Flowers Foods reports ‘record year’ thanks to Hostess

By Kacey Culliney

- Last updated on GMT

Related tags Supply and demand Hostess brands

Flowers Foods CEO said it had gained volume share after Hostess exited the market in 2012 and the acquisition of its bread brands would propel the company forward in the coming year
Flowers Foods CEO said it had gained volume share after Hostess exited the market in 2012 and the acquisition of its bread brands would propel the company forward in the coming year
Flowers Foods has reported record sales for fiscal 2013, propelled by volume gains from the exit of rival Hostess in late 2012 and the acquisition of its bread brands, its CEO says.

The US bakery major pulled in net sales of $192.3m for fiscal 2013, up from $142.4m the previous year. Total sales were $3.75bn for the year, up 23.1% from fiscal 2012.

“2013 was a record year for Flowers. In the first half of year we benefited from significant volume increases because of Hostess exit from market in late 2012,”​ said Allen L. Shiver, president and CEO of Flowers Foods in the company’s full year analyst earnings call.

Hostess Brands went bust in November 2012 and sold of all of its assets over the course of 2013. Flowers Foods paid out $360m for the majority of Hostess' bread business in July, 2013​.

The reintroduction of Hostess bread brands​ Wonder, Home Pride, Merita and Butternut, were also a highlight of the final quarter and overall fiscal year, he said. All four brands combined totted up sales of $22.8m in Q4. Shiver said that the brands had gained a 3.2 dollar share of the US white loaf sector since being reintroduced.

Wonder is now in the top 10 white packaged bread brands across the US, he said, and Butternut white bread is number two in the Cincinnati market.

“It is very important to note that we are gaining incremental sales with the acquired brands,”​ he said.

“In the south market, our most mature market, Flowers’ legacy brands gained significant share before we launched the Hostess brand, but the most incremental gain, as we expected, has come in our newer markets. Adding Wonder, Home Pride, Merita and Butternut has strengthened our brand offering because consumers know and trust those well-known brands.”

Hostess production facilities – second to open in spring

Shiver said that the opening of the ex-Hostess production facility in Henderson, Nevada​ back in November, 2013 had been successful, with production now set to serve the Californian market with Nature’s Own.

Flowers will reopen a second Hostess plant within a few months, he added.

“We are carefully reviewing the business [Hostess] and considering the best use of the assets – gaining a clear view of market demand for the capacity that will be needed.”

Expanding and growing further

Shiver said that while 2013 had been a very strong year for Flowers, it had been built up from earlier strengths.

“With the recent acquisition of Lepage​, Sara Lee California​ and Hostess, combined with volume growth following Hostess’ exit from market, sales are up almost one billion dollars in two years,”​ he said.

Growth has been phenomenal, he said, and this should continue into fiscal 2014.

Flowers will work on strengthening infrastructure to boost traction in newer markets – those outside the southern region of North America, he said.

“We’re going to be developing those markets and the acquisition of the Hostess brands will really help us do that. Geographically, some of the bakeries sitting idle are positioned in really key markets and as consumer demand grows we’ll talk more about reopening those,”​ Shiver said.

Flowers will also continue to improve traction in the southern, more developed markets, he added.

“We have the brands, the bakeries and most importantly the team to get the job done.”

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1 comment

Glad to see that Flowers did not buy Canada Bread

Posted by Cullen Williams,

Flowers has the brands and the plants available to make their footprint so much stronger in the USA without looking outside the country and taking on more debt, The Flowers Way is what has gotten them 79% of the US market and they need to use these assets plus building new plants to stay the low cost producer they are today in this country until they cover the USA in all areas they have Tastykake that is fresher and will one day be the number one snack food in the country just like Nature's Own is the number brand of fresh

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