Ramifications of deal extend beyond wholesale bread
Feb. 18, 2014
Most media reports about Grupo Bimbo’s pending acquisition of Canada Bread focused on how the world’s largest baking company aims to secure a dominant position North of the Border. However, purchase of Canada Bread has potentially huge ramifications for the U.S. baking industry — specifically among hearth, artisan and specialty bakeries.
When the acquisition is completed, Grupo Bimbo will become a major force in the potentially lucrative in-store bakery, convenience store and food service channels. That’s because Canada Bread has about C$500 million ($454 million) in annual sales of frozen bakery products, including frozen par-baked products, specialty and artisan breads, and bagels sold in North America and the U.K.
If Grupo Bimbo decides to keep Canada Bread’s frozen business, it will play in nearly all breadstuffs segments throughout the supermarket. It will broaden its reach among restaurant chains as well. Fortunately for many nimble, mid-sized producers of par-baked breads and rolls, Canada Bread earned a reputation of competing more on price than new product innovation. Under Bimbo, however, the dynamics may change, and the impact could be felt by many specialty bakeries that have never competed with the biggest of the big and against a company with such vast resources at its disposal.