Sightings of the fluffy white bear that adorns packages of Bimbo-brand bread are becoming more common in U.S. supermarkets. But while the bear may not yet be the star here that he is in Central and South America, chances are most U.S. consumers have sampled something made by one of Grupo Bimbo's bakeries during the past year.
Since becoming chief executive officer of Grupo Bimbo in 1997, Daniel Servitje has continued to grow the company his father Lorenzo co-founded in Mexico City 65 years ago. And, much of that growth has come from acquisitions north of the border. In 1998, the company acquired Mrs. Baird's in Texas. In 2002, Grupo Bimbo bought the U.S. Western Division of George Weston, a deal that included the Oroweat brand, as well as distribution rights for Entenmann's, Thomas' and Boboli. In 2009, they bought Weston Foods outright, making Horsham, Pa.-based Bimbo Bakeries USA the largest baking company in the United States.
“This transaction is the most important in Grupo Bimbo's history and one of the largest in the bread industry,” Servitje said in an announcement at the time. “Size alone, however, is not our main objective. Rather, our vision is to become the best baking company and we furthered that goal today by demonstrating a commitment and dedication to serving our consumers and customers.”
Like many suppliers, Grupo Bimbo faced several challenges in 2010. Shoppers were spending less, wheat costs were on the rise, a stronger valuation of the Mexican peso impacted the company's dollar-denominated sales, and natural disasters in southeastern Mexico, Chile and Mexicali impacted the company's production facilities, Servitje wrote in a letter to shareholders. Fortunately, it was still the second-best year in the company's history, after 2009.
And still, Servitje continues building. In November, Grupo Bimbo reached an agreement to buy Sara Lee's North American bakery business for $959 million.
“Along with a family of iconic brands, Sara Lee represents a significant opportunity to strengthen our U.S. operations, which will now generate approximately half of the [U.S.] Group's sales,” Servitje wrote. “The combined businesses are highly complementary in terms of product lines and geographic footprint, and will provide us with a true nationwide manufacturing and distribution platform.”
The company plans to invest more than $1 billion during the next five years to integrate Sara Lee's bakery business into Bimbo Bakeries USA. Servitje cautioned shareholders that synergies between the units might not be evident until 2013, with “gradual but important improvement in operating results thereafter.”
In the meantime, the company's Bimbo bread brand has a promising future as its rollout into mainstream U.S. supermarkets continues. As an already iconic product throughout Latin America, the brand will immediately appeal to many Hispanic and Latino shoppers.