- Flowers Foods, the maker of Nature's Own, Dave's Killer Bread, Wonder and Tastykake, said in a statement it is prioritizing the relevancy and expanding the presence of the company's valued brands.
- As part of a strategic update, Flowers also said it would look for M&A opportunities in grain-based foods.
- "Our long-term strategic plans are intended to position Flowers to drive growth, operate more efficiently and, ultimately, deliver enhanced shareholder value," Ryals McMullian, Flowers Foods president and CEO, said in a statement.
Flowers Foods has built a dominant position in the bread space, but despite the Georgia-based company's recent success, it is putting more momentum behind increasing the market position of its brands while adding to the fold products that fit with trendy categories in food.
This is the latest big announcement from Flowers in the last few weeks. Last month, Flowers announced organizational structure changes the company said would increase its focus on brand growth, product innovation and improving its cake business operations. As part of the move, Flowers said it would eliminate 250 jobs, or about 2.6%, of its 9,700 workforce.
Flowers' decision to place more weight behind value-added products and M&A follows a similar trend throughout the food and beverage space where companies are doing more to make their offerings stand out to the consumer — many of whom were doing more online shopping even before the pandemic — while bulking up through acquisitions that offer a higher-rate of growth beyond what they were doing on their own. PepsiCo, for example, increased its reach in energy drinks and carbonated water, Nestlé bulked up in coffees and Hershey expanded in portable, better-for-you snacks.
Flowers has grown through acquisitions, making it one of the largest producers of packaged bakery foods in the U.S. Last year, the CPG company had $4.1 billion in sales. The company has been relatively quiet in recent years after a series of deals, including Tastykake in 2011, Wonder Bread in 2013 and Dave's Killer Bread in 2015. At the end of 2018, Flowers Foods bought Canyon Bakehouse, a privately held gluten-free bread company. After the acquisition pause, it appears Flowers is ready to reengage in M&A with a focus on grain-based food. Shoppers are increasingly eating more whole grain foods because of its healthy attributes so it makes sense why Flowers would want to increase its presence in that area.
Flowers said Friday it forecast long-term sales growth of 1% to 2%, excluding M&A. Despite a favorable second quarter where Flowers' sales of $1.03 billion topped analyst forecasts "on the strong demand for our leading brands," its recent announcements indicate it realizes it needs to do more and insulate itself from growing competition from private label offerings and other competitors in the space.
By tailoring its portfolio to today's trends, Flowers will better position itself to grow and compete. Its stock has been largely range bound in the $20s during the last few years, and shareholders are likely clamoring for it to do more — or they could push it to become an acquisition target for someone else.