Lessons From a Legend
“I was practically born into the baking industry,” Charles W.H. Matthaei likes to say. In fact, he was only seven when his father, William Matthaei, purchased the Roman Meal Co. from Dr. Robert Jackson, an ailing physician who created whole grain hot cereal based on the early diet of Roman legionnaires. Eventually, the elder Matthaei convinced a number of bakers to begin producing Roman Meal bread in a number of markets.
The rest is history.
Today, Roman Meal is synonymous with natural whole grain goodness, and Charles Matthaei is part of the illustrious 2008 class that was inducted into the Baking Hall of Fame in early March.
Throughout the decades, Matthaei has been a fixture in the baking industry, along with leaders such as Burt and Joe Franz in Portland, Ore.; the Kilpatricks in San Francisco; the Fuchs in Miami; the Nissens in Portland, Maine; the Petersons in Omaha; the Cottons in New Orleans and other legends of the past century.
To provide a link between past and present, the society asked Matthaei last month to share his thoughts about the baking industry today and compare it to times gone by. Here is an abbreviated version of what he had to say.
American Society of Baking: What is your view of the state of the baking industry?
Charles Matthaei: The 1929 stock market crash and the Great Depression bear some similarity to the credit market crunch today. I am convinced that it could create a comparable financial situation for the industry, as happened in the Depression.
Other challenges for the industry are the bankruptcy of Interstate Bakeries, and the ability of retail stores and grocery chains to dictate whether or not a baker can leave his products on the shelves or, in some cases, must pay an excessive stocking charge for introducing a new product.
I believe there is a tremendous opportunity for bakers to provide products, which are both healthy and taste good. We must reinforce the nutritional value of whole grain baked foods with consumers to build demand for specific bakers’ products with retailers.
ASB: What has been the biggest milestone for the baking industry over the years?
Matthaei: The biggest milestone that I’ve observed is the change in bakery ownership from family-owned bakeries dominating a single market to the large corporate chains we see today. In the past, for example, my grandfather came from Germany and established a bakery in Kansas City, and eventually became the second-largest baker in that city. Smith Brothers had the largest, and they got together with my grandfather and three other Kansas City bakers to form the Consumers Bread Co., which eventually changed its name to General Baking Co., and they became one of the first large corporate bakers. They were one of the major corporate bakers when I first got into the industry.
However, they failed because, I believe, their management got old and did not meet the challenge of the changing times. There, of course, have been many failures, mergers and purchases of independent bakeries, so at the present time, there are very few large independent wholesale bakers.
ASB: How have you had to change your company to adapt to changes in the baking industry?
Matthaei: It has been necessary to have managers who understand the bakery business and have empathy with the managers of the bakeries with whom they work. This requires that our managers not only have empathy with their opposite number, but that our company be knowledgeable in the marketing of bakery products and have knowledge of the technology to help our licensees have successful products on the market.
ASB: Commodity prices, especially wheat, are near or at record levels. Have you ever seen such a time as this?
Matthaei: I have never seen wheat priced as high as it is today. Back when I started the Roman Meal Milling Co. (now called Dakota Specialty Milling) in 1960, if my memory serves correctly, we were paying about $1.60 a bushel for dark hard red spring wheat. At the time I’m responding to this, hard red spring wheat is running in excess of $12 a bushel.
We have had a rather poor harvest in the Southwest, and Australia and South America have had poor crops as well, resulting in there being a world shortage of wheat. I am concerned that the high wheat prices, as well as the high prices for other grains, will continue into the future. The planting of winter wheat for this year is not much larger than last year, and until harvested, the size of the crop cannot be certain. Farmers in the spring wheat area are still in the process of making up their minds whether to grow wheat or corn because of the high price of corn, plus the additional subsidy the government is offering farmers to encourage them to grow more corn for the production of ethanol to replace some gasoline.
ASB: What is the short- and long-term potential for whole grains? Where do you see the greatest opportunities for growth?
Matthaei: I think there is a lot of potential for whole grains both in the short-term and the long-term because of the value of the nutrients in whole grains. Many of the essential micronutrients in whole grains are not readily available from other sources. Wheat, rye, oats, barley and rice kernels have similar structures and should be a significant part of a well-balanced diet. To accomplish this, we need to do a better job of informing the public of the importance of whole grain micronutrients, as well as the importance of dietary fiber provided by whole grains.
ASB: How does it feel to be in the Baking Hall of Fame?
Matthaei: I am amazed to be nominated for such a distinguished recognition and extremely pleased to be honored. There were many leaders in the industry who were not fortunate enough to get recognized in the Baking Hall of Fame. Nevertheless, they did make very significant contributions to the greatness of the industry, and in a manner of speaking, we are all standing on their shoulders. SF&WB