Flowers Foods CEO: As a strong no.2 in fresh baking, we’re poised for growth

By Kacey CULLINEY contact

- Last updated on GMT

Flowers Foods is hungry for US expansion and plans to drive its newly acquired brands (including Wonder) further across the country
Flowers Foods is hungry for US expansion and plans to drive its newly acquired brands (including Wonder) further across the country

Related tags: Flowers foods, Hostess brands, Hostess

Flowers Foods is open-minded on the lookout for future acquisition opportunities and is committed to driving its portfolio into new US markets, its CEO says.

Speaking to attendees at Barclay’s 2014 Back to School conference in Boston last week, company CEO and president Allen Shiver said Flowers Foods was ready for growth in what was now a consolidated but competitive market.

“In little more than a decade, the industry’s key players have gone from eight down to three,”​ he said.

Grupo Bimbo, Flowers Foods and Pepperidge Farm covered the US fresh baking category today, he said, but in 2008 it was these three companies plus Sara Lee, Interstate Bakeries Corporation, Best Foods, Weston and Earthgrains.

“As a strong number two in the industry, Flowers Foods is poised for growth; we have opportunities with current and new customers,”​ he said.

“…Overall, Flowers has benefited greatly as the industry has consolidated… The pace of industry consolidation has accelerated in the past few years and Flowers has taken advantage of those opportunities.”

Flowers Foods CEO says the company has benefited from consolidation. Credit: Flowers Foods Barclays 2014 slide
Flowers Foods CEO says the company has benefited from consolidation. Credit: Flowers Foods Barclays 2014 slide

The lucrative acquisition trail 

Allen Shiver, Flowers president & CEO: 'In just three years, we increased our sales by 46% - well over a billion dollars'

In 2011 Flowers Foods acquired Tasty Baking​, in 2012 it acquired Lepage Bakeries​ and in 2013 it acquired a span of brands from the Hostess Brands’ portfolio​.

“In just three years, we increased our sales by 46% - well over a billion dollars,”​ Shiver said. “Such a large increase required tremendous efforts by the team and stretched our capacity to the limits.”

“…The past few years have been very dynamic for the industry, but Flowers has gained share by winning new customers in existing markets, as well as expanding into new markets by acquisitions and introducing proven brands to new customers,”​ he said.

This growth was achieved through volatile times, he added, with periods of deep promotional activity and rising commodity costs.

“We believe there remains ample opportunity to continue our growth.” 

Allen Shiver, president and CEO of Flowers Foods. Photo Credit: American Bakers Association
Allen Shiver, president and CEO of Flowers Foods. Photo Credit: American Bakers Association

Increasing the DSD network further, but how?

The goal over the next three to five years, he said, was to increase the company’s direct-store-delivery (DSD) footprint to access 90% of the US population – up from current levels of 81%.

Driving known brands into new market areas was one strategy, he said, but “we also must take advantage of future acquisition opportunities that present themselves”.

Flowers continued to monitor and engage larger acquisition targets, he said, including possible opportunities in the better-for-you category and segments adjacent to fresh bread and snack cakes.

“Looking ahead, we have the strategy, the brands, the market access and the team to continue succeeding our growth objectives.”

Hostess acquisition is like a series of bolt-ons

Shiver said last year’s acquisition of the majority of Hostess Brands’ bread brands – along with 36 bakery depots and 20 bakeries – would reap benefits long-term.

“We won’t re-open all the bakeries at once – we have to be careful and take a very methodical approach,”​ he said.

“One way to look at this acquisition is that it will be very similar to a series of bolt-on acquisitions. Market by market, we will grow our sales and increase our share and as we need production capacity, we won’t have to make acquisitions since we have idle capacity to be re-opened.”

This would save Flowers a lot of capital, he said. For example, building a new production facility would cost in excess of $65m, but would only cost one-third of this to re-open and initially invest in these acquired facilities.

Related topics: Bakery, Manufacturers

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