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2012 Power 50: No. 39 Daniel Servitje

Daniel Servitje continues — even in tough times — to expand his company.

Indeed, Grupo Bimbo’s name belies its size.

Bimbo, a shortened version of bambino — meaning small child —  certainly does not define the Mexico City-based company that Servitje, chief executive officer, has led since 1997. 

Grupo Bimbo describes its size and prominence on its website.

“Today, we are the most important baking company in the world on the basis of brand positioning, production volume and sales; we are also the undisputable leader in our field in Mexico, Latin America and the United States,” it states, noting the company’s presence in 19 countries and its 10,000 products and 103 brands.

Last fall, the U.S. Department of Justice approved Grupo Bimbo’s purchase of Sara Lee’s North American bakery business, a deal agreed upon more than a year ago, and the integration with Bimbo Bakeries USA, a division of Grupo Bimbo, went into high gear. Gross margins were squeezed, but Servitje and Bimbo Bakeries USA President Gary Prince told shareholders this spring that as the company integrates its information technology and implements new efficiencies in distribution, the picture will improve.

Servitje has pushed into new markets even when the economy is dim. Sometimes that’s a plus.

“When Grupo Bimbo bought Sara Lee’s bakery business, Sara Lee was not going gangbusters,” one industry source told SN.

Sara Lee had competed in some markets with Horsham, Pa.-based Bimbo Bakeries USA, which became the largest baking company in the U.S. when Servitje bought Weston Foods in 2009.

This spring, Servitje updated shareholders on the company’s transition.

“In terms of our performance this quarter, results were decidedly mixed with very strong volume growth in Mexico and Latin America on one hand, and on the other tighter margins than we are used to in the United States. Keep in mind that 2012 is a transition year for BBU [Bimbo Bakeries USA] as we execute our comprehensive integration plan of Sara Lee.”

Servitje also said United States sales were good, mostly attributable to the addition of Sara Lee.

“That said,” he continued, “higher raw material costs combined with a higher post-integration cost structure impacted gross margins this quarter.”

But, he told shareholders he was optimistic about the rest of the year and that after the transition “the brands and the wealth structure will be stronger as a result of this combination, definitely.”

Even as he concentrates on expanding his company, Servitje is noted for his social responsibility. In late 2011 Grupo Bimbo was awarded “Clean Transportation” recognition by Mexico’s Ministry of the Environment & Natural Resources, and last month, Servitje presented food security proposals at the G20 meeting in Mexico City.

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