Leave it to flour milling to create the third largest company within this important sector of grain-based foods by combining businesses that few people outside the industry have ever heard of. That this is actually in process and near completion through the acquisition of Cereal Food Processors, Inc., headquartered in suburban Kansas City, by a combination of Milner Milling Co. and Pendleton Flour Milling Co., both with headquarters in Chattanooga, Tenn., not only caught the entire grain-based foods industry by surprise, but provided further powerful evidence that wheat flour milling is a dynamic business offering its players great opportunities that all too often are overlooked.

It is well over a decade since milling has experienced a combination of companies of this size. For a business historian, that is an amazing length of time, considering the manner in which M.&A. activity has come to symbolize more than a few of the world’s major industries, not just in America but around the world. Milling in America has gone for years with its three largest companies accounting in total for slightly more than half of aggregate capacity. Cereal Foods, the company being purchased in the new transaction, has held fourth place, actually with less than half the flour output of any of the three largest companies. While individual mills and milling companies have performed in totally different fashion in this long period of quiet in corporate purchases and mergers, the industry proved notable among food industry sectors for its efficient supplying of what has been a rather static total flour market in the United States. Flour users like wholesale baking have faced a fast-changing consumer and retail marketplace with a steady total.

Beneath the surface where details of the new milling combination were being structured, significant changes were under way at other companies. Within milling itself, announcement was made a year ago of the proposed merger of the flour milling assets of ConAgra Foods, Inc. and Cargill-CHS, which would create the largest flour milling company in U.S. history — a single entity accounting for a third of capacity. Discussions apparently have been under way with the U.S. Department of Justice to come up with adjustments that might meet the federal government’s views of what was needed to maintain competition. The companies themselves have taken the step of offering four mills for sale, but there are no signs of whether this has gained Justice Department approval, or even whether questions center on shares of milling capacity or wheat markets.

These major moves in milling follow on the heels of or are coincidental with equally massive changes in wholesale baking. As this page noted just a few weeks ago, the developments in baking, not just the massive geographic expansion of its leading company, the Mexico City-headquartered Bimbo, but also the growth of baking’s leading U.S.-based companies, have established a grain-based foods industry starkly different from anything that has gone before. In response to consumer and retailer demand for innovation in products, America’s, indeed the western world’s, baking business is being transformed in a manner that demands the shifts, transformations in ownership and new ways of operations that must be adopted by the very new companies that are now being created.

Hardly ever has the pace of change in any modern industry, food or electronics, wheat breeding or technology, accelerated at the rate witnessed recently in grain-based foods. The ability of the industry’s executives to respond with vigor, with intelligent strategies to fit a marketplace that itself will be totally new and different is both a challenge and an opportunity. As remarkable as the people were who established and managed the businesses now being joined in their ability to deal with a fast-changing world, what lies ahead is assuredly new and different. It promises a future for grain-based foods and the companies prospering in this new era an industry overshadowing anything from the past.