Special commentary: Extraordinary time for this industry

by Morton Sosland
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Within the past year or so, we at Milling & Baking News have been tempted to describe current events as “extraordinary times” in grain-based foods to the point that it seems unnecessary, even redundant, to declare what has occurred in recent days as without parallel in this industry’s long history. Looking back on a period extending over the past year or two that saw truly cosmic-like events announced in both wholesale baking and flour milling, the cumulative impact emerges to stand today as not just extraordinary, but history-making in every sense. At no other period in a long history has the fundamental structure of both bread baking and wheat flour milling been transformed in such a total or striking manner as now under way. It has attained the point where the industry of grain-based foods is on the verge of being totally different from what it was a short time ago.

Baking comes first to mind in view of the announcement this week that Grupo Bimbo, the Mexico-based baking giant, is acquiring Canada Bread Co. to give it ownership of the largest baking business in Canada. Considering that Bimbo in the past two years purchased baking operations that gave it unquestioned leadership of the U.S. wholesale baking market, that it is the baking leader in several top Latin American markets, and that it has interests in Europe and the Far East, this full-bore move into Canada gives it a near sweep of Western Hemisphere bread baking. Bimbo has accomplished a corporate transformation surpassing what might only once have been dreamed of in any industry, much less the one in which it was done.

All hail to Daniel Servitje, the chairman and chief executive of Bimbo, whose family, under his direction, has guided Bimbo to these unprecedented heights. Billions of dollars have been invested under Bimbo’s name and credit to acquire baking businesses to create a group that appears hell-bent not just on leadership in a single hemisphere but on creating a globe-circling business. Happily for grain-based foods, its base derives from humankind’s most important food: bread. Bimbo’s strategy reflects not just faith in and support for the centrality and quality of the principal product of grain-based foods, but of its own total commitment to thoughtful, careful and skillful management of people, assets and resources. Only then could Bimbo have undertaken these amazing moves that reflect a nearly unlimited geographic ambition.

Keeping watch over, if not abreast of, Bimbo’s actions has become very much the principal task of its major competitors in wholesale baking. As if Bimbo’s moves were not enough, the vast changes occurring in the past year in the make-up of the balance of baking’s leadership companies unfolded a scenario of huge change in baking’s structure. Putting all of this into the reality — no longer just vision — of an industry totally transformed is no exaggeration.

Baking’s presence in almost every part of the food system, in both developed and developing nations where Bimbo has moved and grown, might appear to give it unprecedented importance to how grain-based foods evolves. Baking is only one part of grain-based foods. No company in baking is more aware than Bimbo of how its success depends not just on what it achieves internally but on the products, services and much else it obtains from suppliers of all sorts. Once a leading flour miller itself in Mexico, Bimbo as part of its dramatic remake has separated milling into a company it no longer owns. It is the fundamental restructuring of baking that accounts in part for the pending merger in flour milling to join the mills of Cargill-CHS and ConAgra Foods into a new company that would be the largest milling operation in the world.

Completion of this milling merger is now indicated for the second quarter of this year depending on the outcome of negotiations with the Justice Department and other unspecified details. The large size of this venture partly makes up for what has been relative quiet in milling at a time of massive shifts in wholesale bread baking. It is not beyond imagination to expect other moves in flour milling that may be influenced to varying degrees by these baking changes. Just as deep and broadly affecting are the simultaneous shifts under way in grain merchandising that are near to producing a partial international revolution in how and who moves grain.

Singling out Mr. Servitje and the top executives of baking and milling companies who have led in making these vast changes happen must not lessen the way all of this is exerting a tremendous impact at every conceivable level of grain-based foods. It is not beyond imagination that everyone in the industry having a front-row seat to such momentous events is going to be able to examine these times as not just extraordinary historically, but exceptional from the viewpoint of each person’s own experience.  Already obvious is that what has happened in baking and in milling mark a great forward step in the proud history of what now must be wisely called the new grain-based foods industry.

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