By Dan Malovany
Out with the old and in with the new.
That’s the conventional way for bakers to jazz up their product portfolio. In recent years, they’ve been adding everything from tropical fruits, Mediterranean olives and imported cheese to Omega-3s, new strains of whole grains and even plant sterols to create additional varieties of breads and sweet goods that target cutting-edge trends – and sometimes fads – that keep their businesses relevant to their customers and consumers.
Then again, out with the new and in with the old remains a tried-and-true formula for many bakers in an industry that’s deep-seeded in tradition. Natural baked goods made with age-old starters and long fermentation times never go out of style. Why search for the greatest new thing when the formula for crafting the best-tasting European-style breads and sweet goods has been around for centuries?
That’s why the Lantmännen Unibake, one of Europe’s leading suppliers of frozen bread and other baked goods, established a foothold in North America in 1995 and began importing its authentic Schulstad Royal Danish Pastry from its production facilities in Denmark. Along with its Pastridor croissants, which are frozen, classic French-style croissants that are ready to bake and ship from its operation in Belgium, sales of its imports reached such a critical mass that the company began its search for domestic production in 2006.
After visiting about a dozen different operations for two years, Lantmännen Unibake acquired Euro-Bake, a regional producer of premium, artisan-style breads based in St. Petersburg, Fla.
In many ways, Euro-Bake was the quintessential missing piece to the puzzle, says Scott Kolinski, president of Lantmännen Unibake USA, which has its sales division headquartered in Lisle, Ill.
Internationally, baked goods account for about $1 billion in annual sales for the diversified food and agricultural company, which is headquartered in Sweden but whose Unibake bakery division is based in Denmark. Throughout Europe and Russia, the company operates 25 fresh and frozen bakery facilities that house 85 production lines. Of that, 21 of the bakeries have 70 lines that specialize in producing frozen baked goods, which are sold in 10 countries, including as far away as Japan and South Korea.
The Euro-Bake acquisition means that the company now has production capacity in the United States for the first time and signals a vital step in its Lantmännen Unibake’s worldwide growth strategy. Moreover, Euro-Bake’s frozen and parbaked baguettes, ciabatta and other Old World-inspired breads and rolls nicely complement the company’s lineup of imported sweet goods.
“One, what we were looking for was a well-run, well-managed bakery and, two, a profitable operation. We didn’t want to fix too many things,” Kolinski says. “Three, we wanted one that had the potential for expansion for building on or adding to the facility so that we can build a pastry plant. Certainly, the Euro-Bake operation was very well run.”
In fact, the two U.S. operations are almost twins that seemed separated at birth. Both share a common history steeped in European baking tradition as well as similar sales strategies and complementary resources that have allowed the business to grow as the combined sales force diversifies its customer base.
“Both of our strategies were very parallel in nature, and we’re both highly leveraged into the hotel business,” Kolinski explains. “We both had strong programs that catered to the upper scale of the hotel trade. Since Lantmännen has acquired Euro-Bake, we have broadened that scope to a greater number of customers.”
In addition to foodservice establishments, hotels and caterers, Lantmännen Unibake has made a big push to establish a greater presence in the retail and in-store bakery channel.
Founded by Harty Gerhard in 1993, Euro-Bake started out by selling authentic European breads and rolls that were produced by its partner in Germany and shipped frozen to the United States for distribution. Over the years, sales for the tiny import company spread throughout the Southeast, prompting Gerhard in 2000 to start up a small, one-line bakery that specialized in producing frozen breads and rolls.
By 2006, business eventually became so robust that the company built a 55,000-sq.-ft., state-of-the-art bakery. In 2007, Euro-Bake had nearly 200 employees and around $25 million in annual sales.
That’s when Gerhard decided to sell the business, but he didn’t just want to cash out to anybody, says his son, Mike Gerhard, who’s currently the bakery’s director of operations.
“My father did not want to sell to a U.S. company that would make our bakery more of an accounting project,” he says.
The younger Gerhard notes that Bent Pultz Larsen, the chief executive officer of the Lantmännen Group, is a baker himself, and that the company operates under the philosophy of customer intimacy and operational efficiency. It’s a strategy both companies shared.
“That’s why we had such a good fit with Lantmännen,” he adds. “We both are customer-focused and concentrate on efficiencies. Since we were bought, it’s been a focus on quality, and it’s gone surprisingly well.”
In addition to the common ground that they share, Lantmännen Unibake and Euro-Bake can leverage a slew of sales, product and operational synergies. Together, Kolinski notes, the companies, which have a combined $60 million in annual sales, now can offer in-store bakery and foodservice operators a one-stop shop with its extended line of breads, rolls and baked sweet goods
“As important as that is to a foodservice operator, it is even more important to offer an in-store bakery a broad line of products,” he notes. “They’re all consolidating suppliers so if they can find somebody who offers high-quality products in multiple categories, then that’s a benefit for that retailer.”
The Euro-Bake concept, for instance, can target nearly every eating occasion because it offers everything from variety packs of dinner rolls to subs, buns and sandwich breads, says Ralph Hoffmann, director of sales. True to Euro-Bake’s German roots, it also sells Bavarian soft pretzels as well as pretzel buns, sticks, sandwich rolls and dinner rolls.
In addition to higher volume products, the St. Petersburg, Fla., facility also has one line that can produce more authentic artisan breads, some of which receive more than four hours proof time to fully develop the products’ flavor.
“It’s a slow process that’s hand crafted and not necessarily something that the ownership likes to see because of the output, but it is a key component of what Lantmännen Unibake and Euro-Bake are,” Hoffmann says.
To cater to consumer trends, the company is adding more whole grain products for its customers, which typically range from sandwich shops and upscale hotels to airlines and cruise liners.
“Americans like their white bread, but on the R&D side, the trend is toward the whole grain and whole wheat products where people see nutritional value to them,” Hoffmann says.
In many ways, Lantmännen Unibake’s new products are a marriage between the old and the new. Often it’s a new twist on an Old World formula. The bakery’s signature breads are made with its natural starters using a time-intensive production process, and are loaded with various grains, fruits and other flavor enhancing ingredients. Its olive loaf, for instance, contains three different kinds of olives while its muesli bread is filled with raisins, cranberries, walnuts and other wholesome ingredients.
“It has everything that’s good for you,” Kolinski says.
Premium products, however, require an uncompromising approach when selecting ingredients, Gerhard adds. All breads are made with virgin olive oil. Its garlic loaf, for instance, uses roasted ingredients from Italy.
Meanwhile, on the indulgent side of its portfolio, the Pastridor croissant line features the brand’s traditional mini- and regular-sized, all-butter croissants in straight and curved forms as well as all-butter croissants filled with chocolate, almond, apricot, pain au chocolate and pain au raisins. Lantmännen Unibake just began importing them three years ago, but North America is among the Top 3 selling markets for croissants in the company, Kolinski says.
From the Schulstad line, the U.S. division imports “real” mini and classic Danish that comes in best-selling maple pecan plait, cinnamon swirl and vanilla crème crown, just to name a few. Moreover, its premium line features a blackberry and cream fan, a double chocolate plait with hazelnuts and a toffee pecan swirl, among others. This year, for the Latin market, the company is introducing its mini- and regular-sized Tropical Crown with guava, pineapple and passion fruit.
“If we feel there is a group of core products that are good core sellers, we’ll put them in as an assortment and sell them as a Tropical Selection or by another name,” Kolinski says.
To secure the integrity of the individually wrapped Danish and croissants, the company uses distinctive packaging with its layered barrier film to protect the products from potential dramatic swings in temperature.
Vast Resources to Grow
By teaming up with Lantmännen Unibake, Euro-Bake secured access to a wealth of sales and operational resources, says Hoffmann, who became the second employee at the specialty bakery when he joined it in 1994. Prior to its purchase, Euro-Bake’s strength was in the Southeast, and it still is. It didn’t have representatives on the West Cost nor in the Northeast. Now it has three or four sales managers in those regions.
“From the Euro-Bake side, we had a small sales force,” Hoffmann says. “We now have a sales force that’s 15 people strong, including a person who is totally dedicated to retail. We are going after whole market segments from retail in-store bakery to foodservice.”
Because its products are delivered via food distributors or directly to the operator by dedicated or common carriers, Lantmännen Unibake USA recently restructured its sales force to get closer to its customers and provide both a push and a pull when it comes to sales.
“We had to ask, who is our customer? Is it the distributor or the operator who is actually is getting our
products? Clearly the answer is both, but we strive to get as close to the operator as possible,” Kolinski says. “Both are important, but we want to have that intimate relationship with the operator.”
“We’re a sales-driven company,” he adds. “We don’t have a lot of fancy marketing programs that our bigger competitors have. What we do have is very good quality products at a reasonable price. In other words, we offer a great value to our customers.”
With the help of master baker Uwe Kehlenbeck, the St. Petersburg bakery also specializes in producing custom-designed products, Hoffmann says. Specifically, to produce more healthful products, its R&D staff will work to reduce sodium, increase the amount of grains or “whatever needs to be done to make it a signature product for the customer,” he says.
Despite its larger size, the company remains nimble and will cater to smaller accounts. For larger customers, the bakery is versatile enough to produce products or enter different categories that may require some investment if the project is fiscally reasonable.
“Our sales strategy is to do whatever the operator wants subject to our own constraints within the plant here,” Kolinski says.
To diversify and expand, the U.S. division can rely on its European parent company to provide resources and expertise, especially when it comes to improving plant operations. From a sales point, however, the corporate philosophy is mainly entrepreneurial.
“The pleasurable thing about working with Lantmännen is there are certain things that they are very strict on like product quality and food safety,” Kolinski notes. “However, when it comes to operating in each other’s markets, we’re allowed to go ahead and do what is right for our country’s markets, and there is no direction from corporate that says, ‘You have to sell this or you have to sell that,’ and that’s pretty refreshing. It’s more about what can I do for you and what are you looking for to be successful.”
During the past year, the slow economy has made business tough for any bakery involved in the hotel and upper-end of the foodservice channel. Because it has diversified after the Euro-Bake acquisition, Lantmännen Unibake has been able to hold its own, more or less, and is poised to expand and possibly add domestic sweet goods production when the market rebounds.
In the end, the key is to react quickly to the market, but don’t rush it when it comes to creating quality products the Old World way.
“We take a little more time in making our products,” Kolinski says. “We don’t mind spending a little bit more money putting together our olive loaf or roasted garlic loaf because the result is paying for itself.”
That’s a lesson that only comes from being rooted in tradition.