THOMASVILLE, GA. — Seventy-nine per cent of the United States has access to the expansive bread, bun, roll and snack cakes portfolio of Flowers Foods, Inc. While impressive, that total still suggests room for growth.
Using the company’s expansion efforts in California as an example, Allen Shiver, president and chief executive officer of Flowers Foods, explained in a Feb. 6 conference call with analysts the company’s strategy for growing in new markets.
“What we have accomplished in California to date, to me is a very good example of our team’s ability to grow in new markets,” he said. “We had a multi-phased roll-out and now serve all the major supermarkets in California. Our internal goals were exceeding those. Our team is in place for future growth. I really think if you look at the map, you can see many of the markets that we have recently moved into are some of the largest population centers in the country. And we understand how to build our brands, and we understand how to develop our business in those markets.”
Flowers Foods entered Southern California with a small presence when it acquired Holsum Phoenix in 2008. The company added to its West coast presence in 2012 when it acquired the Sara Lee and Earthgrains brands in California from Grupo Bimbo S.A.B. de C.V.
Mr. Shiver said Flowers has “a long track record” of being able to build its presence in new markets. The company also has benefited from a solid reputation with retailers.
“Many of the retailers that I have mentioned in the past, they are encouraging us to serve all of their stores,” he said. “So in the case of national retailers, as we move into new markets, we are getting their support with product authorizations, and support with displays and so forth. So we are very confident.”
Flowers’ share of the U.S. bread market is about 14%, up from 10% in mid-2012. Mr. Shiver said he expects that share to continue to move up.
“The key is making sure that we do that in a controlled organized fashion, so that we can make sure that the earnings are there to coincide with the sales growth,” he explained.
Reflecting on fiscal 2013, Mr. Shiver called it “a real exciting year.”
“We have kind of a peg down in many new markets, and we are going to be developing those markets,” he said. “The acquisition of the Hostess brands really helps us do that. If you look at the bakeries that we acquired, geographically some of the bakeries that are sitting idle, are in really key markets across the country.“And as we build market share, and as consumer demand increases, we will talk more about reopening those plants. We are off to a very good start with the opening of the Henderson (Nev.) bakery, and those have gone extremely well. We are really excited about our product quality coming out of the plants. I expect the share in California to grow significantly, as we are selling bread produced by our plant versus co-packers. So really pointing to California, as an example of doing a job, expanding the D.S.D. (direct-store delivery) footprint, and our plans are to do the same thing in other markets.”