Baking & Snack - July 2015 - 14

Big bucks and fresh bets

When Starbucks paid a "latte" money - $100 million in cash - for San
Francisco-based La Boulange retail bakeries and its Bay Bread wholesale
division three years ago, co-manufacturers for the coffee chain had reason
to "vente" and be nervous. Would Starbucks eventually begin to produce an
increasing number of its baked goods internally? Would the chain change
its menu and stop selling what its co-manufacturers offered altogether?
In June, Starbucks answered these questions by announcing it would
close all 23 La Boulange retail bakeries and the two manufacturing plants
that supported the retail locations. Simply put, Starbucks took a risk by
branching out of what it did best - selling coffee and beverages.
From a retail perspective, it can be a "tall" order to even take the relatively simple operational concept of selling coffee and grab-and-go foods
and complicate it by adding breakfast sandwiches and more. However,
Starbucks seems to have raised the level of difficulty even more by going
from a mainly co-manufacturing-based supply model for its food to bringing much of the production in-house.
As every baker knows, selling baked goods is one thing. Making them is
totally another.
Starbucks maintains it still has a "grande" goal to grow its food business
and deliver an incremental $2 billion in the next five years, but perhaps
there's a lesson to be learned. In some cases, maybe it's best to let the experts - in this case, co-manufacturers - handle the production aspects
and stick with what the chain does best: selling its signature beverages along
with high-quality baked goods supplied by others.
Overall, co-manufacturing is a big part of the baking and snack industries - and it allows companies to extend their brands beyond their core
businesses, as Senior Editor Charlotte Atchley reports on Page 21. In fact, it
recently allowed Hostess Brands to branch out from selling sweet goods and
venture into the bread and bun category.
After seeing reports on bakingbusiness.com, we found Hostess white
bread and buns selling for $2.99 and the whole wheat for $3.29 at a local
Walgreens in Chicagoland. OK, maybe that's just the price for convenience
in this channel.
But what caught our eyes were the sell-by dates. The loaf of white
bread bought on June 18 had a July 31 date. The package of hot
dog buns listed Aug. 6. Milling & Baking News reported up to a
60-day shelf life for those products.
Typically, most people who shop in drug stores don't look
at sell-by dates - and in most cases, the products are eaten
by the time they expire. But then there's this message from
the company on the back of the packages: "We're proud to
extend our rich heritage of baking delicious, wholesome products with this new assortment of fresh bakery bread."
Ultimately, freshness is defined by the consumer.
- Dan Malovany, editorial director
dmalovany@sosland.com

14 Baking & Snack July 2015 / www.bakingandsnack.com

EDITORIAL STAFF
Editorial Director
Dan Malovany
dmalovany@sosland.com
Executive Editor
Laurie Gorton
lgorton@sosland.com
Editor/Managing Editor
Joanie Spencer
jspencer@sosland.com
Senior Editor

Charlotte Atchley
catchley@sosland.com

Assistant Editor

Ryan Atkinson
ratkinson@sosland.com
Contributing Editors:
Donna Berry
donnaberry@dairy-food.com
Theresa Cogswell
bakercogs@sbcglobal.net
Jim Kline
jkline@theensolgroup.com
Joe Stout
joe.stout@cf-san.com
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Associate Design
Services Manager
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Designer
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Classified Ad Layout
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G. Michael Gude
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Vice-President,
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Melanie Hepperly
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Baking & Snack - July 2015

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