Milling & Baking News Corporate Profiles - 2017 - 10

INDUSTRY
Grain-based
REVIEW:
foods
Grain-based foods

Grain-based foods
Slow growth in baking has category leaders searching for answers

LEADING FRESH

bread vendors
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2
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4
5
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9

Grupo Bimbo
Flowers Foods Bakeries L.L.C.
Campbell Soup Co.
Aunt Millie's Bakeries, Inc.
Lewis Bakeries, Inc.
United States Bakery
Aryzta L.L.C.
Pan-O-Gold Baking Co.
H&S Bakery
Private label
Total

Dollar sales
$2,400,428,371
$1,847,669,255
$634,057,017
$189,200,572
$176,994,236
$150,520,809
$116,033,691
$95,138,501
$82,799,082
$1,954,543,776
$8,933,980,688

% change
from
year ago
2.2%
2.5%
-5.0%
-1.5%
-0.1%
2.3%
8.0%
-10.1%
1.1%
-4.1%
-0.1%

Data for 52 weeks ended July 9, 2017
Total U.S. - Multi-outlet with C-Store (Supermarkets, Drugstores and Mass Market
Retailers, Gas/C-Stores, Military Commissaries and Select Club & Dollar Retail Chains)
Source: Information Resources, Inc.

10 \ October 2017

©ZLAJAPHOTO - STOCK.ADOBE.COM

T

he nation's two largest baking companies both have long
histories in the industry, and over the past year both
companies made major moves in order to be positioned
for success in the long-term future.
The actions of Grupo Bimbo S.A.B. de C.V., based in Mexico
City, and Flowers Foods, Inc., Thomasville, Ga., have been taken
at a time in which growth in baking has been scant.
Dollar sales of fresh bread were flat over the past year, according
to data from Information Resources, Inc., totaling just over $13
billion. Within the bread category, fresh bread sales were down
very slightly, off 0.1%, at $8.9 billion. Bun sales were down 2%
while "other fresh rolls/buns/croissants, were up 2.4%. Bagel sales
fell 1.9%. Strong in grain-based foods were indulgent categories,
including pastry/donuts, up 4.4%, and pies and cakes, up 3.2%.
Between the two companies, Bimbo Bakeries USA and
Flowers Foods have combined retail sales of $4,248 million,
accounting for 61% of branded bread sales in the United States,
according to I.R.I. data.
Restructuring efforts undertaken by both companies followed
major acquisitions within the U.S. baking industry. In 2011,
Bimbo acquired the fresh baking business of Sara Lee Corp.,
and three years later Flowers acquired out of bankruptcy
the bread business of Hostess Brands, Inc. While the latter
business had been ailing for many years, the Hostess business
historically had been the largest bread business in the United
States, and the Sara Lee business had ranked second. Both

acquired companies had aging asset bases, and it is no wonder
significant restructuring efforts followed both transactions.
In the years since it acquired the Sara Lee business, capacity
rationalization has been pursued steadily by Bimbo. Baking
plants have been closed by the company in California, Illinois,
Iowa, Kansas, Kentucky, Nebraska, Pennsylvania, South Dakota
and Tennessee. In Canada, plants have been closed in Alberta,
Nova Scotia and Quebec.
Speaking in late July, Daniel Servitje, Bimbo's chief executive
officer, said company efforts to optimize its production and
distribution infrastructure should be viewed as a "never-ending
process."
"As we streamline and improve our efficiency within our
plants, we are always looking at the cost-per-unit effect on all
of our plants," he said. "And we're always striving to do better.
When we operate at a better rate, we can bring more volume to
the most efficient plants. And if there is an opportunity to have
a structurally better performing company, we will take that. And
we are constantly opening lines in different parts of the world
and shutting down lines or plants if we can do it. Because as
we've always said, our intent here is not basically to work for a
quarter or a year, we are a long-term builder of a competitive
advantage in our industry. And that requires us to look at the
opportunities with the long-term purpose. So these closures are
part of a plan that will continue to be implemented over time
here and in all markets. In North America, basically the plants
that are planned for closing or closed already are small plants,
old plants. Most of them are one- or two-line plants."
Bimbo's efforts have not been limited to capacity reduction.
New lines have been added at certain plants, and a $75 million

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