Way noted to baking prosperity

by Josh Sosland
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It isn’t unusual for the “changing of the guard” at the American Bakers Association to present a study in contrasts when it comes to the outgoing and incoming chairmen. The leadership transition occurring in 2016 is especially striking. The incoming chairman, Fred Penny, is president of Bimbo Bakeries USA, the largest company ever operating in the history of U.S. baking. A 32-year veteran of the industry, Mr. Penny’s career mirrors the extraordinary change that has buffeted wholesale baking since the 1980s. With paychecks over his career that have read “Entenmann’s,” “General Foods,” “Kraft,” and “George Weston Bakeries,” as well as B.B.U., Mr. Penny has had a front row seat to baking’s amazing consolidation and altering ownership. The corporate parent of his current company, Grupo Bimbo S.A.B. de C.V., is emblematic of one side of today’s industry — a corporation focused first and foremost on its baking business.

If Mr. Penny represents the essence of traditional baking, the outgoing chairman, Richard G. Scalise could be pegged at the opposite side of the spectrum. Mr. Scalise is president and c.e.o. of a company in which baking is not even included in its name — Hearthside Food Solutions. Many of the company’s principal products — snack bars, granola and ready-to-eat cereal — typify the broadening reach of grain-based foods. The companies where Mr. Scalise worked before Hearthside similarly could be characterized as specialty baking businesses, including the frozen bakery operation of Ralcorp Holdings. The private equity ownership of Hearthside is an emerging force across grain-based foods.

As chairman, Mr. Scalise is credited for his effective and amiable leadership of the A.B.A. but also for frequently reminding his peers of the need to think of the industry more broadly than sliced bread and rolls and snack cakes. A mark of success in this transition is the serious consideration being given to a merger of the A.B.A. with the Biscuit and Cracker Manufacturers Association, two of the oldest trade groups in the industry. The B.&C.M.A. has limited itself in recent years principally to education, training and networking, having halted its Washington advocacy work more than a decade ago. By folding its activities under the A.B.A. umbrella, the groups would be achieving synergies and, more importantly, would allow a single association to speak on behalf of the entire baking industry. Measured by retail sales, the cookie and cracker categories combined are about the same size as the fresh bread and rolls category. Bringing the A.B.A. and B.&C.M.A. together would, in effect, double the clout of the baking industry at a time when a clear, strong voice is needed more than ever.

The A.B.A. in recent months rightly has highlighted a string of legislative and regulatory successes that have meaningfully benefited its membership. From issues more narrowly focused on the baking industry, such as a manageable timetable for the phase-out of partially hydrogenated oils, to matters of broader concern, such as the repeal of country-of-origin labeling, the A.B.A. is playing a meaningful role in changes that require thoughtful and tenacious advocacy. The big issue that “got away,” a national labeling standard for foods containing bioengineered ingredients, underscores the importance of maintaining a concerted and continuous effort in pursuit of the industry’s interests. The A.B.A.’s successes justify continued support and optimism for the future.

Even as bakers struggle with issues relating to bioengineered ingredients and challenges encircling perceptions of flour-based foods, observations during the A.B.A. annual meeting coming from customer panels pointed to opportunities for the industry to prosper. Between the runaway success of the Patti LaBelle sweet potato pie at Wal-Mart Stores, Inc. and a move at Wendy’s Co. restaurants to use value-added buns for sandwiches, baking industry customers pointed the way to growth by baking companies that develop products capturing the imagination of ever more adventurous and demanding consumers. Even as Wal-Mart, Wendy’s and specialty retailers grapple with seismic changes in their different markets, the way is clear to a bright future for bakers who adapt.

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