in the fourth quarter, the rate of EBITDA growth obviously is slowing. How do we think about 2021 in terms of what you think are the biggest puts and takes and how we start framing it in our mind? I know it's early to give exact guidance, if you could give us some puts and takes, that would be very helpful.
Well, I don't think we're ready to do that for 2021. I'll let Bruce comment. I think one thing I would say, if you need to get your head wrapped around 2021 is do what we're doing. Look at 2021 versus 2019. That's the trends we know about. Trending versus 2020 is still up in the air. There's such major changes to the business in 2020, excuse me. We're trying to wrap our mind around how does 2021 look versus 2019? What's reasonable to assume of what's gonna carry over? While we look at puts and takes versus 2021, versus 2020, we're really looking to build it versus 2019. That's the trends we know of today.
Very difficult to figure out what's going to happen next March and April versus the last March and April where we saw just sudden, unexpected, huge increases in demand.
Yeah. Obviously the biggest wild card is gonna be what happens with COVID and are we still in a work-from-home, play-from-home, school-from-home type environment?
Okay. Also freight, it would obviously be a factor as well. I'm assuming ad spending and new innovation and slotting fees. Is that also because it seems like you've actually amped up the new innovation. If you kind of think about relative, again, to 2019, in a lot of respects, you're a whole new company in terms of your focus on innovation. It seems like it's just a greater focus. Are those the keys that I would think of?
Yeah. The other ones that I'd add to that is obviously, as we've talked about over the last couple of years, if there's inflation, and it's sustained, people should expect, not just B&G, but other packaged food players to take price increases. Probably nothing different there. Certainly, you get COVID, you get massive demand. We've seen that all year. Despite predictions of maybe it goes away, it's still here. Obviously the last thing is Crisco. We've got an acquisition, and that'll fit perfectly within our financials.
I agree. Just the last question I have is, when I think about the innovation, again, I like it versus 2019, I think that's a really fair way of thinking about it. What do you think your success rate is in the incremental from that relative to the idea that, we're all talking about, you're getting new customers, but part of it is the innovation of that. What percent of your innovation, or what percent of the sales you think is sticky? What percent of your innovation is something that won't go away? Do you think of that as a percent of your sales going forward? Can you frame that for us? I'll leave it there, and I appreciate it.
Ken, you want to get that? You want me to get it?
Yeah. Sorry. I'm sorry. I will. I think what you have to think about, we're not prepared to start to talk about percent of business from innovation for 2021. That'll all be in our guidance for next year. We'll be able to lay out for you how much volume we believe we'll get from innovation, and how much of it is sticky and left over. Suffice to say, we'll do more volume and innovation in 2021 than what we did in 2019 because we've got a good success rate from what we've launched. Not every single SKU has been successful and will stay on shelf, but for the most part, everything we launched is doing well. We're launching new products on top of that. It's building.
In particular, our largest brand, Green Giant, we can lay it out for you, but the brand has steadily grown over the last few years, and that's basically driven by innovation.
Great, I appreciate it. Be well, guys.
Thanks, Ken.
Thank you.
Our final question today comes from Robert Moskow of Credit Suisse.
Hi. Thank you.
You bet.
I had a question about I was just finding it again. I'm sorry. You mentioned that it was at the rare luxury that retailers are kind of pushing back, from the merchandising reset. Can you elaborate a little bit more on that for me? Is it allowing you to get more distribution than you otherwise would have expected? And if so, how are retailers making room for you? Are they expanding the overall category, or do you think there's other brands that are being reduced?
The rare luxury comment comes from my many years of being a marketer. The rare luxury is really for our marketing and R&D and commercialization people because they basically got a six to nine-month reprieve to get everything ready. That's what I meant by the luxury. Going to the R&D and marketing people and say, "Guess what? You have now six to nine more months before you have to get everything to market." Let's just say, if I told them, "Move everything you're working on up six to nine months," they'd gulp and say, "Oh my God, how in the world are we going to do that in a quality way." It's really a luxury of our marketing and R&D folks. We didn't stop our innovation pipeline, but everything just shifted. We were working on 2020, 2021, 2022 plans, and we had great ideas.
Everything just shifted, meaning we're gonna start the 2020 innovation later. We'll probably launch what was gonna be early 2021. We'll launch that in late 2021 or early 2022. It just made it more robust because we had a delay, the luxury was that we didn't need the new product volume, everybody focused on the base business. Again, the comment was really to the folks that have to get these products successfully developed and commercialized for shipment to customers.
Do you think that this will give you a bigger year in terms of innovation in 2021 than a normal year? Is it twice as much innovation, three times as much? I am wondering what it might mean.
I would like to hope that, but I think that's more appropriate for our 2021 guidance, because right now we still don't know for every single customer in all the different categories when their resets are going to be because they still haven't decided. Last weekend, COVID's not over. There's still a lot of uncertainty.
Okay.
We're ready to go when the customers are ready to go, but that hasn't been all decided yet.
All right. I'm a big fan of Takis, so I'm looking forward to that. All right. Thank you.
All right.
Thanks, Rob.
Bye.
Good night.
With no further questions in queue, that will conclude today's call. We thank you for your participation, and you may now disconnect.