French baking interest rekindled in Starbucks move

by Josh Sosland
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While it is still early to assess the many implications of the Starbucks Coffee Co. pending acquisition of Bay Bread L.L.C. and its La Boulange Brand for $100 million, the move clearly is an important one for grain-based foods. Starbucks said the transaction marks the next step in elevating its $1.5 billion U.S. food business, a theme the company has discussed and addressed steadily in recent years. For instance, announcing a revamping of its food selections a couple years ago, the company said, “Bringing the same passion Starbucks has in serving customers some of the best coffee in the world, the company went back to the kitchen and started from scratch. Starbucks baked and tasted hundreds of recipes to make its food more as nature intended.”

With La Boulange, Starbucks said it will work “closely with outside suppliers to create a broad range of La Boulange products for its U.S. stores.”

It is important to note that Starbucks is making this latest investment not from a desire to reverse underperformance but instead from a position of strength. In its most recent financial results, the company reported record earnings, up 18% from the same period last year. Revenues were up 15%. The company’s share price has climbed 37% over the past 12 months and 127% over the past two years, compared with gains of 2% and 33%, respectively, for the S.&P. 500 in the same periods.

Among the interesting aspects of the La Boulange acquisition is the emphasis Starbucks is putting on La Boulange’s dedication to the “traditional art of French baking,” adding that the founder has been a baker since he was a boy and currently owns a specialty flour mill in San Francisco. While America’s fascination with French baking has never disappeared, it certainly seemed to recede in the 1990s.

In style and menu, La Boulange is unabashedly French. How the concept will evolve under Starbucks ownership and how this will affect baked foods tastes broadly will be important for grain-based foods.

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