Milling & Baking News - March 18, 2014 - 13

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Aunt Millie's in pact to license
Wonder brand in Chicago
FORT WAYNE, IND. - Aunt Millie's
Bakeries, a regional baking company
based in Fort Wayne, has signed an
agreement with Flowers Foods, Inc.
under which Aunt Millie's will have
the exclusive license to bake and market Wonder and Home Pride brand
bread in northern Illinois, including Chicago; northwest Indiana; and
southern Wisconsin.
Terms and conditions of the agreement were not disclosed.
With the agreement, Wonder and
Home Pride will return to store shelves
for the first time since November 2012
in the area covered by the agreement.
Aunt Millie's presence in the Chicago
bread market largely was made possible
by the shelf space vacated when Hostess
Brands was forced into bankruptcy, John
B. (Bohn) Popp, vice-president of marketing, recently told Milling & Baking News.
"We are now full blown 100% in
Chicago," he said. "And that's expensive. We went from 20% to 90% in less

than three months, adding 50 to 60
routes." (See Milling & Baking News of
March 4, Page 33.)
Allen L. Shiver, president and chief
executive officer of Flowers Foods, Inc.,
said, "We're excited about partnering
with Aunt Millie's, which produces

quality fresh bakery foods and has a
great distribution network. This agreement allows us to bring these wellknown and well-loved bread brands,
baked with the same recipes, back to
consumers in this part of the Midwest."

Flowers said its baking plants have
been able to reintroduce Wonder and
the other brands it acquired from Hostess Brands to its direct-store delivery
market, which reaches approximately
79% of the U.S. population in the East,
South, Southwest, and California.
In acquiring most of the assets of
Hostess, Flowers purchased a number
of baking plants in the states of Indiana, Ohio and Illinois, including one
in Hodgkins, Ill., 17 miles from Chicago. Flowers has yet to reopen most
of the plants it has bought in the transaction.
Aunt Millie's operates baking plants
in Fort Wayne; Coldwater, Jackson,
Kalamazoo and Plymouth township,
Mich.; and Sidney, Ohio.
In November, Aunt Millie's entered
into a limited distribution agreement
with Hostess Brands L.L.C. giving Aunt
Millie's the right to sell Hostess snack
cakes, including Twinkies, Ho Hos
and CupCakes, in its markets, including Indiana, most of Illinois (including
Chicago), Milwaukee and the northern
parts of Kentucky where Aunt Millie's
currently has distribution. MBN

Gruma details plans for global
growth in tortilla business
MEXICO CITY - The elimination of hundreds of stock-keeping units over the past
year has allowed Gruma S.A.B. de C.V. to
improve its service in the stores it serves,
said Raul Cavazos, chief financial officer,
in a Feb. 27 conference call with analysts
to discuss fiscal 2013 results. During the
call Mr. Cavazos discussed expansion
plans for Russia, Malaysia and Mexico.
"We are promoting our brand," Mr.
Cavazos said, adding that Gruma's efforts have sparked competition in the
U.S. tortilla market, increasing the likelihood that the category may see volume
increases in the year ahead. Gruma also is
leaning on innovation.
"We launched last year a new formula for
wheat and corn tortillas," Mr. Cavazos said.
"The soft tortillas for both have been very
well accepted by the consumers, and they
are (choosing) our products (more) than the
products of our competitors. That also is one
of the drivers for growth. And even if we decrease or we eliminate s.k.u.s, we have been
keeping our shelf space in any store."
Gruma's tortilla efforts extend beyond
the retail shelf, and Mr. Cavazos indicated the company's food service business is
doing "quite well."
"We have a strong relationship with our
main clients, and we are developing those
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Business

products that they are increasing the volumes," he said. "And we are increasing
for the year food service volumes in that
space. We already have orders,
and we are developing some
products. We are working quite
close with our clients in order
to have these new products for
them. And they are quite grateful for us on that in the food service. That's going to be maybe
one of the main drivers for
growth on our volumes."
Gruma has a number of investments
planned for the next few years, and Mr.
Cavazos shed light on those projects during the conference call. Specifically, he
mentioned new plants in Russia, Malaysia and Mexico.
He said the company has been supporting sales in Russia from another outlet, but costs, particularly as they related
to transportation expenses, have been
high. The Russia plant is expected to begin operations this year, he said.
In Malaysia, Gruma no longer has the
operation capacity to supply the demand
for tortillas, he said. The company has
shifted some production to its Shanghai
plant, but it hopes to have the new facility
in Malaysia operational by 2015.

Gruma has plans in place for two plants
in Mexico. One will be an additional production unit at its site in Mexicali
"Mexicali is a city quite close to Los
Angeles," Mr. Cavazos said. "Los Angeles is doing quite well in terms of tortilla,
the tortilla business. And what we are
doing basically is to orient all
the production capacity of this
production unit, will be just to
support Gruma Corp. in the
southwest region, which also
of course it's going to be more
efficient for us."
Gruma also plans to build a
couple small facilities for tortillas and tostadas in Tijuana
and Monterrey.
"What we are doing basically in all the
plants in which we are producing tostada
and taco shells, we will move those production lines to this plant in Tijuana as
well as in Monterrey," Mr. Cavazos said.
"We will produce those products here in
Mexico, and we will support Gruma Corp.
with all these products. And in Gruma
Corp., we are making space to add additional bread lines to produce wheat tortilla, which is more profitable, and we will
increase production capacity without any
additional important amount or CapEx."
In total, Gruma expects the full amount
of capital expenditure spending in 2014
to be about $165 million, Mr. Cavazos
said. MBN
Milling & Baking News March 18, 2014 / 13

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Milling & Baking News - March 18, 2014

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