Thinking Beyond the Alphabet
September 1, 2007
Thinking Beyond the Alphabet
By Deborah Cassell
Delivering its baked products from point A to point B is job one for Chicago’s Alpha Baking Co., but the wholesale baker’s recent acquisition of the Natural Ovens brand paves the way for a future in the organic and all-natural retail market.
Every morning at 8 a.m., a conference call takes place among the executives at Alpha Baking Co. The subject of discussion? Logistics. The fruits of these daily conversations? Out-of-the box thinking — the level of which has driven this company to the top in a highly competitive industry.
“In the alphabet, we’re a bit toward the front,” jokes Mike Marcucci, chairman and CEO of the Chicago-based bakery.
In terms of innovation, Alpha Baking also is top of mind for those in the foodservice industry, the bakery’s primary market.
“We get things done really quickly as a group,” says Bob McGuire, vice president of logistics. The “group” McGuire refers to includes himself and cousins Mike and Larry Marcucci, the latter of which serves as president.
Logistics is a “core competency” for this wholesale bakery, Mike says. Perhaps best known for its fresh and frozen distribution systems, Alpha Baking also boasts several strong brands, including S. Rosen’s, Mary Ann, Kreamo, Grain Waves Organic, Golden Hearth and, of course, it’s most recent acquisition: Natural Ovens.
Mike calls this newest addition a “synergistic fit.” That said, he adds, “We don’t expect it to pay off immediately.”
Thankfully, patience is a virtue in Alpha Baking’s arsenal, which it has grown out of a willingness to take unconventional risks. For example, Natural Ovens is not Alpha Baking’s first foray into all-natural and organic. In the late ‘90s, the company introduced a brand called Grain Waves.
Unfortunately, “we were too early,” says Mike, adding that consumers were not yet ready for a 100% organic product. Like Grain Waves, Natural Ovens targets a limited segment of the public. However, in today’s environmentally and health-conscious market, it has “tremendous potential,” he says.
In the short term, Natural Ovens will deliver a new customer base to Alpha Baking. The all-natural brand comes complete with a dedicated base of consumers who love its whole grain, flax and nutrient-infused breads, rolls, bagels and other baked goods, all of which are produced at the Manitowoc, Wis., facility Alpha Baking now operates. (See “Change of Pace.”)
“They have a real following nationwide,” Mike notes.
Up until now, promotions for the Natural Ovens brand have been practically non-existent. Instead, the line of breads, rolls, buns, bagels, cookies and cereal has gained acceptance through traditional word of mouth or “guerrilla marketing,” as Larry calls it. In the future, Alpha Baking will relaunch the product in an effort to spread that otherwise grassroots word even further.
In the meantime, the company will enjoy yet another immediate benefit of its acquisition. The Natural Ovens business provides Alpha Baking a greater geographic footprint, which allows it to make fewer stops on delivery routes — ideal for a company focused on distribution.
Alpha Baking is to foodservice and retail channels what FedEx is to mail delivery.
In fact, “we were just talking about getting a tour of the UPS facility [near Chicago] to see how they do it,” Larry says. “We want to be maybe not on the bleeding edge, but on the cutting edge.”
When it comes to delivering baked goods, “We’re as good as anyone at getting product from Point A to Point B,” Mike asserts. Because Alpha Baking is not a brand-driven company, “where we bring value is on the logistics end,” he adds.
Despite the acquisition of Natural Ovens, which primarily is distributed to retail customers, the vast majority of Alpha Baking’s business comes from foodservice customers, to whom it delivers fresh and frozen varieties of bread, bagels, ciabatta, focaccia, French/hoagie rolls, hamburger and hotdog buns, mini bagels and specialty rolls. The company delivers fresh products every morning to Minnesota, Missouri, Kansas, Wisconsin, Illinois, Indiana, Ohio, Kentucky and Iowa … and the company is known for turning around orders on a dime.
“We’re still taking phone orders up until 4 p.m. the day before,” Larry says.
In the retail realm, the wholesale baker is the primary supplier of baked goods for the Midwest division of a major national retailer. Of the 32 baked products that the stores sell, Alpha Baking’s products represent a significant majority of the SKUs. Its offerings also can be found in one mainstream health and wellness grocery chain, thanks to the addition of the Natural Ovens brand to its portfolio. That’s part of the synergy between Alpha Baking and Natural Ovens.
The two businesses complement themselves in other ways, as well. In the summer months, for instance, Alpha Baking’s bun and roll production lines are going “like a bat out of hell,” Larry notes. Mike usually “gets suicidal in January” because business is so slow, he jokes, so it will be interesting to see what happens in 2008, given the new acquisition. Traditionally, the Natural Ovens business picks up speed as consumers make New Year’s resolutions that include eating healthier, Larry says.
Altogether, the company offers some 2,300 stock-keeping-units that it produces through the 13 lines at its four plants — two in Chicago and one in La Porte, Ind., plus the Natural Ovens facility in Manitowoc.
To get its products from the bakery to a restaurant or retail outlet, “we have 18 distribution centers and four production facilities,” McGuire explains. “There’s a lot of moving parts in this thing.” In fact, he adds, “we have so many parts that it can get away from you.”
The company’s multi-layered distribution programs are customized to meet its individual customer’s needs — another calling card of the baker, which does more than $200 million in annual sales.
“We ship in every fashion there is,” from road to rail, excluding only water, McGuire notes.
In particular, “we take great pride in our ability to move frozen goods in this country,” he adds. Because Alpha Baking’s freezers are in-house with a partner or partnering company, they work seven days a week, as opposed to third-party houses that work five. (See “Freezing Their Assets Off.”)
McGuire points out that this function is unique. As a result, “there are other foodservice houses and customers in the country thinking of using us as a distribution point,” he adds.
As a logistics-based company that also happens to be a bakery, Alpha Baking is intent on expanding its distribution system to include more markets in more states for a larger geographic footprint. For example, as a result of the Natural Ovens acquisition, the company now serves Minneapolis/St. Paul, where the company not only distributes to retail customers, but is making inroads in the foodservice channel. It also acquired “some really qualified talent” in the enthusiastic group of truck drivers — especially in Minnesota — that were included in the acquisition.
And business certainly is booming for this successful baker.
As for that age-old question of where the company sees itself five years from now, Larry laughs.
“We’ve never had a five-year plan,” he says. “We had a five-week or a five-day plan, but we never looked five years out.”
With Alpha Baking, it’s often easier to look back. For example, 2002, one year after 9/11, was “a rough time in our business,” Larry notes. Then, Alpha Baking was just starting to offer low-carb products. Now, the company has moved into natural and organic offerings — proof that the ability to adapt to trends is what keeps it at the forefront not just of the alphabet, but of the industry. SF&WB
At a Glance
Company: Alpha Baking Co., Inc.
Web Site: www.AlphaBaking.com
Annual Sales: More than $200 million
Brands: S. Rosen’s, Mary Ann, Kreamo, Natural Ovens, Grain Waves Organic, Golden Hearth
Products: Namely, breads, buns and rolls for foodservice, retail, in-store bakery and contract manufacturing. Also produces bagels, cookies and other baked goods and cereal.
No. of Plants: Chicago (2), La Porte, Ind.; Manitowoc, Wis.
No. of Lines: 13
No. of Employees: 1,400
Chairman & CEO: Michael Marcucci
President: Lawrence Marcucci
Exec. V.P. & Treasurer: Robert Cruice
Sr. V.P. Operations: David Granger
V.P. of Manufacturing: George Poulos
V.P. of Logistics: Robert McGuire
CFO & G.M.—Retail Sales: Marc Zawicki
V.P. of Sales & Marketing: Gary Narcisi
V.P. of National Accts.: Paul Spencer
Sr. V.P. Sales: Nick Nicholas
V.P. & G.M.: Steven Rosen
V.P. of Sales: Mark Marcucci
V.P. Information Technology: Barbara Boyer
V.P. of Human Resources: Gary Hibbert
President of Kreamo Division: Larry Mitchell
Environmental concerns have become important to all food manufacturers, including Alpha Baking Co. In an effort to reduce hazardous emissions as well as costs, the Chicago-based company recently started using alternative forms of energy to fuel its delivery trucks.
What started one afternoon as a conversation about gasoline prices has resulted in Alpha Baking’s decision to filter vegetable oil from the restaurants it serves in the foodservice channel. Today, the company successfully runs two trucks on the oil, which previously was used for animal feed or turned into waste. In addition to saving money, this innovation narrows Alpha Baking’s carbon footprint, notes Larry Marcucci, president of the company.
“We want to be on the leading edge,” adds Mike Marcucci, chairman and CEO. “Five years from now, I’d say a good portion of our fleet will be greener, for environmental and financial benefit.”
Of course, this new energy source — which many environmentalists have been using for years — does pose some challenges.
For one, “there’s a finite supply of vegetable oil,” Mike says. In addition, there are some objections from a warranty perspective when it comes to the trucks themselves. Lastly, not every corner of the markets Alpha Baking serves can provide or collect the fuel.
Needless to say, the entire fleet cannot make the switch. For this reason, Alpha Baking also is experimenting with a propane-injection diesel. However, at this point in time, neither source can replace regular fuel.
As Bob McGuire, vice president of logistics, says, “We want to do out part to be green and reduce dependency on foreign oil, but … at what price victory?”
If anyone should know about bakery trends it’s Chicago’s Alpha Baking Co., which serves as a supplier to everyone from fast food chains to club stores, restaurants, and health and wellness grocers, with products ranging from buns and rolls to artisan creations to all-natural and organic loaves.
According to chairman and CEO Mike Marcucci, this year has seen demand from foodservice providers for smaller portions in the form of appetizer-size rolls. Also on menus: French rolls, brat and sausage rolls, and semi-rustic loaves.
Although it produces some white bread under the Mary Ann brand, most of its products are varieties, including its signature S. Rosen’s rye bread. In addition, Mike notes, interest in 100% whole wheat is way up.
“The consumer has obviously shifted away from white bread, but we were never really in the white bread business anyway,” he says.