Expanding in Challenging
March 1, 2004
Expanding in Challenging
While many bakers have expressed concerns over the low-carb trend and its negative impact on the sales of baked goods, two of North America's largest baking companies announced recently that they are launching aggressive programs to significantly increase their production capacity.
Flowers Foods told analysts at a meeting in New York in March that the Thomasville, Ga.-based company plans to build a new wholesale baking facility every 18 months over the next three to five years as it extends its direct-store-distribution (DSD) territory by 100 to 150 miles. George Deese, Flowers' president and Chief Executive Officer, noted that the expanded distribution will give Flowers Foods access to an additional 48 to 50 million customers. The added production capacity, he noted, will be necessary to meet the demands for Flowers' products as it enters new markets.
In 2003, after announcing its distribution strategy, Flowers moved into new markets with about 3 million in population. This year, the company plans to reach another 2 million consumers, Deese said.
Flowers Foods is scheduled to start production at the first of its new bakeries in Denton, Texas, by this summer. Moreover, the company is exploring acquisitions of fresh bakery companies with sales ranging from $10 to $100 million and of snack or frozen baked goods businesses with sales between $10 and $35 million, Deese said.
Meanwhile, Weston Foods U.S. plans to build three bread and roll plants in the United States this year. Citing an increase in momentum across its product platforms, the Toronto-based company will locate the plants throughout its territory east of the Mississippi River in the Midwest, Southeast and in New England.
Gary Prince, president, told attendees at the American Society of Baking that the company plans to invest heavily over the next few years in capital improvements. Since acquiring Bestfoods Baking in 2001, the company has made $125 million in production-related investments to improve capacity and lower its operating costs. Currently, Prince said, Weston Foods U.S. operates 30 "product focused bakeries." He added that Weston may close facilities or move lines to other plants if their operating costs are not in line with the company's expectations.
In addition to Weston and Flowers, other major players have built new facilities at a time when the baking industry is facing unprecedented challenges from carb-cutting diets.
Pepperidge Farm, for instance, constructed a $72 million bread and roll facility in Bloomfield, Conn., to provide much-needed capacity in its core markets in New England and part of the mid-Atlantic. Campbell Soup, Pepperidge Farm's parent company, reported that its bakery division contributed significantly to a 13% increase in sales of its Biscuit and Confectionery operating unit for the second quarter ended Feb. 1.
Likewise, Kansas City, Mo.-based Interstate Bakeries opened up its new plant in Henderson, Nev., last year to add capacity to better serve its market in Southern California. However, the company continues to experience overall soft sales in many of its core bread and snack cake items. IBC plans to close its bakery in San Pedro, Calif. The closing, scheduled for May 14, will affect 184 employees.
During the American Society of Baking conference, held in Chicago from Feb. 29 to March 3, several other bakers indicated that the difficult challenges for the baking industry pose opportunities for bakers who are willing to be different and launch innovative products that meet consumers' dietary concerns and needs for quality and convenience.
Speaking on a panel of top executives in the baking industry, Michael Marcucci, Chief Executive Officer of Chicago-based Alpha Baking Co., even argued that the low-carb trend might be beneficial in the long run for an industry that has historically been too reliant on sales of commodity-priced white bread instead of focusing on rolling out new premium and super-premium products.
If it weren't for the thriving sales of the super-premium bread segment, sales of the bread category would be flat to down, added Pat Callaghan, senior vice president, strategic business development for Pepperidge Farm. He said companies like Pepperidge Farm rely on continued consumer research to gain new insights as to how to strengthen the bakery's brand.
"We're a company that's never satisfied," he told ASB attendees. "We're always trying for constant innovation."
Smucker to Buy Multifoods
Orrville, Ohio-based J.M. Smucker announced that it plans to acquire International Multifoods Corp. for $840 million, which includes the assumption of some $340 million in debt. Together, the companies will have sales of $2.3 billion based on fiscal 2004 estimates.
The acquisition of Minneapolis-based International Multifoods marries such brands as Pillsbury baking mixes and ready-to-spread toppings with Smuckers, Jiff and Crisco brands. International Multifoods also owns such brands as Hungry Jack and Martha White products.
Get an Education at IBIE
During the International Baking Industry Exposition, wholesale bakers will have a chance to participate in educational programs that will tackle a wide variety of issues, ranging from how to formulate products for extended shelf life to producing bakery products with reduced carbohydrates.
The seminars, sponsored by the American Institute of Baking, will be held during IBIE 2004, which runs from August 15-18 at the Las Vegas Convention Center. In addition, the Retailer's Bakers Association will hold educational seminars for craft bakers.
The AIB program also includes seminars that address baking industry trends, just-in-time training, new technologies, allergen control and food safety.
For more information on the AIB programs, call 785-537-4750 or visit www.aibonline.org.
To register for IBIE, call 312-920-1230.
Jays Foods, best known for producing Jays Potato Chips, announced that it had filed for bankruptcy protection. The Chicago-based company, owned by the Japp family, will, if everything goes as expected, emerge from the bankruptcy under a new owner who has promised to retain the brand name and to expand the company's product range. This is the second time the Japp family has relinquished control of the company founded 77 years ago by Leonard Japp Sr. A Chicago-based investment group, Willis Stein & Partners, has pledged to purchase the company, but the deal going forward is based on the approval of the bankruptcy court.
It will be a momentous occasion at this year's International-Dairy-Deli-Bakery Association's (IDDBA) annual seminar and expo. The theme this year is "A Monumental Experience" and will be held June 6-8 in Washington D.C. The keynote speaker will be Dr. Phil McGraw, best-selling author and host of Dr. Phil, a nationally syndicated series and an expert on human functioning. Other speakers include former pro-baseball player Cal Ripken, Jr., and Erin Brockovich. The Monumental Experience also features a 10,000-sq.-ft. state-of-the-art merchandising theater, the IDDBA Show & Sell Center. For more information, call 608-238-7908 or visit www.iddba.org.
Obesity is the central theme of Stagnito Communications' 2004 Summer Conference. A global publisher of food, beverage and packaging magazines, Stagnito Communications' Obesity Summit 2004 will take place June 24-25 at the Indian Lakes Resort, Bloomingdale, Ill., a suburb of Chicago. The conference will draw experts and corporate leaders from all segments of the food industry to exchange views and analyses of what many are now calling a global epidemic. Obesity is "both a threat and a tremendous opportunity for the food industry. But the first step in meeting the challenge is separating myth and rumor from fact and reality," says Harry Stagnito, president and CEO. For more detailed information or to register, call Pierce Hollingsworth at 1-847-205-5660 x 4101, or email SPD@stagnito.com
The 2004 TIA Workshop, April 27-30 at the Norwalk Marriott in Norwalk, Calif., offers a unique combination of lectures, hands-on experience and demonstrations. Discover how to formulate products to meet the latest consumer demands, including trans-free, low-carb and shelf-stable. For more information contact Lauriellen Mustful at firstname.lastname@example.org.
David Michael & Co. has announced plans for its next Innovation Roadshow. Combining components of research and development into a one-day seminar, the company is offering attendees a unique opportunity in product development insight. Designed to inspire creativity and innovation, the Roadshow provides an educational forum to introduce unique flavors and trends from around the globe. For more information, contact Worldwide Headquarters at 1-800-DM-FLAVORS.
Solbar begins construction on a specialty soy protein plant in China at the Ningbo Free Trade Zone, southeast of Shanghai, in December 2004. The new state-of-the-art facility will be equipped to produce Solbar's functional soy protein concentrates, textured soy concentrates and steam-textured soy proteins. The facility is designed in accordance with HAACP-standards of quality control.
The board of directors for MGP Ingredients recently approved a $900,000 expenditure to further increase specialty wheat starch production capabilities at MGPI's Atchison plant. This is in addition to a series of similar projects amounting to approximately $2 million that the board approved last December. Both the new and previously approved projects are expected to be completed by this April and will involve the installation of additional starch-processing equipment at the company's Pekin, Ill., plant and additional starch and wheat protein-processing equipment at the Atchison facility.
International Flavors and Fragrances (IFF) will begin construction on a culinary and bakery center in the first quarter of 2004. The facility will be built at its existing North America regional creative center in South Brunswick, N.J. Construction is expected to be completed by the end of 2004. The new facility will better support customers' product development programs in retail and foodservice and expand the company's capabilities in the savory and bakery categories.
Quest International will sell its food ingredient business to Kerry Ingredients for $440 million to concentrate on building its core flavor and fragrance activities in order to grow its flavor and fragrance business. With the sale complete later in 2004, some 900 employees and nine facilities will be transferred to Kerry.
Cargill commissioned the first North American erythritol manufacturing plant in Blair, Neb. After limited test runs last spring, the $60 million facility is now fully operational and running continuously to meet demand for Eridex brand erythritol, an all-natural, non-caloric bulk sweetener with a taste similar to sugar. Cargill and Mitsui have formed agency agreements to collaborate on the distribution of Cargill-made erythritol to food company customers in Japan. The sweetener is imported by Cerestar, a wholly owned subsidiary of Cargill.
Balchem and David Michael & Co. have entered into a strategic alliance to manufacture and market microencapsulated flavors throughout North America. Marketed under the name MichaelCap, these flavors have applications within a number of food and beverage categories such as bakery, confections and more. They are being offered with multiple-coating materials for controlled release and application-tailored flavor delivery systems.
Urschel Laboratories is expanding its resources in Asia. Urschel Asia, the product test cutting facility, is located in Singapore and has doubled the size of its staff and focus. The facility will now also serve as a direct Urschel sales office for Singapore, Malaysia and the Philippines. To reflect this growth, the new name of the facility has been changed to Urschel Asia Pacific Pte. Ltd.
Stagnito Communications will sponsor the following conferences in 2004: Strategic Growth Conference, April 20-21; Packaging that Sells II Conference, June 9-10; Beverage Industry New Products Conference, June 15-16; Obesity Summit, June 24-25; and Innovators 2004, September 20-22. To register, log on to www.northstarconferences.com
The B&CMA announces this year's speaker at the 101st Annual Convention in Palm Springs, Calif. On the program is Dr. Larry Sabato, nationally renowned political scientist and election analyst. Also on the program is Timothy P. Burns, president of Cranial Capital. The convention will again feature buffet breakfasts, receptions, the Annual Golf Tournament, Dine Around on Monday evening, tennis and a Jeep adventure. For more information, call 301-608-1552.
Suppliers on the Move
Chr. Hansen appointed Linda Sweek as manager of communications and public relations; Pierre Monsan joins Danisco Venture's Scientific Advisory Board; Formost Packaging appoints Don Didur to replace Hap Pool as the west coast regional sales manager. Pool retired after18 years with the company; Stefanie Katz joins David Michael & Co. as human resources specialist and Gerard Giuffrida named maintenance supervisor, both in Philadelphia, while Eduardo Villagomez Mendez was hired as an account manager for David Michael de Mexico; Formers of Houston announces Gregg Drewelow as the new outside sales representative; Dave Olsen appointed president of Workhorse Custom Chassis; Dave Atkinson promoted to vice president of systems sales worldwide for NDC Infrared Engineering; Bake Mark promoted Tim Williams to vice president sales, key accounts; Scott Krebs joins Extru-Tech, as executive vice president, chief operating officer; Safeline hired Anastasia Snyder as special events and promotions coordinator; Cargill Sweeteners North America appointed Elaine Tecklenburg to the post of new products manager; Steve Ham named director of marketing for specialty ingredients and Brad Maier announced as corporate director of international marketing and sales for MGP Ingredients; AMF Bakery named Jim Loveless key account and west coast sales manager; Lesaffre Yeast Corp. promoted Dean Modglin to director of sales for the wholesale bakery channel.
People on the Move
Carbolite Foods, Evansville, Ind. – Kevin Fritton named chief operating operator.
The Cheesecake Factory, Calabasas Hills, Calif. – Chris Radovan announced as vice president of research and development.
Shearer's Foods, Brewster, Ohio – Scott W. Smith promoted to chief operating officer and Fritz Kohmann promoted to chief financial officer.
Wyandot, Inc., Marion, Ohio – Jim Augur promoted to operations manager and Tedley Pihl joins as research and development project manager.