Baking&Snack - February 2014 - 43

As the leader in the gluten-free market with its Udi's mission is addressing consumer need states like heartand Glutino brands, Boulder Brands continues to pro- healthy, diabetic care and those wanting natural foods."
actively meet the demand for new and existing products
manufactured in its dedicated gluten-free facility.
Poised to invest
"We came to the point where scale and synergies Unlike in the past, a greater number of bakeries today
caused us to consolidate into one facility," Mr. Stoecklein wait until they shake hands on a long-term deal before
said. "It also facilitated the installation of an automated they commit to a major capital project, according to the
bread line, which we believe is the highest output, dedi- survey. The move is not necessarily an aversion to risk
cated gluten-free bread line in North America."
but a more prudent approach to investing.
Competition in this segment is expected to heat up
During the past two years, Canadian baker Pita Bread
when Fancy Pokket Corp. opens a 58,000-sq-ft dedi- Factory consolidated production of its fresh and frozen
cated gluten-free facility in Lancaster, SC. The $13 to pita bread, tortillas, bagels, naan, cookies and pies under
$14 million investment is a big move for Mike Timani, one roof in Burnaby, BC.
president and CEO of the Canadian company, which
"New customers and new products will drive our
produces pitas, pizza crust, bagels, tortillas and panini spending plans in 2014," said Sid Hayek, operations
bread in its 45,000-sq-ft bakery in Moncton, NB.
manager. "And in 2014, we're going to continue to drive
The Lancaster bakery, which Mr. Timani called "the growth in our existing lines with existing and new
second-largest facility of its kind," has been in the plan- customers.
ning stages for more than two years. "It will be a first"In the next three years, we'll look at further buildclass operation, all new machinery in place and highly ing expansions," he added. "Currently, we have 75,000 sq
automated," he said.
ft in our facility, and we can expand into a warehousing
The bakery will produce glutenfree sandwich breads, whole grain
specialty breads, buns, focaccia, cookies, pound cake, banana bread and
Most bakers finance their capital spending through cash or a combinalemon poppyseed loaves. Initial plans
tion of cash and lending from banks or even their suppliers, accordcalled for a $6 million, 30,000-sq-ft
ing to Baking & Snack's survey. However, financing is not a sure thing,
plant, but Mr. Timani nearly doubled
especially in the long run.
its investments in automation after
Bakers may want to consult with their bankers if they are planning
learning that projected demand for
to make major investments in their operations in the near future. And
the gluten-free items would outstrip
they might do a bit of Federal Reserve watching as well.
original expectations.
That's part of the advice from some members of our panel of experts
"It is a tough market, and if we're
who have sought financing or refinancing during the past year.
not competitive enough, we won't
"As you talk to lenders, they're confident that rates will stay down in
survive," he said. "Automation is one
the short-term, but they get very uncomfortable with two years out,
"
of the biggest ways we do this."
noted John Linehan, executive vice-president, King's Hawaiian Bakery
Despite increased competition,
West. "They think interest rates will go up sharply then.
"
Mr. Stoecklein of Boulder Brands
Mike Timani, president and CEO of Fancy Pokket, added that
remained bullish on gluten-free and
banks remain overly cautious when it comes to lending.
other better-for-you products partly
"I feel bad about how banks look at growth and investment opportubecause the segment's steep, steady
nities to invest back in their businesses, he said. "Yes, the banks made
"
growth trajectory benefits everya lot of mistakes before, and now they're overkilling it, and businesses
one, especially those who are
are paying for that. What happens is, it contributes to owners and invesinvesting in automation.
tors who want to grow and expand their buildings being more cautious
"We are going to continue to
and careful because the financing is not there. I would expect this to
be aggressive in our capital investcontinue for the next two to three years. Banks won't be comfortable
ments in our gluten-free produntil they're well beyond what's happened in the past few years.
"
ucts," he explained. "Our portfolio
Mr. Linehan wondered what liquidity might be like five years from
includes Smart Balance and Earth
now after easy money tapers off and interest rates rise.
Balance with heart-healthy
"Capital spending will pull back in five years as a result of sharply
spreads. We have Glutino,
increased interest rates, he said. "A lot of companies will be able to
"
Udi's and Level, which is
afford to finance five years out but may not do it at that point.
"
a diabetic product. Our

Finer art of financing

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