Utz Brands CEO Chats With Jim Cramer About Marketing

Savory and salty snack maker Utz Brands Inc UTZ reported fourth-quarter results on March 18 that sent shares lower by 4% despite beating expectations.

Investors appear to have been concerned with management's outlook, including weaker than expected revenue guidance and a commitment to ramp up marketing spend.

On March 19, Utz Brands CEO Dylan Lissette explained on CNBC's "Mad Money" why it is betting big on digital advertising.

What Happened: Utz's comforting and indulgent lineup of salty snacks, such as potato chips, performed well during the pandemic and the company spent $11.1 million to market its brand in 2020. But looking forward to 2021, management plans to increase its marketing spend by 60% and "even more" in later years.

Utz is looking to capitalize on its data showing a 70% repeat purchase rate for its snack foods, the CEO said. Targeting consumers online via digital ads will be the main focus to convince consumers to try its products and hopefully convert them to repeat buyers.

"What we love about [digital ads] is the fact that you really are able to turn on a dime ... and pursue what works," he said. "If some sort of an angle of attack on reaching our customers for one brand, or another brand works, they're able to very quickly lean in behind it."

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Why It's Important: The alternative option to digital ads is proving to be outdated, the CEO said. Traditional TV or other forms of ads consist of one message that runs repeatedly for a year. But if the marketing message fails to resonate with consumers it could still end up running for a year and only then realize "it didn't really give you what you needed."

What's Next: Utz CFO Cary Devore said in its earnings report it expects recent favorable changes in consumer preferences will result in a "lasting, beneficial impact to long-term demand trends."

(Photo: Utz Brands)