Partnering behind the scenes

by Dan Malovany
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ARYZTA AG prefers to let its customers shine in the limelight. In the US and Canada, consumers may recognize the company’s food group from the products they buy under the La Brea Bakery or Otis Spunkmeyer brand. For the most part, however, ARYZTA quietly supplies many of the biggest of the big retailers, in-store bakeries, private-label store brands, quick-service restaurants (QSR) and other foodservice accounts. In fact, nearly two-thirds of its North American revenues come from its Top 20 accounts, according to the company’s 2014 annual report.

Overall, the North American food group, based in Los Angeles, had about $2.0 billion (€1.6 billion) in revenue during its latest fiscal year. It operates 29 bakeries and kitchens across the continent that produce everything from artisan bread, hamburger buns, pizza, croissants, sweet goods, flatbreads, frozen cookie dough, laminated products and even sweet and savory pastries, just to name a few.

Globally, the Zurich, Switzerland-based corporation calls itself one of the largest frozen baking businesses in the world. In 2014, its worldwide food group had $4.3 billion (€3.4 billion) in annual sales with 60 bakeries and kitchens in 25 countries. ARYZTA also has agricultural holdings in Ireland.

In Europe, where it has operations in 14 countries, the company has annual revenue that is equivalent to its North American business, but that’s where many comparisons stop. Unlike in the US and Canada, ARYZTA’s European food group is highly diversified. Only 38% of its sales come from its Top 20 customers. Large retailers and QSR account for 40% of revenue in Europe, compared with 72% in North America.

ARYZTA also has 11 bakeries and kitchens in nine countries throughout Asia, Australia, New Zealand and South America, but they account for only 6% of annual sales.

Expanding through acquisitions

ARYZTA (derived from Latin “arista” meaning the pinnacle of an ear of wheat) is a relatively new company, resulting from the 2008 merger of two food and agriculture companies — Ireland-based IAWS and Swiss-run Hiestand. Investors in ARYZTA AG, however, have been rewarded over the past few years. According to its annual report, the company’s stock rose quite steadily over recent years, and its market cap doubled since 2011.

Organic growth coupled with strategic acquisitions and their subsequent synergies have driven its top and bottom lines over the years. Earlier this year, ARYZTA purchased Cloverhill Bakery, the Chicago-based producer of individually wrapped pastries, and Pineridge Bakery, a Canadian producer of a wide variety of desserts and baked goods through its Oakrun Farm Bakery and Gourmet Baker operations.

Cloverhill broadened ARYZTA’s exposure to the burgeoning snacking and inter-meal eating occasions. It also complemented the company’s already strong presence in private label, large retail and foodservice channels while bolstering its offerings for convenience stores. “What we’re basically doing with Cloverhill is following a consumer trending toward convenience,” noted Owen Killian, ARYZTA AG’s CEO, shortly after the March purchase.  “Cloverhill has invested heavily in ready-to-eat, which involves substantial investment in packaging, wrapping and individual portion size.”

In addition to strengthening ARYZTA’s position in Canada, Pineridge’s Gourmet Baker — with facilities in Burnbury, BC, and Winnipeg, MB, enhanced its dessert portfolio for the in-store bakery and foodservice markets.

Oakrun Farm Bakery, Ancaster, ON, makes English muffins, crumpets, frozen batters, Danish muffins and bagels for the breakfast eating occasion. In addition to supplying retailers throughout Ontario and Quebec, the bakery produces for private-label, foodservice and contract manufacturing customers.

Perhaps just as significantly, Oakrun Farm Bakery reinforced ARYZTA’s already-existing partnership with Tim Hortons, Canada’s largest donut and QSR chain. In 2001, ARYZTA and Tim Hortons entered a joint venture to build Maidstone Bakeries, which supplies the foodservice chain with fresh baked goods throughout the day. In 2010, ARYZTA purchased Maidstone entirely. Oakrun Farm Bakery also has supplied Tim Hortons with English muffins and other products over the years.

While Pineridge and Cloverhill add new products and capacity, ARYZTA sees additional opportunities to grow those businesses by incorporating the two acquisitions into its North American sales and distribution network.

Other key North American acquisitions listed on ARYZTA’s website include Fresh Start Bakeries, Pennant, Sweet Life and Great Kitchens in 2010 that supply QSR, foodservice and in-store bakeries with pizza, appetizers, hamburger buns and a variety of other frozen baked foods. Previously, IAWS acquired Otis Spunkmeyer in 2006 and La Brea Bakery in 2001.

However, some recent acquisitions are not listed on ARYZTA’s website, such as Pita Pan Old World Bakery, a flatbread producer in suburban Chicago; FullBloom Bakery, a California sweet goods producer; and Il Fornaio, a California artisan bread bakery.

For the most part, these acquisitions, like its more public ones, have one thing in common. They don’t serve the conventional retail bread aisle. With the addition of Cloverhill and its presence in private label, maybe that will change.

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