Flowers gives glimpse of dynamic future for baking

by Josh Sosland
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The presentation late last month by top executives of Flowers Foods to Wall Street analysts offered interesting insights into both the company’s plans for growth in coming years and about the state of and outlook for the baking industry. Standing out among ambitious objectives the company laid out for the analysts was a significant northward thrust in Flowers’ direct-store delivery market area and a widening of targeted EBITDA margins to 11 to 13% from 10 to 12%.

Perhaps the most dramatic observation at the session, though, was the assessment of George E. Deese, chairman and chief executive officer, about prospects for industry consolidation. Acquisitions have been a major part of Flowers’ growth strategy for decades, but Mr. Deese left a clear impression that this activity will be picking up in the months and years ahead.

“I believe consolidation is now,” he said. “More than ever, I believe it is now. Today, not way out into the future.”

Most startling, and perhaps unprecedented, was a vision Mr. Deese offered of where the consolidation could end.

“In cereal and beverages, the industry is down to one or two companies,” he said. “We see that happening in the food business. Flowers is a strong No. 2 player.”

This analysis and the entire presentation all suggest that the pace of change ahead in baking could be dizzying.

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