Company provides extensive insight on its strategies, operations and market trends.
In an extensive “Meet the Management Team” presentation at the New York Stock Exchange, top officials at Flowers Foods outlined information on the company’s growth strategies, consumer trends, market share, new products, supply-side chain strategies and financial projections for 2010.
Although Flowers Foods expects record growth this year, the Thomasville, Ga.-based company has been forced to step up its promotional activity recently to defend its share of the market, says George Deese, chairman, CEO and president. A cautiously optimistic Deese adds that he hopes such activity will return to more normal levels in the future.
Such excessive promotional pricing can be detrimental to the industry and lead to category deflation, says Allen Shiver, executive vice president and chief marketing officer who will become the company’s president at the start of 2010.
However, such activity may be needed as budget-conscious consumers are looking for affordable products, making less impulsive purchases as they return to old-fashioned shopping lists and are in search for products offering value and special benefits, Shiver explains. Additionally, they are influenced by brand trust, coupons, circulars and discount cards.
Overall, fresh bread and roll sales are experiencing some deflation. For the 13 weeks ending Sept. 27, sales of fresh bread and rolls fell 4%, according to IRI Consumer Network data supplied by the company. According to IRI, fresh packaged bread-type products, such as sandwich bread, buns, rolls, bagels and English muffins, account for $12.7 billion of the $19 billion retail fresh bakery market. Cake sales are about $3.6 billion while tortillas and wraps account for $2.2 billion. After its recent acquisition of Leo’s Foods in Ft. Worth, Texas, Flowers expects the tortilla category to emerge as a growth opportunity and priority for the company in the future.
To drive top line sales, look for Flowers Foods to add such new products asNature’s OwnSandwich Rounds in January,Nature’s OwnThin Sliced Bagels in February and Italian, Potato and Wheat varieties ofCobblestone Mill Soft Breads during the first quarter of 2010.
Another growth opportunity involves expanding its direct-store-delivery territory, says Brad Alexander, president of Flowers Bakeries. During the past five years, Flowers has expanded into such cities as Baltimore, Indianapolis, St. Louis, Wichita, Phoenix and southern California. With its expansion into adjacent markets to its core territory, Flowers Foods now reaches 50.3 more consumers with $94 million in annual sales in these newer markets. In 2009 alone, it added territory in Indiana, Illinois and Pennsylvania that reaches an additional 3.9 million consumers.
Additionally, Flowers Foods continues to invest significantly in expanding its production capacity and efficiencies. In fact, the company has made so many improvements in its operations that, in sum, are the equivalent of adding two new bakeries that it didn’t have to build.