Three years ago, when the nation’s leading baking companies descended on Las Vegas for IBIE, they did so with an eye on organics and alternate categories.
Flowers Foods, Inc., Thomasville, Ga., had integrated acquired bread assets from Kansas City-based Hostess Brands into its operations and was in the early stages of understanding the value of organic bread producer Dave’s Killer Bread, Milwaukie, Ore., acquired in September 2015.
Bimbo Bakeries USA (B.B.U.), the North America segment of Grupo Bimbo, Mexico City, was less concerned about organics and more focused on international expansion.
Hostess had just been acquired by Gore Group Holdings and was making a play to look beyond the brand’s traditional distribution outlets to spur growth.
Boy, have things changed.
As IBIE 2019 approaches, both Flowers Foods and Hostess Brands have new leaders. Organics are a staple at most of the large baking companies, and ancient grains and specialty flours are driving new product innovation.
Restructuring plans in place
Reflective of escalating costs and pressure on margins, each of the largest baking companies took business restructuring steps over the past year. For Flowers Foods, the actions were part of its large Project Centennial, a major restructuring plan launched in June 2016, just prior to IBIE. The company is still in the middle of the endeavor, aimed at cutting costs while spending more on marketing and new product development.
Leading the charge at Flowers is Amos Ryals McMullian Jr., who succeeded Allen Shiver as president and chief executive officer following the company’s annual meeting in May. Mr. McMullian had been chief operating officer since July 2018 with responsibility for executing the company’s strategies to drive growth and expand margins through cost savings and operating efficiencies under Project Centennial. He also had oversight of the company’s two business units (Fresh Packaged Bread and Snacking/Specialty), supply chain and sales.
In addition to Project Centennial, Mr. McMullian will oversee the continued integration of Canyon Bakehouse, a Johnston, Colo.-based gluten-free baking company that Flowers acquired in December 2018. Canyon’s addition continues Flowers’ build-out of its bread business to alternate segments, coming just a few years after the Dave’s Killer Bread acquisition.
In the cake market, a reversal of fortune at Hostess Brands represented a major development during the year. Hostess had been riding a powerful wave in the five years since the company returned to the market after bankruptcy in 2013.
In March 2018, Hostess’ longtime president William Toler retired and was succeeded by Andrew Callahan (C. Dean Metropoulos served as interim president and c.e.o. between Mr. Toler and Mr. Callahan).
Mr. Callahan most recently was president of North American foodservice and international at Tyson Foods, Inc, Springdale, Ark. At Hostess, he experienced something of a “baptism by fire,” contending with the challenges of integrating a new facility acquired from Aryzta, Zurich, Switzerland, a sudden policy change at a major retail customer cutting sharply into sales and serious cost headwinds.
Earlier this year, Hostess announced plans to open a new corporate office in Chicago to serve as its new hub for marketing and category management. The company also said it will move its principal distribution center to Kansas from Illinois, a move that will put the distribution center closer to its largest bakery and more centrally located.
Ingredients in demand
Wanting to capitalize on consumers’ desire for fiber, protein and whole grains, grain-based foods manufacturers are increasingly incorporating ancient grains into new products. Grains such as quinoa, millet and sorghum are appearing in new products in the bread, muffin and cereal retail categories as well as new menu items at foodservice.
B.B.U. features flaxseed, chia and other ancient grains in its new 22 Grains & Seeds organic bread variety found in three brands: Arnold, Brownberry and Oroweat.
B.B.U. also took steps to eliminate all artificial preservatives, colors and flavors from its whole grain line of products sold under the Arnold, Brownberry and Oroweat brands as part of its “No Added Nonsense” initiative. Monoglycerides, diacetyl tartaric acid esters of monoglycerides and high-fructose corn syrup also have been taken out of the whole grains line.
“Today we celebrate our position as the largest premium bread brand in the nation to remove artificial ingredients traditionally used in large scale industrial baking,” said Jon Silvon, vice-president of marketing for B.B.U. “Our consumers told us they expected a bread baked using traditional methods that feature real, easy-to-pronounce ingredients. Our new ‘No Added Nonsense’ initiative allows us to answer that call. We look forward to expanding into to additional product lines in the future.”
B.B.U. also strengthened its commitment to energy management. In late April, the company signed a five-vehicle purchase order with Motiv Power Systems for electric delivery vans.
The delivery vans will feature a highly modular cargo area and multiple door configurations to provide versatility. The vehicles will be deployed for product delivery in Ceres, Calif.
The details of the electric delivery vans order came a little more than six months after the company unveiled plans to use 100% renewable energy globally by 2025, a pledge that makes it the first company in Mexico and Latin America to commit to the global goal.