Acquisition Trail

July 1, 2004
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Acquisition Trail

Heats Up
During the early days of these steamy summer months, several acquisitions were put on the front burner while other facilities were closed as consolidation continues on the baking industry.
North of the border, Weston Bakeries, a division of Toronto-based George Weston Ltd., purchased Boulangerie Gadoua, a family run bakery out of Napierville, Quebec. Gadoua runs three bakeries that serve the province of Quebec as well as 14 distribution centers. Boulangerie Gadoua will operate as a wholly-owned subsidiary of Weston while its management team continues to run the company on a day-to-day basis.
Meanwhile, Weston also announced it was shutting down Kaufman’s Bakery, an institution in Buffalo, N.Y., for the last 67 years. The Kaufman’s plant had operated as part of Weston’s Stroehmann’s division since it acquired the family-owned bakery in late 2000. Weston attributed the closing, which will affect 109 employees, to the aging plant’s lack of efficiency. Weston had been making low-carb rolls and buns in the Kaufman’s operational facility. However, the company determined that the outdated facility could not make these products as cost effectively as its other, more modern plants. Weston produces low-carb products under an agreement with Atkins Nutritional.
In other news, St. Louis-based Sara Lee Bakery Group said that it will close its Houston and San Antonio, Texas plants and sell the assets of its Houston operation to Flowers Foods, which is based in Thomasville, Ga. Under this transaction, Sara Lee not only exits the private label market, but also the foodservice channel in this area. The deal, set for completion in September, has Flowers picking up Sara Lee’s private label and foodservice customers in this region.
The move is part of an effort by Sara Lee to focus on branded-only business in the price-driven Texas market. Sara Lee sells breads and rolls under such brands as Sara Lee, Earth Grains, IronKids, Rainbo and Grant’s Farm.
Richard Noll, Sara Lee Bakery Group’s CEO, notes that the branded only business effort in Texas is not a one-size-fits-all model. Rather, the company will tailor its business model to the market. In some areas, he says, private label and restaurant customers can be quite profitable.
Sara Lee noted that the sales of its Houston bakery assets should balance out the cost of restructuring. The company will supply the Texas market with branded product from its Dallas bakery. Flowers’ new Denton, Texas, facility will meet current needs for additional production in these selected markets.
In unrelated news, Baltimore-based H&S Bakery announced that it’s building a second facility in East Baltimore. The company said that the expansion is needed to meet additional demand for some of its products.
Long Co. to Meet in Las Vegas soon
A bevy of trends and critical issues will be discussed at The Long Co. Annual Conference, which runs August 13-14 at the Las Vegas Hilton just prior to the International Baking Industry Exposition.
For example, Art Turock, supermarket consultant, will discuss “Achieving Sales Growth in the Wal-Mart World” while Lee Sanders and Paul Abenante from the American Bakers Association will discuss a new joint promotion program that’s been developed by the ABA and the North American Millers’ Association.
Meanwhile, Jerry Smiley, founding partner of the consulting firm, Strategic Growth Partners and Dan Malovany, editor of Snack Food & Wholesale Bakery magazine, will outline the latest trends impacting the baking industry touching on bakers’ prospects to reposition their soft bread lines to create new opportunities.
For more information on the conference, call 312-726-4606 or visit www.thelongco.com.

TIA, AACC hold
Historic Meeting
For the first time, the Tortilla Industry Association and the American Association of Cereal Chemists will hold a joint meeting, September 19-22, in San Diego.
More than 300 presenters will share their latest findings on low-carb products, soft wheat baked goods, dry milling, health and nutrition, biotechnology, tortilla production and tortilla formulation.
For fun, there will be a golf and tennis tournament as well.
For more information, call 651-454-0766.

Court Throws out Hours
of Service Regulations
In a potentially monumental decision for the snack food and wholesale baking industry, the U.S. Court of Appeals on July 16 threw out the new Department of Transportation Hours of Service Regulations. The new rules, which govern the hours that truck operators can drive and be on-duty, went into effect January 4, 2004.
“We are concerned with this decision as many baking companies have made significant investments to come into compliance with the new rules,” says Robb MacKie, vice president of government affairs for the American Bakers Association. “We are working with the Congress and the department on several outstanding operational issues with the new rule, but the new rules made bakers reexamine their distribution systems to increase efficiency and reduce costs­ – a great potential benefit for the industry and its customers.”
ABA co-chairs the food industry coalition on the Hours of Service Rules with the Snack Food Association. The coalition successfully fought back a previous attempt to regulate in this area that would have limited night-time driving, created confusing categories of operations and had other unworkable provisions for the wholesale baking industry.
“We will be closely examining the court decision to determine the full impact of the decision on the industry,” MacKie says. “We are pleased that the court seemed to recognize the need for more flexibility and rest breaks.
The DOT must now decide whether it will appeal the decision or accept the decision and rework the regulation. In addition, ABA and the coalition’s efforts to insert language into the highway reauthorization legislation will need to be reexamined in light of the decision. The decision was made in response to a legal challenge brought by so-called highway safety advocates.
AIB to Administer BISSC
The board of the Baking Industry Sanitation Standards Committee (BISSC) in July voted unanimously to enter into a management agreement with the American Institute of Baking to administer the operations of BISSC.
The agreement, effective September 1, will transfer the daily administrative functions for promoting and managing the ANSI/BISSC/Z50.2 sanitation standard certification process to AIB.
“AIB has the resources and expertise to support our long-term goals, said Sigismondo De Tora, BISSC chairman. All BISSC-registered companies will be notified about the administrative change.
ABA Meet with FDA
To Discuss Critical Issues
In a meeting with Food and Drug Administration Commissioner Lester Crawford and five other senior FDA officials, the American Bakers Association discussed a number of issues affecting the baking industry.
Specifically, a small delegation of ABA members led by association President & CEO Paul Abenante discussed the new U.S. dietary Guidelines and the benefits of enriched grains, including the benefits of folic acid. ABA also explained how it plans to address the issue of obesity and, how it’s considering several proactive programs for consumers.
The delegation also brought to FDA’s attention some of the administrative problems that bakers are experiencing regarding the “prior notice” provisions regarding bringing ingredients across U.S. borders on weekends.
In addition to Abenante, the delegation included ABA Counsel Peter Hutt, Len Heflich, chairman of the Food Technical Regulatory Affairs Committee and Lee Sanders, ABA’s vice president regulatory and technical affairs.
ABA wins Time for Spill Compliance
The U.S. Environmental Protection Agency published a one-year extension of the Spill Prevention Control and Countermeasure (SPCC) amendments in the Federal Register in June.
The American Bakers Association had been leader in the food industry in convincing the EPA of the need for such an exemption.
The July 2002 rule amendments have been the subject of litigation and controversy. The new compliance dates are August 17, 2005, for having SPCC plans for bakery facilities, and the plans must be implemented by February 18, 2006.

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