Baking & Snack - February 2010 - 35

RESEARCH AND STATISTICS

ity is also reflective of a particular
company's balance
sheets and ratios;
we just launched
a new product line
with no problem.
There is plenty of
money to lend, but
your business has
to be healthy to get
a loan. Compared
to all other industries, the baking
industry is in a
healthy position."
Messrs. Watson and Khoury
were cautiously
optimistic about
the coming year.
"Top-line growth
is difficult with
the focus on improved margins and earnings," said the
vice-president of engineering international and bakery
technology at Campbell Soup Co. "Capital investment
targeted at productivity and cost-reduction programs is
driving capital plans."
Customs Foods' president noted, "Regarding Custom
Foods specifically, we're putting in some equipment in
2010, whereas, we didn't do that in 2009. We're adding
production capacity. As an industry, I think companies
are apprehensive to spend because everyone is shellshocked from the past few years. Everyone is being conservative. But I think as the economy improves, purses
will loosen and spending will happen if only to replace
equipment or put money back in companies to make
them profitable."
When asked about mid-range and higher projects,
Ms. Harrington, noted Tennessee Bun added a new
biscuit line in 2009 and plans to add another line this
year. Prior to that, it had muffin, hearth bread and highspeed bun lines along with an English muffin griddle
line, frozen dough line and now a biscuit line. "We hope
to add an additional line this year," she said. "We just
started the biscuit line in late 2009. We also completely
upgraded our mixer system at Nashville Bun this past
year. Additional conveyers and packaging will also be
added in 2010."
Custom Foods is adding a production line to its operation. "It's very competitive out there in terms of keeping current customers and picking up new ones," Mr.
Khoury said. "It's the most competitive time I've seen in
years with customers looking to save money wherever

"I absolutely
believe that
sustainability
is woven into
every decision
we, and other
manufacturers,
make every day."

- Cordia Harrington,
Tennessee Bun

BAKING & SNACK / February 2010

they can. I don't know if it's the same for other companies, but if you want to pick up customers as they're looking to save money where they can, you need to spend
money to gain these new customers. We're adding production capacity to bring on new customers."
Ms. Bayles stated, "Unless there's a pretty good return
on a project, it probably won't get done. It's a difficult climate to get money. So only companies in that 'well positioned' status will continue to cautiously invest."
Ellison is in a unique position. "We had a relationship with a national brand that claimed bankruptcy a
year ago and thus freed us up to expand our operation
now," Mr. Sparks said. "Specifically, there will be big
expenses for us to accomplish our goals. We're expanding capacity within existing facilities. Several years ago,
we expanded our facility in size quite a bit but didn't
actually use the space. Now we are expanding capacity
inside our current footprint."
SECTOR OR STRUCTURE. We asked members of
our industry panel where they see spending being directed this year, whether in a specific sector, action or
operational area. Mr. Watson quickly pointed to the
OSHA-led phase out of R-22 and other ozone-depleting refrigerants that begins this year. Ms. Harrington
noted packaging as an area for spending capital. "From
an industry perspective, someone needs to figure out a
different way to package than delivering with bakers'
trays. We then have to come back to our customers to
pick up the trays, take them back to our facilities and
wash them before going through the same process all
over again," she said. "Corrugated trays aren't an environmentally friendly alternative, but some different
packaging and delivery system is needed to both retail
and wholesale customers. There has to be a better way.
These trays are labor intensive. I don't know what we
need to do, but there's an opportunity there."
With an ever-increasing number of sophisticated consumers, Ms. Bayles sees healthy bread products that meet
consumer trends as a growth area. "What I call familyfriendly whole grains will remain popular as long as they
still taste good, are soft and convey value. Consumers
have high demands and expectations in taste, nutrition
and value," she said.
Ms. Harrington mentioned flat breads and wraps.
"Those areas have real growth potential. I think tortillas
are still growing really well," she said.
The drive for new customers is a recurring theme,
and capital outlay is an important factor to consider.
Mr. Sparks sees saw a lot of growth opportunities. But
unless companies learn how to innovate they'll miss
growth opportunities, he said. "By innovate I mean
truly creating something new and different that consumers haven't seen before. I am referring both in

Baking & Snack - February 2010

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