After a dramatic fire, Pineridge Foods has rebuilt its damaged bakery, launched a branded marketing initiative and integrated the sales forces of its bakery businesses. Finally, the Canadian company is poised for rapid growth within its niche markets.

By Dan Malovany

On a Friday evening on Sept. 21, 2007, Roger Dickhout had been dining out at a private club in Toronto when he received a call from Tony Tristani, senior vice president and general manager, operations for Oakrun Farm Bakery.

Dickhout, president and CEO of Pineridge Foods, which purchased Oakrun Farm Bakery five months prior, ignored the call for the moment. He assumed Tristani, head of the Ancaster, Ont.-based bakery, was returning a voicemail that he left earlier in the day. Besides, he was enjoying himself that evening, and the club didn’t allow its patrons to talk on their cell phones.

Then, Dickhout received not one, not two but three calls from his son. So he finally called back his son, and while being accosted by the maitre d’hotel, he found out why his phone had been so busy that night. Oakrun Farm Bakery, which produces a variety of fresh and frozen baked goods, had caught on fire, and about a fifth of the bakery that housed its top-selling English muffin and crumpet lines had burned down.

“It had a huge impact because it destroyed a big part of the business,” Dickhout recalls, and it couldn’t have come at a more critical time for the new owners. That’s because Dickhout and his partners at the private equity firms, Swander Pace Capital and Scotiabank’s Roynat Capital division, were just getting to know the nuances of the Oakrun Farm Bakery and Gourmet Baker operations, the latter of which is a frozen baked goods producer based in Vancouver, B.C., that it also had purchased earlier that year.

“We felt that we bought companies in the baking industry that really had some momentum, and we were more focused on working with the management team on how to grow the businesses and develop long-term plans,” Dickhout says.

Despite the initial shock, he notes, the company’s management team, along with salaried and hourly employees, rolled up their sleeves and went into action.

“By the next day, we had made contingency plans and informed all of our customers that we were making alternative arrangements,” Dickhout says. “It was a week of total crisis management. We got back into business really quickly by using co-packers and other operators.”

At the bakery, Tristani recalls employees driving up to the burnt portion of the building that night asking if they could help in the cleanup. Shortly afterward, the company set up a makeshift human resources department consisting of picnic tables in the parking lot to sign in employees and assign them duties. Although the English muffin and crumpet operations were destroyed, other areas such as the bakery’s lines that produced thaw-and-sell batter, bagels and other products were still in tact, but they had to be completely washed down prior to resuming production.

After just a few days of around-the-clock cleaning and removing debris, several of the lines, including its frozen predeposited muffin, cookie dough and tea biscuit operation, were up and running.

“It just shows you the culture of the company and the dedication of the employees,” Tristani says. “In turn, we never laid off anyone. We may have cut hours, but we put them to work cleaning up, repairing the damage and rebuilding the bakery.”

Recently in mid-April, on the day beforeSnack Food & Wholesale Bakery’s visit to Oakrun Farm Bakery, the company rewarded employees by handing out profit sharing checks for 2009. The management team also gave away fleece sweaters and other tokens of appreciation during a rally that was held in the newly built 41,000-sq.-ft. section of the plant. Today, that part of the facility now houses offices, a quality assurance lab, a research and development center and two large, empty rooms where the company plans to install production lines for new products.

Firing Up its Brands
In addition to celebrating the restructured bakery at the rally, Pineridge Foods announced a new branding initiative that features a new logo, packaging, promotional materials and a consumer- and retail-oriented sales and marketing initiative for theOakrun Farm BakeryandGourmet Baker lines.

Historically, only about 10% of the company’s bakery products are branded, but outside of the company’s market leading English muffins and crumpets, the branded products have not had a big presence in the market, notes Andra Zondervan, who was hired as director of marketing for Oakrun Farm Bakery and Gourmet Baker to spearhead the company’s branding initiatives.

“When both companies were acquired in 2007, neither had changed its logo in 30 years,” she says.

Despite tired packaging and an old logo, however, Oakrun Farm Bakery is the No. 1 English muffin and top-selling crumpet company in Ontario, according to the company’s ACNielsen data, Zondervan says. Additionally, the bakery has a leading market share in the smaller angel food cake and ring Danish segments in Ontario. Oakrun Farm Bakery also produces bagels, cinnamon buns, tea biscuits, hot cakes and pre-deposited cookies and muffins for bake and sell.

Although the bulk of its business involves serving foodservice and quick-service restaurant chains with frozen baked goods, the bakery’s 37 independent distributors ship fresh products to supermarkets, convenience stores and gas station outlets throughout the “Golden Horseshoe,” or the area that’s a two-hour drive from the bakery from eastern Toronto and along Lake Ontario all the way to the U.S. border.

Despite this coverage, the company never invested heavily in the brand. Moreover, its packaging had featured a huge, generic “English muffin” label that dominated the top of the bag while the small Oakrun Farm Bakery logo was less visible.

That’s all changing this summer. Oakrun Farm Bakery English muffins and crumpets feature the company’s signature green banner and a prominent logo that changes color depending on the product’s variety. The goal, Zondervan says, is to make the package work much harder and to get Canadian consumers, who tend to be avid label readers, to pick the package off the shelf and to turn it over to check the better-for-you nutrition labeling on the back.

“Now, the brand takes a primary communications role,” she explains. “The type face is easier to read. It’s easier to understand the nutrition claims, easier to understand the flavor, and there’s a stronger emphasis on the brand Oakrun Farm Bakery.”

Emphasizing the Oakrun Farm Bakery name, Zondervan adds, is critical because of the brand’s equity and the aura of natural wholesomeness that comes from the bakery actually being located on a former farm owned by the company’s founders, John and Ellie Voortman.

“The exciting thing from a marketing standpoint is to actually create a brand, but the beauty of Oakrun is that we had one,” she says. “We had just not articulated it in a way that was well understood by people other than our key customers.”

For Gourmet Baker, the new branding effort is all about “the signature of ‘G’,” and that there are actual bakers and cake decorators working behind the business and adding personal touches to the products. The company also updated Gourmet Baker’s sell sheets and promotion materials to create visual presentation that not only emphasizes the products’ value-added features, but also better defines the indulgent experience that diners have while enjoying their desserts at the end of a meal, Zondervan says.

“Gourmet Baker is really about the essence of the finest,” she says. “It’s about the finest ingredients that go into these products.”

For Gourmet Baker, the lack of brand recognition is partly due to its business model. The producer of frozen laminated dough, croissants, sheet cakes, decorated cakes and crumpets primarily focuses on the foodservice and in-store bakery channels, where there is little brand recognition on restaurant menus or in a display case.

In fact, Gourmet Baker specializes in developing custom-designed products with long-established customers throughout Canada and with key accounts in the United States. Each year, some 15% of its business comes from new products, specifically premium, value-added and indulgent frozen desserts and baked goods with no branded presence in supermarket freezer cases, notes Dave MacPhail, senior vice president and general manager, sales and marketing.

“We’re not a private label company, but a custom developer that’s vertically integrated with key relationships with certain customers,” he says. “At Gourmet Baker, we try not to be everything to everybody, but we really use the strategic customer approach. Our point of differentiation would be the quality of the product and the speed to market in product development in terms of our turnaround time. Our quality assurance and our quality controls are second to none.”

Most of its products are delivered via common carrier to customer warehouses or through a distributor network where consumer branding is not a priority.

One Face to Customers
In many ways, the two baking divisions complement each other. Oakrun Farm Bakery is a highly automated operation that provides quality fresh and frozen products at competitive prices, MacPhail says.
On the other hand, Gourmet Baker, which provided a steady stream of business when Oakrun Farm Bakery was rebuilding from its fire, offers premium frozen value-added products.

MacPhail adds the two baking divisions are looking at operation and distribution synergies to reduce freight. Additionally, Pineridge Foods is putting new tools into its sales force as it’s ready to accelerate its growth rate now that the Ancaster bakery is fully operational and ready to expand.

“We’ve been working on an initiative over the past year, and we coined it, ‘one face to the customer,’” MacPhail says. “We’re putting a lot of effort into redeploying our sales efforts into getting the sales people to carry one bag with two product portfolios in it. We’re capitalizing on synergies that we have.”

Although a disaster at the time, the Oakrun Farm Bakery fire and the long rebuilding process did prompt Pineridge Foods and the bakery’s management team to reexamine how the operation should run going forward.

“It caused us to rethink the way we’re doing business,” Dickhout says. “We made significant process improvements, improved product quality and changed our financial processes so we can understand costs more deeply along with margins. The company, as a result, became more efficient and more focused than we were before.”

Currently, Pineridge Foods is actively searching for acquisitions to bolster its bakery division, says Craig Miller, vice president of corporate development who is spearheading that initiative. Those companies, he says, will tend to be entrepreneurial or family owned, have a unique culture, be leaders in their niches and have close relationships with their customers with whom they can partner to develop unique products that drive everyone’s business.

“That’s how we plan to grow the baking business, by acquiring a company that, even though it has gotten to a certain size, still has a smaller company culture,” Miller says. “It’s fast moving and able to be innovative in these niche areas.”

During the rally at Oakrun Farm Bakery, banners read “Pride in our past. Confidence in our future,” which sums up how Pineridge Foods is not only maintaining the culture of its founders, but also taking the business to a new level.

In fact, Miller says, the company is now ready to fire on all cylinders.

“If we didn’t have the fire, we would probably be further down the road with further acquisitions,” Miller notes. “The focus was getting the core business working beautifully again and working better than before leaping into new acquisitions. Now, that’s behind us. We’re out there talking to people and seeing if there is a company that fits our type of business and will be interested in joining our group.”

With a little luck, maybe their call will be answered soon.