Milling & Baking News - September 11, 2018 - 28

Bread Industry Perspective

enhanced to improve the company's
cash conversion cycle.
A large part of the administrative
workforce expense savings came
from a voluntary separation incentive plan announced in July 2017.
Together with other initiatives, the
VSIP resulted in a net overall headcount reduction of approximately
450 associates, including a 15%
reduction in management positions.
The greater efficiencies are being
used to help Flowers achieve greater
marketplace success, said Allen L.
Shiver, president and chief executive
officer of Flowers Foods, Inc.
"We've refined our brand assortment and focused on our highestturning s.k.u.s (stock-keeping units),"
he said in a Sept. 5 presentation at the
Barclays Global Consumer Staples
Conference in Boston. "We continue
to grow dollar sales of our biggest

renewable energy as it Pepperidge
Farm bakery in Bloomfield, Conn.
(which bakes bread and rolls as well
as other products), with a 1 MW
(megawatt) solar array, and 1.2 MW
and 1.4 MW fuel cells - the latter of
which equate to the power necessary
for about 1,400 homes.
A shift in mergers and acquisitions
away from the bread market has
become pronounced among major
bakers.
Grupo Bimbo made two North
American acquisitions over the past
year, neither of which focused on the
company's core sliced bread market.
In October 2017, Bimbo announced
the acquisition of Chicago-based East
Balt Bakeries from One Equity Partners for $650 million. A company
specializing principally in bun production for quick-service restaurant
customers, the acquisition gave Grupo

Inc. With brands that include Snyder's of Hanover, Lance, Kettle, Cape
Cod, Pretzel Crisps, Pop Secret, Emerald, Late July, Archway and Stella
D'oro, the deal bolstered Campbell
Soup's position in the snack foods
market. At the same time, the acquisition diminishes the proportion of
Campbell Soup's grain-based business dedicated to the bread market.
Flowers Foods was quiet on
the acquisition front over the
past year, deeply involved in
effecting
changes
from
Project Centennial and continuing
to expand distribution of Dave's
Killer Bread. Potential bread acquisitions remain on the company's
radar screen, but Flowers has signaled its intention to look beyond
its traditional bread/snack cake
focus going forward. Such a shift
would not be unprecedented - the

Over the past year, both Bimbo Bakeries and Flowers Foods have completed programs to reduce administrative headcounts by about
15% to help lower costs.

brands, and we are beginning to use
new promotional management tools
that we expect will enhance the r.o.i.
(return on investment) of our trade
spend. We're launching new products
and growing in segments where we
are underindexed."
With a change in leadership earlier
this year, Campbell Soup Co., Camden, N.J., initiated a review of its
businesses to put the company back
on a path toward growth. While the
bread business has not been an area
of focus, the company announced
significant efficiency/sustainability
investments in its baking plants.
Specifically, the company's bakeries
installed LED lighting and motion
sensor technology, which Campbell
Soup said can nearly halve the electricity demand for lighting in some
facilities. Converting to low-charge
ammonia and CO2, four bakeries
have phased out R22 refrigerants.
The company also has invested in
28 / September 11, 2018

Milling & Baking News

Bimbo additional reach in the global
food service segment.
"The company is one of the leading
global food service focused providers of baked goods to quick-service
restaurants in 11 countries around
the world," Daniel Servitje, Bimbo's
chief executive officer, said in late
2017. "East Balt Bakeries enjoys decades long relationships with some
of the world's leading Q.S.R.s such as
McDonald's, Wendy's, Burger King
and KFC, among others. It operates
21 baking plants and employs about
2,200 associates."
In 2018, Bimbo acquired the Cicero, Ill.-based baking plant of Aryzta L.L.C. Aryzta acquired the Cicero
facility in 2014 as part of its acquisition of Cloverhill Bakery, a specialist
in sweet goods.
In December 2017, Campbell Soup
made a major investment expanding in grain-based foods with its
agreement to acquire Snyder's-Lance,

company owned Keebler for a time
in the 2000s. Over its history, Flowers has acquired more U.S. commercial bread businesses than any other
baking company, and more are likely
in the future even if the company
pursues other categories.
"There are significant opportunities for this company as we look at
adjacent categories," Mr. Shiver said.
"The perimeter of the supermarkets
is where a lot of the sales action is
taking place. We have the opportunity, both on the cake side and
on the fresh bread and roll side, to
expand into different product segments that may come through an
acquisition. It may come from developing internally, but there are significant opportunities looking at adjacent categories to continue to grow
this company."
In the Sept. 5 presentation, Mr.
Shiver again expressed interest in
investment in "other segments of the
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - September 11, 2018

Table of Contents for the Digital Edition of Milling & Baking News - September 11, 2018