Dan Malovany: The Book on Bimbo
Dec. 8, 2010
Grupo Bimbo’s pending acquisition of Sara Lee’s fresh baking business shouldn’t come as a surprise to anyone who has followed the Mexico City-based company through the years. While many companies run their businesses quarter to quarter or year to year, Bimbo always has taken a longer-term view. In the 1970s, it became the biggest baking company in Mexico by relying upon organic growth and product diversification to build its market. In the 1980s, it became the biggest baking company in many Central and South American countries, mainly growing through acquisitions.
In the mid-1990s, Bimbo indicated it intended eventually to be the biggest baking company in the US. Nobody believed it back then. But then it partnered with Mrs Baird’s Bakeries to form QFS (Quality Freshness Service) Foods to expand its distribution throughout the southern US. The company was rumored to be interested in Continental Baking Co. Eventually, after Interstate Bakeries bought Continental, the QFS Foods deal dissolved. To expand its US footprint, Bimbo purchased Pacific Pride Bakeries in San Diego, CA, and then Mrs Baird’s Bakeries in Ft. Worth, TX. In 2001, it bought Weston Foods’ bakery assets west of the Mississippi River and then Weston Bakeries east of the Mississippi in 2009, making it a $3.9 billion company today.
When the dust settles sometime next year, Bimbo Bakeries USA (BBU) will be the first true national player capable of blanketing the market coast to coast. It will be able to serve the growing number of national customers and other regional retail chains that continue to expand in a consolidated supermarket industry. Right now, BBU’s purchase of Sara Lee will fill in those “white spots on the map” in the Midwest and elsewhere where it lacks distribution, according to Gary Prince, president of the Horsham, PA-based company.
“This transaction is good for all constituents, starting with the consumer and our customers,” he said in an exclusive interview with Sosland Publishing. “Our customers over the past decade have grown, and the industry hasn’t kept up. We plan to invest a lot of money after we close [the acquisition] in building an infrastructure that is updated with state-of-the-art capability to be working at a world-class level to service our customers with high-quality products with good value.”
Unlike Kraft, Unilever or many of the other food conglomerates that acquired baking companies through the years, Mr. Prince noted, BBU is singularly focused on baking. It has a diverse portfolio of strong brands such as Thomas’, Entenmann’s, Oroweat and Arnold. In addition to the Sara Lee brand, which is less than 10 years old, the combined companies, with $6 billion in total annual sales, will have dozens of regional brands that the former Earthgrains Co. acquired in 1990s. Mr. Prince views Sara Lee not as one company but as a patchwork quilt of regional companies — including the former Metz, Campbell-Taggart, Coopersmith, Heiner’s and Rainbo businesses — that complement the broader reach of the Sara Lee brand. “I’m very mindful the name on the door is Sara Lee, but in reality, it’s a collection of properties over time. They’re brands with rich histories and local flavors,” he said.
Moreover, the acquisition will expand the reach of the Bimbo, Marinela and Tia Rosa brands that are new to some consumers but longtime favorites among the nation’s growing Mexican and Hispanic populations. “Our products will be available in every city and town in the country, and we will garner the support of our customers through good service, fresh products and good value, and our customers demand it, frankly,” Mr. Prince said.
In the end, he added, it’s about adding innovation to its line of variety products and investing in excess of $1 billion in being a more productive company. Businesses, Mr. Prince noted, are journeys in time. “Unless you take the long view in business today, the choices you make may not be able to support the business in the long term,” he said.
That’s been Bimbo’s strategy for decades. By the book, Bimbo’s book.