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Exclusive interview

Grupo Bimbo ceo to invest in UK arm

By Rod Addy+

16-Jul-2014

Bakery giant Grupo Bimbo believes the UK arm of Canada Bread - the business it bought in May - together with Spanish and Portugese divisions can strengthen European sales after further investment.

Commenting on the newly acquired UK operation, the bakery products group of Toronto-based Maple Leaf Foods, Daniel Servitje, Grupo Bimbo chairman and ceo, told FoodManufacture.co.uk: “The business is a growing business. It has been through a lot of changes, a lot of restructuring, but is now profitable.

“We were just meeting and knowing the people and their plans. We as a company like to build businesses that have a good future. We want to understand where we can play and add value.”

In the context of Europe, Grupo Bimbo believed its UK arm, together with factories in the Iberian Peninsula – Spain and Portugal – offered considerable growth potential and would boost European sales. “There might be some opportunity to work together.

“We are investing in good, new manufacturing plants in the UK. The business adds value to the customer and the consumer and shareholders know the business is very big, and strong in the UK.”

Servitje said the bakery portfolio in the UK “won’t probably be as wide in baking formats as we are in other countries”, but still offered a lot of possibilities.

In the UK, Canada Bread is a major bagel supplier. It operates two plants, one in Rotherham, south Yorkshire, and an ambient facility in Maidstone, Kent. “It’s a two-plant business with different niches, focused on bakery specialities,” said Servitje.

Referring to the entire Canada Bread acquisition, he said: “It was attractive because of its leading position and profitability. The Canadian economy is very sophisticated, stable and growing and we believe  that there are opportunities to run the supply chain in a more efficient manner.

“We believe there are synergies between the US bread plants and the ones in Canada in either lowering costs or adding products to other markets.”

He said the integration of Weston Foods in the US, following its $2.5bn (£1.5bn) acquisition of the company in 2009, was still “a work in progress”. “We envisioned a four to five year changeover of the manufacturing and distribution footprint,” he said.

“The two companies have the same footprint nationwide and we now have to streamline everything,” he said. “They have different distribution networks and we have to create simpler, more scalable distribution and that’s what we are doing.”

The two entities now had a common IT infrastructure, he said. “Now we’re getting into detailed restructuring, setting up a direct store delivery network … we’re happy with progress. It was a multi-programme and we’re executing on that, but we still have a couple of years to go.”

Its recent acquisitions had given it a more mixed portfolio, providing the foundation for “more risky ventures” where appropriate, said Servitje. However, the scale of recent ventures made other large deals unlikely in the short term, he said.

Referring to innovation plans, he said he believed single-serve foods were “not a very extensive offering” in the US and therefore could be developed further.

Separately, Grupo Bimbo’s expansion beyond North America into Mexico had been a necessary step to propel the company to the next stage of development, said Servitje. “We came to the realisation we would either become a North American play or we would end up being acquired, so we took a more aggressive stance that so far has been a good decision.”

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