IW 50 Best -- Growing the Flowers Way

IW 50 Best -- Growing the Flowers Way

Thanks to its proven business model, sales and earnings have blossomed at Flowers Foods.

"If it ain't broke, don't fix it," the old adage goes. Flowers Foods Inc., which debuted on the IndustryWeek 50 Best Manufacturing Companies list in 2010, is a classic example of that adage in action.

The Thomasville, Ga.-based producer of packaged bakery goods, which serves retail and foodservice customers in the Southeast, Southwest and mid-Atlantic regions of the United States, has become a model of consistency by staying true to its core business principles: driving sales and profitability through innovation, acquisitions, strong brands and operational efficiency.

"Our operating strategies are right and our business model is sound," declared Chairman and CEO George Deese and President Allen Shiver in the company's 2009 annual report. "Flowers Foods has staying power because we have invested in bakeries, products, brands, technology, distribution systems and our team."

The company "exited 2009 better positioned than we entered it," Deese and Shiver noted in the annual report. In fiscal year 2009, Flowers Foods posted revenues of $2.6 billion, a 7.7% increase over 2008; net income of $130.3 million, a 9.3% increase over 2008; and earnings per share of $1.41, up from $1.28 in 2008.

"Were one of the few bakers that are investing significant capital back into the business and building new greenfield plants."
Allen Shiver, President, Flowers Foods
In 2009, new-product launches such as Nature's Own whole-grain bread and Nature's Own sandwich rounds helped Flowers Foods grow its top line in the midst of a troubled retail environment. The company increased its new-product sales by nearly 5% in 2009, compared with less than 4% annual new-product sales growth during the past few years, according to the company's internal data. Flowers Foods sold nearly 3 million loaves of Nature's Own whole-grain bread in the first three months of its introduction, according to Shiver. Citing data from the market research firm SymphonyIRI Group (IRI), Shiver points out that Nature's Own whole-grain bread ranked as the No. 1 new-brand UPC in the IRI South market for the 12 weeks ending June 13.

"It's a little bit sweeter and a little bit softer than our 100% whole-wheat bread, and I think consumers are attracted to the 12 grams per serving of whole grain and the 2 grams per serving of dietary fiber," Shiver tells IndustryWeek.

Through acquisitions in recent years -- including two in 2009 -- Flowers Foods has extended its sales territory, entered new product categories and added production capacity near expanding markets. The company estimates that the eight acquisitions made from 2004 through 2009 have added 50.3 million people and $94 million in annual sales to its direct-store-delivery (DSD) territory. (DSD sales accounted for $2.14 billion of the company's overall revenues in 2009.)

Most recently, Flowers acquired Fort Worth, Texas-based Leo's Foods Inc., which makes tortillas and tortilla chips for foodservice and institutional customers. Flowers hopes the acquisition, which took place in October 2009, will help the company build on its 2.4% share of tortilla sales in the IRI South market. (By comparison, Flowers is the South market-share leader in the soft variety bread category, at 43% of the market).

Aiming to be the most efficient, low-cost producer of bakery goods is another of Flowers' longtime strategies. In 2009, Flowers opened a $52 million, 197,000-square-foot bakery in Bardstown, Ky., which boasts a high-speed bread line and bun line. The bun line features the largest single dough divider line in the country and can produce up to 1,200 buns per minute, according to the company.

"We're one of the few bakers that are investing significant capital back into the business and building new greenfield plants," Shiver asserts.

In addition to "sophisticated energy-monitoring systems" and a cross-trained workforce, the Bardstown facility boosts efficiency in another key way, Shiver adds. By locating production closer to customers in Kentucky, Ohio, Indiana and other nearby states, the plant will save Flowers approximately 2 million transportation miles annually compared with Flowers facilities that previously served those markets.

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