Oreos would not be as filling without Graco

Dee DePass
Star Tribune

Minneapolis – Ever wonder how M&M’s get their crunchy shells? Or how Reese’s Peanut Butter Cups and Pop-Tarts get their decadent fillings? Or how that perfect dollop of creamy goodness sits into the middle of an Oreo?

The answer lies deep inside Graco Inc.’s factory in Minneapolis, where towering pumps and sprayers are manufactured that let American food factories rhythmically dispense or squirt gallons and gallons of food ingredients.

With little hoopla, Graco has quietly built a business of Food and Drug Administration-approved pumps and spraying machines that are renowned within the food industry. The unit is still small but one of Graco’s fastest-growing segments, doubling since 2010.

Food companies consider Graco’s technology sacred, although the Minneapolis company – which employs 3,600 global employees and has $1.3 billion in annual revenue – is more likely to talk about its much larger units that make industrial pumps and sprayers that paint vehicles, insulate homes or fireproof oil rigs.

“Doritos uses our (oil) sprayers in their tumblers so the seasonings stick to each chip. We do the fruit for Pop-Tarts,” said Kevin Jagielski, sales and marketing director of Graco’s Process Division. “It’s a part of Graco most people never think about. But (food processors) know that what Graco really specializes in is pumping the really difficult and thick fillings that have high viscosity. We are the market leader.”

Other customers include General Mills, Cadbury, Ben & Jerry’s, Samuel Adams beer and Tropicana. Graco’s equipment also transports Coca-Cola’s syrups, Campbell’s soups, Skippy’s peanut butter, McDonald’s ketchup and Kemps’ milk through factories for bottling, canning, molding and bagging.

In March, Hershey’s bought a massive $150,000 bin evacuation pump so it could better transport chocolate into candy filling stations. In February, one of McDonald’s ketchup vendors bought another $150,000 machine to move hundreds of gallons of ketchup into packets.

Jagielski said the new emphasis on food has increased Graco’s “Process Division” by 5 percent a year. In addition to food, the division makes sanitary and industrial pumps for cosmetic, pharmaceutical and oil firms and generates about $250 million in annual sales.

Graco’s overall profits rose 5 percent, but extra sales and new business lines can be important in years like this one when the strong dollar and international economic woes are expected to weigh on sales results for international companies such as Graco.

The stock price, driven by improved annual performance every year since the Great Recession of 2008-09, has risen from $17 per share in March 2009 to recent highs around $80.