Flowers Foods eyes M&A to expand beyond white bread

By Kacey Culliney contact

- Last updated on GMT

Flowers Foods CEO says growth strategy will focus on specialty breads and breakfast - a move beyond its better-known soft white bread business
Flowers Foods CEO says growth strategy will focus on specialty breads and breakfast - a move beyond its better-known soft white bread business

Related tags: Bread

Flowers Foods will expand business further beyond soft white bread to align with changing consumer preferences and growth opportunities, its CEO says.

The US bread major, best known for its Wonder, Nature’s Own and Home pride brands, registered a net profit of $61m for the first quarter of 2015 – up 0.5% on the previous year. Sales of branded soft variety breads in direct-store-delivery grew by just over 1% but overall sales dipped 0.7% to $1.146m.

Allen Shiver, president and CEO of Flowers Foods, said future growth would be driven by a shift into the breakfast and specialty bread segments; beyond regular soft white.

“As we grow, it’s important that we build a strong competitive position. In white and soft variety breads, we are strong in our core markets and we are growing in our expansion markets,”​ he told analysts in the company’s Q1 earnings call.

“In the other product categories, we are less developed and our focus is to grow sales – both organically and through acquisitions,”​ he said.

Asked by an analyst if Hostess was a potential acquisition target, Shiver said: “As we have said in the past, we look at all acquisition opportunities within the category and it really would not be appropriate for us to comment on Hostess at this point.”

This week, the New York Post suggested Hostess was taking initial bids with the view of a full sell-out.

Consumer changes

Shiver said Flowers would position itself to better align with changing consumer preferences.

CobblestoneBreadCompany

Investments in the Cobblestone Bread Company (CBC) brand, for example, would continue with breakfast items and NPD in breads set for this fall.

“The Cobblestone Bread Company offers an opportunity for us to develop products in categories where we traditionally have not been strong. Breakfast is a big opportunity for us; the specialty bread, wide pan bread category is a big opportunity; as well as some specialty buns and rolls.”

In addition, he said innovation teams would continue to develop nutritional bread varieties across the portfolio as it had done so with Nature’s Own by halving the ingredients deck.

“Our innovation team has been busy and we will soon be introducing several new bread varieties with nutritional attributes that are on-trend for today’s consumer.”

“…Beyond 2015, I see a long runway for growth – we have share gains in underdeveloped markets and we have opportunities to grow sales in underdeveloped categories,” ​Shiver said.

Related topics: Diversification, Bread, Manufacturers

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