Milling & Baking News - September 24, 2019 - 13

Business

Flowers Foods contending with
cost inflation in many areas
BOSTON - Ingredients and packaging, production labor, and shipping and transportation costs have
increased significantly, leading companies such as Flowers Foods, Inc.
to take actions to mitigate them with
a variety of initiatives, from strategic pricing to portfolio and network
optimization.
"Across the supply chain, the cost of
doing business is accelerating above
and beyond sales growth to date,"
R. Steve Kinsey, chief financial officer and chief administrative officer
at Flowers Foods, said during a Sept.
4 presentation at the Barclays Global
Consumer Staples Conference in Boston. "We are pleased that the focus
we put on cutting cost in our indirect
spend and overhead structure have all
set inflation in those areas and provide
a leverage to our top-line growth."
A. Ryals McMullian, president and
chief executive officer, said labor inflation and the labor turnover issue are
a "pretty big headwind" for Thomasville, Ga.-based Flowers, but added
that the company doesn't look at it in
terms of pure wage inflation. He noted

that Flowers' wage inflation is pretty
much in check. Instead, the real driver
of the labor issue for Flowers is the inefficiency that turnover creates.
"In a very tight labor market like
we have, we're experiencing more
turnover than we normally have,"
Mr. McMullian said. "You then incur training and retraining costs, as

in some areas it's a bit of a revolving
door there, creates inefficiencies in
the plant, and every point of efficiency that we gain is very, very meaningful on our bottom line....
"That term 'efficiency' rolls up a
lot of things, including labor cost per
pound for us, scrap cost and the stuff
that we throw away, that sort of thing.
So every incremental point that we
can get from an efficiency standpoint
is very meaningful to the bottom line."
Mr. McMullian said Flowers' strategy is to attack the labor issue from a
variety of angles.
"The quality of life aspects of a job

at Flowers do need some improvement," he explained. "We traditionally operate on a production schedule
where most folks don't have consecutive days off. They're working 12-hour
shifts. And particularly in a tight labor
market like this, there's just - folks
have a lot of options. And ... we're
going to have to move Flowers closer
to today's workforce, not trying to
draw them closer into our old ways
of working, so modernizing our benefit programs. Our pay tends to be
pretty competitive. So that's not really
the issue. It's really more around the
quality of life aspects. If we can get
that corrected, get the right scheduling, get the turnover stabilized, see the
efficiencies come up, we'll see a lot of
impact on the bottom line."
Mr. Kinsey agreed, saying it's
all about driving efficiencies in the
bakery.
"I mean we are a scale business,"
he said. "So when you start impacting labor and you have this kind of
revolving door turnover, you do see
significant drops in efficiency. And
we're down about 250 basis points
from where we were about a year
ago. So you can see that's been a
tremendous impact on our overall
gross margin." MBN

Grains and Inputs.
Agrofel's business focuses on
15,000 farmers supported by 38 units,
including warehouses and stores,
with a combined capacity of 450,000
tonnes and 470 employees. Founded
in Palmeira das Missões, Rio Grande
do Sul, Agrofuel works with seeds,
fertilizers, plant nutrition, pesticides,
receiving, buying, selling, exchanging and storing grain.
"Combining Agrofel's broad relationship and expertise with local producers with our logistical management and existing origination capacity in Brazil is ideal for us to increase
our origination capillarity in one of
the most relevant soybean growing
states," said Raúl Padilla, president
of Bunge Global Operations.
Bunge said the deal is a part of its
strategy to strengthen its grain foothold in Brazil. Agrofuel operations

bakingbusiness.com / world-grain.com

"We share the same values and
principles focused on ethics and
sustainable production and believe

that this transaction maximizes
opportunities for both companies
to expand their operations in Rio
Grande do Sul," said Wilson Ferrarin, chairman of the board of Agrofel. "Bunge has experience in risk
management and complete logistics
capacity and relying on this expertise puts us on another level in the
country's grain market." MBN

CHICAGO - Simple Mills is expanding its
portfolio with the launch of Simple Mills Soft
Baked Almond Flour Bars. The bars are available in four varieties: dark chocolate almond,
chunky peanut butter, nutty banana bread and
spiced carrot cake.
The bars feature nut flour blend as the No.
1 ingredient and
are sweetened with
honey and molasses. Simple Mills
said the bars are free
of grains, dairy, soy,
corn, cane sugar and
high-fructose corn
syrup. The bars also
are certified glutenfree and non-G.M.O.
The bars will be available at Whole Foods,
Sprouts, Natural Grocers, Amazon, Thrive
Market and other grocers for a suggested retail
price of $5.99 for a five-count box.
In addition to bars, Simple Mills offers baking mixes, crackers and cookies. MBN
Milling & Baking News

September 24, 2019 / 13

SIMPLE MILLS

Bunge secures stake in Brazilian Simple Mills
grain-sourcing business
launches almond
SÃO PAULO, BRAZIL - Bunge is includes sourcing more than one
acquiring a 30% stake in a Brazilian million tonnes of grain annually, inflour bars
grain-sourcing business, Agrofel cluding soybeans, corn and wheat.

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - September 24, 2019

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