Bimbo Bakeries USA
– Mrs. Baird’s Bread
Strategic Business Design
Final Presentation – 03/30/07
University of Texas at Dallas
School of Management
Executive MBA Program
Team: Mike Fowler, Sidney Hopper, Srini Kaarlapudi,
Dan Lawson, Renée Underwood
Agenda

Client Background

Engagement
Overview

Analysis

Recommendations

Q&A
2
Bimbo Bakeries USA - History
History
Grupo Bimbo first began US operations with the acquisition of
Orbit Finer Foods in Oklahoma in 1994. Major US expansion
came about in 1998 when Grupo Bimbo purchased Mrs
Bairds Baking Company- the premier baking company in
Texas. Then in 2002, Bimbo purchased the Western US
operations from George Weston Ltd. The Weston purchase
included the exclusive ownership/distribution rights for top
selling brands including Oroweat, Thomas, Entenmann’s, and
Francisco.
Basic Geographic split with George Weston.
Financial and Operating Highlights For Bimbo Bakeries USA
Annual Revenue for 2005 = $1.23 Billion
Number of Routes = 3140 (+/-due to seasonality)
Number of Employees = Over 7300
Bimbo Bakeries USA represents 24% of Grupo Bimbo’s total sales.
3
US Product Portfolio- Bread
Oroweat – Bread Perfected
Oroweat is the number one selling brand of bread in the West. Oroweat participates in the
Variety Sliced, Traditional Sliced, Rolls, Buns, and English Muffin segments of the Bread
Category. (Oroweat represents 27.3% of total BBU sales)
Francisco International – Make Everyday a Little Special.
Francisco is the number one selling French bread brand in the United States. Francisco has
representation in French Bread, French Rolls, and Buns. (4.7% of sales)
Mrs Baird’s – Baked with Pride Since 1908.
Mrs Bairds is the number one selling brand of bread in Texas. Centered in Texas but with
distribution to many Southern states; Mrs Bairds produces Traditional Sliced bread, Rolls,
and Buns. (13.0% of sales)
Thomas – the Original “Nooks and Crannies” English Muffin.
Thomas is the number one selling brand of bread products in the United States. Thomas is
number one in English Muffin sales and number two in Bagel sales in the Western portion of
the US. (7.7% of sales)
Other Notable BBU-distributed bread brands:
4
Engagement Team

Mrs. Baird’s

Bryant Bradanini: Category Manager-Texas

Jack French: VP – Sales Operations (Texas)

Pete Guido: Director of Customer Development –
Texas

Don Perkins: Director of Independent Operator
Services
5
Engagement Overview – Objectives


Analysis Phase:

Identify Mrs. Baird’s current, strategic business design; and

Evaluate this design in terms of the Profit Zone’s “Dimensions of
Business Design”:

Customer selection

Value capture

Differentiation/Strategic Control

Scope
Recommendation Phase:

Complete further analysis, interviewing, and creative thinking

Develop a set of logical, defendable, and feasible recommendations for
Mrs. Baird’s to maximize profit zone impact.
6
Engagement Overview – Scope

Bimbo Bakeries USA

Mrs. Baird’s Bread

Retail Channels

Texas
7
Engagement Overview – Methodology


Profit Zone Identification – Facilitated Working Session
Analysis Phase




Recommendations



Interviews
Surveys
Site Visits
Brainstorming
Research
Governance



Task Register
Client Meetings
Status Reporting
8
Active Task s
Task Status Legend
Work in process, no delays expected, deadline is committed
Green
Red
Work on hold pending resolution of barriers; Deadline missed
Work in process, delays encountered, deadline is questionable
Yellow
Blue
Task completed
Target
Status
No.
Task
Ow ner(s)
Comments & Actions Taken
1
Confirm client and set up engagement kick-off
SH
2-Nov-06
Blue
2
Develop and finalize engagement plan
DL
10-Nov-06
Blue
Review ed on 11/08/06 Team Call
3
Set up w orking session w ith MBB
SH
14-Nov-06
Blue
Meeting booked for 11/30; postponed to 12/06 due to w eather
4
Develop and submit status report to Jasper
DL
25-Nov-06
Blue
Complete 11/21
5
Complete status review call w ith Jasper
Team
5-Dec-06
Blue
6
Prep materials for MBB on-site meeting
DL
6-Dec-06
Blue
7
Meet w ith MBB to review plan and analyze profit zones
Team
6-Dec-06
Blue
8
9
Schedule w orking session follow ing MBB meeting
Update Task Register follow ing review w ith MBB
DL
DL
14-Dec-06
14-Dec-06
Blue
10 Complete Analysis using the "Four Elements" templates
Team
27-Jan-07
Blue
Assignments:
11
- Develop tailored analysis questions
Team
2-Jan-07
Blue
- Grocery Analysis (RU / SH)
12
- Identify and contact Key Account Managers
Team - DL
2-Jan-07
Blue
- Club Analysis (MF / SK)
13
- Complete Analysis
Team
22-Jan-07
Blue
- Convenience Analysis (SK / MF)
14
- Review Analysis results
Team
23-Jan-07
Blue
- Segment Analysis (Hispanic, Health Focused) - (RU / DL)
15 Analysis Status Review
Team
16 Book Analysis Review Session at MBB
17 Finalize Analysis results and prep for review session
DL
Team - DL
18 Analysis Review Session at MBB w ith Plant Tour
Team
19
- Review Analysis and capture feedback
Team
20
- Brainstorm recommendations
Team
21
- Define requirements, actions and assign task ow ners
Team
Blue
9-Jan-07
Blue
Review on Jan 9 and 16 team calls
10-Jan-07
27-Jan-07
Blue
Target 02/01/07 (Thursday preceding class w eekend)
1-Feb-07
Blue
Prep on 01/30/07 Team call
Blue
22 Recommendations Status Review
Team
13-Feb-07
Blue
Via telephone - could also cover on Feb 6 Team call
23 Book Recommendations Review Session & Presentation
DL
20-Feb-06
Blue
At MBB or via conference call
24 Recommendations Working Session
Team
15-Feb-06
Blue
Thursday preceding class
25 Complete development of recommendations
Team
25-Feb-07
Blue
Review on Tuesday 2/27 Call
26 Recommendations Review Session w ith MBB
Team
1-Mar-07
Blue
Conference Call?
27 Complete any additional w ork on recommendations
Team
8-Mar-07
Blue
28 Develop Final Presentation
DL - Team
10-Mar-07
Blue
29 Dry Run Final Presentation
Team
13-Mar-07
Blue
30 Presentation meeting at MBB
Team
15-Mar-07
Blue
31 Update Presentation for class
DL
24-Mar-07
Blue
32 Dry Run Final Presentation for class
Team
29-Mar-07
Blue
33 Present to class
Team
30-Mar-07
Blue
Thursday preceding class w eekend
Thursday preceding class w eekend
9
Analysis
Fit / Alignment with Mrs. Baird's Today
Profit Model
Strong
Moderate Marginal
None
1. Customer Solutions Profit
2. Product Pyramid Profit
3. Multi-component Profit
4. Switchboard Profit
5. Time Profit
6. Blockbuster Profit
7. Profit-Multiplier Model
8. Entrepreneurial Profit
17. Cycle Profit
18. After-Sale Profit
19. New Product Profit
20. Relative Market Share Profit
21. Experience Curve Profit
22. Low-Cost Business Design Profit
11
22 Profit-centric Business
Designs: Explain How Profits Happen
1. Customer Solutions Profit
2. Product Pyramid Profit
12. Brand Profit


13. Specialty Product Profit
3. Multi-component Profit 
14. Local Leadership Profit 
4. Switchboard Profit
15. Transaction Scale Profit
5. Time Profit
16. Value Chain Position Profit
6. Blockbuster Profit
17. Cycle Profit
7. Profit-Multiplier Model 
18. After-Sale Profit
8. Entrepreneurial Profit
19. New Product Profit 
9. Specialization Profit
20. Relative Market Share Profit   
10. Installed Base Profit
21. Experience Curve Profit
11. De Facto Standard Profit
22. Low-Cost Business Design Profit
   = Strong Alignment
  = Moderate
 = Marginal
12
Analysis
Dimension
Key Issue
Key Questions
1. Customer
Selection
Which
customers do I
want to serve?
• To which customers can I add real value?
• Which customers will allow me to profit?
• Which customers do I not want to serve?
2. Value Capture
How do I make
a profit?
• How do I capture, as profit, a portion of the value I created
for customers?
• What is my profit model?
3. Differentiation /
Strategic
Control
How do I
protect my profit
stream?
• Why do my chosen customers buy from me?
• What makes my value proposition unique/differentiated vs.
other competitors'?
• What strategic control points can counter-balance customer
or competitor power?
4. Scope
What activities
do I perform?
• What products, services, & solutions do I want to sell?
• Which activities or functions do I want to perform in-house?
• Which ones do I want to subcontract, outsource, or work
with a business partner to provide?
These must be aligned with the customers’ most important priorities.
13
Analysis – Approach

Grocery



Key Account Manager
Interviews – United
Supermarkets,
Basha’s, Brookshire
Brothers
Club

Site Visit

Internet Research

Convenience

Site Visit

Interviews with
Managers
Consumer

Consumer Survey –
SurveyMonkey.com

Convenience Store
Customer Interviews
…four, face-to-face client visits
14
Grocery – Key Account Managers

Interview Questions:

In what areas does BBU excel?

In what areas does it need to improve?

What ideas from other suppliers in the bread and
snack cake categories should BBU adopt?

What ideas from suppliers in other categories should
BBU adopt?

In what ways can the relationships with independent
operators be improved to meet your needs?

Is BBU’s product portfolio meeting your needs?
15
Market Feedback – Grocery: Strengths

Brand Name

Recipe Integrity

Professionalism

Commitment to the retailer and the category

Product Knowledge

Product Variety

Quality of managing a retailer’s private label
program
16
Market Feedback – Grocery:
Weaknesses

Independent Operator /
Operational myopia

Product management
disconnects

Communication disconnects
between HQ reps to Field reps

Response to slow moving
products

Tactically focused

Product gaps

Missed sales due to Out of
Stocks


Lack competitive tools
Other CPGs are more
aggressive (promotions) and
proactive (weekly sales plan)

Competitive disparity

Sales rep turnover

Decision making

Incongruent linking / unlinking
of products

New product introduction

Too many SKUs

Slow to innovate
17
Market Feedback – Grocery:
Opportunities

Scan based trading

Alliances with other product lines, health organizations

To be more promotion oriented


Cross promotions involving discounts on fresh deli or packaged
meats, or jams or spreads

More large-scale promotional activities

More promotions on more products e.g. Oroweat, white bread,
Boboli, Entenmann’s, Snack cakes

Co-op funding and promotional signage for in-store deli and food
service operations that promote sandwiches or breakfast items
featuring BBU products.

Co-op participation in retailer magazines, such as “Fresh is Best.”
Region specific product mix
18
Market Feedback – Grocery:
Opportunities
continued

Product innovations

Whole grain white bread

Healthier snack items (no
trans fats, sugar free, 100
calorie packs, etc.). The focus
has been on providing a 3/$1
snack as opposed to
innovating with Smart Snacks.

Gluten Free Bread under the
Oroweat label

Line extension – frozen bread
items

Product innovations (continued)


Ability for retailers to receive
specialty lines, such as Weight
Watchers breads, through
regular BBU channels.
Packaging innovations


They don’t refresh or update
their labels often enough. FritoLay is a good example of a
brand that does.
Eye appeal of their packaging
gets boring and stale.
19
Consumer Preference Survey
In January and February 2007, an online SurveyMonkey survey was completed
by 78 respondents to assess their willingness to purchase product lines that are
more profitable for BBU. The following slides recap those responses.
20
Grocery Shopping
Habits
Grocery Shopping
Habits
I am not overly concerned about health. I buy what
tastes good.
I buy the least expensive brand regardless of
ingredients
I select healthier options for my children.
Someone in my family has a health condition that
affects my choices.
I will pay more for organic or health-conscious
products.
I carefully read labels in order to reduce fat, calories,
sugar, increase fiber, etc.
0
5
10
15
20
25
30
35
40
45
21
Size of Household
Size of Household
7+
5 to 6
3 to 4
2
1
0
5
10
15
20
25
30
35
40
45
22
Type of Household
Type of Household
Has no children or seniors
in the household.
Includes 65+.
Includes children 13-18.
Includes children 12 and
under.
0
5
10
15
20
25
30
35
23
Level of Education
Level of Education
Graduate degree
Graduate coursework
Undergraduate degree
Attended college
High school diploma or
GED
Attended high school
0
5
10
15
20
25
24
How IBread
Purchase Bread
How I purchase
I purchase a wide variety of
bread products in various
departments throughout
the store.
I purchase bread in the
frozen food cases.
I choose packaged bread
items from the main
grocery aisles.
I choose bread items from
the in-store bakery.
0
5
10
15
20
25
30
35
40
45
50
25
Frequency Frequency
of Purchase
of Puchase of Bread Items
Gluten free bread
Sugar free bread
Snack cakes such as donuts honey buns fried pies
Brow n and serve dinner rolls
English muffins
Vitamin enriched bread
Bagels
Hamburger or hot dog buns
White bread
Tortillas
Wheat bread
Whole grain bread
0
0.5
1
1.5
2
2.5
3
26
Brand Purchsed
Most Often
Brand Purchased
Most
Often
Other (please specify)
I have no preferred brand.
Store Brand
Sara Lee
Mrs. Baird's
Oroweat
0
5
10
15
20
25
27
Consumer Preference Survey
Potential Products That Mrs. Baird’s Might Offer
and Their Appeal To Consumers
Definitely
would
buy
Probably
would
buy
Might or
might not
buy
Definitely
would
not buy
Response
Total
Oroweat gluten free bread
1
10
24
34
69
Mrs. Baird's frozen dinner or breakfast rolls
5
17
31
16
69
Thaw and bake Mrs. Baird's white or wheat yeast
bread
5
20
26
19
70
Weight Watchers brand bread baked in a plant close
to my home
6
15
18
33
72
Mrs. Baird's snack items with reduced sugar or fat
3
15
28
25
71
Sandwiches in delis or restaurants made with
Oroweat bread
5
26
30
8
69
Discounted or free bread when I purchase deli meat
or cheese items
14
22
23
10
69
Discounted or free bread when I purchase jams or
jellies
8
17
28
17
70
Item score > = 16
Bold Red = High scores in column
28
Consumer Preference Survey

Takeaways from the Consumer Study


Clearly consumers are shifting to healthier product options and
are more concerned about quality and ingredients than price in
those items.
Coupled with feedback from grocery retailers, there appear to be
opportunities for





Easy-to-understand packaging
Product innovations in gluten-free, sugar free, whole grain white
bread
Taking the lead in helping consumers understand whole grain,
how many grains are enough, etc.
More healthy innovations in the frequently purchased tortilla
category
Healthier snack options for kids
29
Convenience Stores


Consumer Interview Details:

2 Stores: Addison and Denton

Total number of people
Interviewed: 53

Female: 27

Male: 26
Interview Questions:

How often do you shop at a
convenience store?

What brand of bread do you buy?
Why?

What type of bread do you buy?

Is the brand of bread important?

Where do you purchase bread?

What other bakery items do you
buy?
30
Convenience Stores – Findings









Convenience shoppers prefer healthier and lower calorie bread
Very small percentage (4.2%) of people interviewed shop for bread at
convenience stores
Usually only a single brand is carried at the convenience stores, which
means no competition.
The majority are not aware about the availability of bread at convenience
stores.
Bread is not displayed in highly visible areas of the store.
Convenience channel shoppers preferred salty snacks over bakery items,
including donuts and cupcakes.
Majority have no brand preference for bread
Consumers are willing to pay more for bread at convenience stores;
however, not a lot more.
Team identified many opportunities for increasing sales in this channel
(signs at fuel pumps, incremental displays near checkout and signs
promoting bread and snack products.)
31
Site Visit – Sam’s Club
 The
prices on BBU items were
better than Sara Lee products.
 Racks
of both brands appeared
about equally stocked / shopped.
 Snack
items: Cloverhill, Duchess
and Otis Spunkmeyer seemed to
have the lion’s share of presence
with club packs of muffins
(assorted flavors), honey buns,
powdered donuts etc. We saw no
BBU snack cake items.

No fruit pies from any brand – is
this an opportunity for Mrs.
Baird’s?
32
Recommendations
Recommendations
Customer
Selection
Independent
Operators

Product

Promotion

Value Capture Differentiation
/ Strategic
Control


Scope



34
22 Profit-centric Business
Designs: Explain How Profits Happen
1. Customer Solutions Profit
2. Product Pyramid Profit
12. Brand Profit


13. Specialty Product Profit
3. Multi-component Profit 
14. Local Leadership Profit 
4. Switchboard Profit
15. Transaction Scale Profit
5. Time Profit
16. Value Chain Position Profit
6. Blockbuster Profit
17. Cycle Profit
7. Profit-Multiplier Model 
18. After-Sale Profit
8. Entrepreneurial Profit
19. New Product Profit 
9. Specialization Profit
20. Relative Market Share Profit   
10. Installed Base Profit
21. Experience Curve Profit
11. De Facto Standard Profit
22. Low-Cost Business Design Profit
   = Strong Alignment
  = Moderate
 = Marginal
35
Independent Operators (IO)

Recommendation:


Re-institute a formal IO Training Program e.g. Mrs. Baird’s University
Solution:

4 Phases






On-line forum for information exchange, communications on best practices, FAQ
Benefits:

Strengthens brand by providing a proactive, managed approach to establish and
communicate performance expectations





Phase 1: Initial Orientation – At launch
Phase 2: Business Economics – Launch plus 6 months
Phase 3: Advanced Merchandising – Launch plus 12 months
Phase 4: Annual Conference – Ongoing
Provides gestation period to balance learning with application in the field
Provides a regular forum to monitor IO behaviors and the resulting business impact
Regular forum to communicate new developments, award performance and
reinforce the importance of IOs to Mrs. Baird’s Profit Zone
Potential for increased sales and bottom line profits.
Profit Zone Impact: Product Pyramid and Relative Market Share
36
Independent Operators (IO)

Recommendation:


Solution:






Implement a balanced scorecard mechanism to identify and measure IO
performance in key areas
Define key performance indicators, criteria and goals
Identify and, or develop tools to generate performance data
Develop performance dashboard / scorecard which displays KPI along
with the targets and actual results achieved with Red – Yellow – Green
indicators showing performance status
Form an ongoing working group to examine problem areas and trends
Establish a formal communication channel to share results and follow-up
on variations
Benefits:

Tangible mechanism to measure, monitor and manage performance


“You get what you measure”
Profit Zone Impact: Product Pyramid and Relative Market Share
37
Dashboard Example
Operational Excellence
Financial
Current
Qtr.
Next Qtr.
F/C
Business Component
• Status of programs and initiatives
focused on improving operational
excellence
Division Summary
Trade P&L Business
Trade Delivery Costs
Commercial Warranty
Corporate IT
Operations
Customers
Customer Loyalty
Segment 1
Segment 2
Segment 3
Customer sat.
Segment 1
Segment 2
Segment 3
Legend:
At or above quarter goal
Employees
H1
x%
x%
x%
HTD
x.x%
x.x%
x.x%
H2
x%
x%
x%
Mo.
x.x%
x.x%
x.x%
<1% below quarter goal
Below quarter goal
• Status of employee specific initiatives
Mo.
x.x%
x.x%
x.x%
38
Independent Operators (IO)

Recommendation:




Implement Scan Based Trading in Texas
Solution:

BBU currently makes this available in other states

Expand SBT to include Texas
Benefits:

Allows IO time to better manage their business instead of losing
the extensive amount of time it takes to individually check each
item in

Puts IO focus on merchandising and customer service
Profit Zone Impact: Relative Market Share
39
Go-To-Market Strategy

Recommendation:


Solution:





Many factors such as workforce capabilities, operating costs, areas of declining
population, government regulations and consumer trends that are contributing to
the challenges facing the current BBU distribution model
Strategically it will make sense to look at each distribution channel separately
Consider partnerships with other logistical options to distribute product
Identify the most productive distribution model for each retailer and location
individually
Benefits:





Strategically evaluate if current distribution model will effectively work in the future
By evaluating options now, BBU will be prepared to implement alternative
distribution strategies as needed
Efficient utilization of all resources
Increased focus in areas that will promote the “Brand”
Opportunity to improve both top line performance and bottom line profits
Profit Zone Impact: Relative Market Share
40
Product Innovation

Recommendation:


Solution:


Utilize effective category management in all product groups
based on consumer needs and wants
Benefits:




Execute a comprehensive review of product portfolio with a view
to rationalize and reduce the high number of SKUs
Will allow adequate shelf space for high turning items by
eliminating slow movers or items not unique to the category
Provides more neighborhood specific merchandising requested
by retailers
Increases profitability
Profit Zone Impact: Product Pyramid
41
Product Innovation

Recommendation:


Solutions:



Weight Watchers bread line (baked in BBU plants and distributed by
BBU)
Oroweat gluten-free bread (baked in gluten-free bakeries, but
distributed by BBU)
Benefits:




Enter co-packing agreements to bring to market more higher margin
product lines
Brings another strong brand – Weight Watchers – into the product
portfolio and makes the highly desired line available to more
consumers in the US
Further identifies Oroweat as a leader in healthy offerings
Makes BBU a single source provider for retailers
Profit Zone Impact: Product Pyramid, Brand Profit and
Relative Market Share and, strengthens two “marginal” profit
zones: Profit Multiplier and New Product Profit
42
Product Innovation




Recommendation:
 Enter licensing agreements to reap profit from BBU’s strong
brand names
Solutions:
 License Oroweat name to producers of frozen dinner rolls
and yeast rolls – such as Rhodes or Sister Schubert’s for
their whole wheat/whole grain offerings
Benefits:
 Affords BBU the opportunity to gain profits in other rapidly
growing departments inside retailers without substantially
changing its business model
 Gain additional space that is at a premium
 Creates new customers for the brand and builds brand
awareness
Profit Zone Impact: Brand Profit and strengthens three
“marginal” profit zones: Multi-Component System Profit,
Profit Multiplier and New Product Profit
43
Product Innovation

Recommendation:


Solution:



Partner with a recognized leader in health, such as Cooper Clinic, to
develop healthier snacks (lower in calories and sugar, no trans fats and
including more whole grains)
Introduce “100 Calorie Packs” of donuts and other snack items to target
those focused on portion control
Benefits:




Develop healthy snack alternatives
Attract health conscious moms back to a category that has struggled to
remain viable with changing consumers desires and needs
Positions BBU as a leader in health products
Pulls market share from salty snack category
Profit Zone Impact: Product Pyramid
44
Marketing – Promotion

Recommendation:

Take credit for the products BBU already has on the market by implementing
more aggressive marketing promotions



Solution:

More aggressive marketing promotions for Oroweat line, Entenmann’s Little Bites,
whole wheat buns and other differentiating brands.




Phase One: Major Brand Campaign – using national mass media – for Oroweat;
Regional Mass Media Campaign in Texas – for Mrs. Baird’s
Phase Two: For Oroweat, National Sponsorships of Major Sporting Events, Health
& Wellness Expos
Phase Three: Product Specific Promotions with Retailers
Benefits:



Many of the products consumers requested in the survey are already in the BBU
portfolio
Retailers from all channels asked for more promotional support of BBU product
lines
Strengthens brand leadership position, generates more profitable sales
Allows for the opportunity to gain additional space in perimeter departments
Profit Zone Impact: Brand Profit, Relative Market Share
45
Marketing – Promotion

Recommendation:


Solutions:





Negotiate with other CPG accounts for promotions like “Buy Smucker’s Jelly, Get
Mrs. Baird’s Bread Free” or “Buy Oroweat Bread, Get $1 Off Oscar Mayer
Lunchmeats”
Provide co-op funds for foodservice operations to promote the fact that they
exclusively use Oroweat breads for their sandwich offerings. Provide signs for
foodservice operations.
Promote bread and snack cake sales on pump toppers at convenience stores
Use cross merchandising in all channels to gain incremental sales
Benefits:



Gain market share through cross-promotions
Generates brand awareness outside the traditional bread aisle
Satisfies retailer and end-user customer needs
Profit Zone Impact: Brand Profit and strengthens a “marginal” profit
zone: Multi-Component System Profit
46
Marketing – Promotion

Recommendation:


Solution:



Develop public relations strategies to use with media, schools and health
organizations to promote consumption of whole grains
Design easy-to-understand packaging – including the use of a color
coding system – to allow consumers to quickly identify products that are
sugar free, whole wheat, whole grain, etc.
Benefits:



Own the “whole grains” and health-conscious market with the Oroweat
line
Coupled with the aggressive brand awareness strategy noted previously,
this will generate increased sales and profits
Satisfies retailer and end-user customer needs
Profit Zone Impact: Brand Profit
47
Thank You!
Back-up Slides
Bimbo Bakeries USA – Revenue
Generation
Bimbo Bakeries USA generates sales through 3 main channels:
Restaurant & Institutions
Retail Channel
Recovery Channel
Restaurants
Schools
Hospitals
Prisons
Food Service
Grocery Stores
Club Stores
Mass Merchandisers
Supercenters
Mercado's/Mom & Pop's
Convenience Stores
Military
Company Thrift Stores
Grocery Outlet Stores
Dollar Stores
BBU has partnerships with key distributors in areas where company operations
are not available, including: Salt Lake City, Boise, New Orleans, and the states of
Alaska and Hawaii.
50
   = Strong Alignment
  = Moderate
 = Marginal
2. Product Pyramid Profit   

The base of the pyramid consists of lowpriced, high-volume products, while the
apex is made up of high-priced, lowvolume products.

Bulk of profitability is concentrated at the
top of the product pyramid


Base plays a strategic role -- often
through a "firewall" brand -- in protecting
the profitability at the top.
Example: Gap Inc.'s tier of retail apparel
chains, Banana Republic is the highprofit, low-volume apex, while Old Navy
serves as the low-profit, high-volume
firewall brand at the bottom.
51
12. Brand Profit


The intangibles associate
with brand are reinforced by
the customer’s experience
with the service or product

Brand becomes tangible in
the price premium that
customers are happy to pay

Example: Sony
   = Strong Alignment
  = Moderate
 = Marginal
52
20. Relative Market Share


Companies with high market shares tend to be more
profitable because large companies have pricing advantages
and cost economies due to greater manufacturing experience
and volume purchasing ability

Advertising and fixed costs are also reduced with more sales
dollars.

The greater the relative market share in comparison with
competitors, the greater the profitability
   = Strong Alignment
  = Moderate
 = Marginal
53
   = Strong Alignment
  = Moderate
 = Marginal
3. Multi-component System Profit



Businesses in this category have either multiple products and/or
sales channels, and only some of these represent the bulk of
profitability. But, in order to maximize sales in the high-profitability
components, it's necessary to have full presence in the lessprofitable components as well.
Examples:


The variation in Coca-Cola's channel profitability
Starbucks has found it lucrative to sell its beans by the pound in lowprofit groceries through a distribution agreement with Kraft. Starbucks
doesn't recognize much profit from grocery sales, but the company
deepens its customers' addiction and loyalty in via the home coffee
market.
54
   = Strong Alignment
  = Moderate
 = Marginal
7. Profit-Multiplier Model



Reaps gains from the same product, character, trademark or
service, over and over again.

Powerful engine for strong consumer brands

Care required to weigh the risks of taking the brand to places
where it doesn’t have authority with the customer
Example: Disney
55
   = Strong Alignment
  = Moderate
 = Marginal
14. Local Leadership Profit

What matters is local leadership, not national scale




In Grocery business, the economics are almost entirely local. A review of the
company’s cost structure indicates that the great majority of elements in the cost
structure are local in nature.
This analysis of local market helps you to choose the following:
 Which customers to invest in
 Which cities it should concentrate to invest
Sam Walton’s fundamental economics of Wal-Mart






Local leadership, to the point of absolute dominance, mattered above all else.
Local leadership reduced logistic costs, advertising costs, recruiting costs, etc.
Before he spread to other counties he achieved leadership in the existing county.
This grasp of the primacy of local economics for his business, and highly
disciplined execution in accordance with the terms of that model, gave Walton
several points of margin advantage over competitors.
Using this approach Wal-Mart achieved 20% growth rate over three decades.
Wal-Mart clearly demonstrates that profitability supports growth, not the other way
around.
56
   = Strong Alignment
  = Moderate
19. New Product Profit

 = Marginal

New product profits are a function of newness and growth

Example: HDTV

As they mature, profits fall

The key to winning is being prepared to shift investment to
create undisputed leadership in the next generation product –
the one that most closely matches the customer's most
important current priorities
57
Consumer Preference Survey

General Comments / Healthy Products

I am not overly concerned with the producer of bread products I
purchase. I am more interested in healthy products and
freshness of the product. Also, I am limiting the amount of bread
my family and I eat....we eat too many bread products each
week. Therefore bread snack related products would not be a big
a "gotta have" product in my home.

High fiber, low fat and nutritious bread which would taste close to
white bread.

Rarely eat snacks other than fruit or veggies. Most snack foods
are very unhealthy.

Carb Free Bread

Low Carb/Low Fat
58
Consumer Preference Survey

General Comments / Healthy Products (cont.)







I look for the highest fiber and protein products
I'm interested in European style breads
I prefer things high in fiber and low in calories.
I purchase multi-grain bread that is preservative-free, which limits
my choices to health-store bread. I would be attracted to a bread
of this type from Mrs. Baird's.
I would like some multi-grain breads, not just whole wheat, that
are 100% whole grain. I would like some of the interesting
breads, such as wheatberry, to be 100% whole grain and, if they
are, to be labeled that way. I feel confined to whole wheat
because it's the only one that says "100% whole."
100% whole wheat hot dog buns 100% whole wheat tortillas
Would like to see more of the health breads.
59
Consumer Preference Survey

General Comments / Packaging – Shelf Life

“Tamper-resistant" packaging, and freshness of the product.

How can I preserve the shelf life of bread without it molding?

I want to know for sure that the bread that I am buying is 100%
wheat bread. I don't like having to read the small print to find out
for sure.

The labeling and ingredient listings are still confusing to me.
Anything to help simplify is appreciated

I would like breads labeled "multi-grain" to make it very clear,
without my having to read ingredients, whether it's 100% whole
grain.
60
Consumer Preference Survey

General Comments / Tortillas







Everyone here raves over red tacos. I find they taste the same. Maybe a
little attractive.
Whole wheat tortilla, no trans fat
I would like to see the Guerrero brand of tortillas in white and corn. I find
this in south Texas and they are the best.
More options for tortillas....more flavors, low carb, fat-free. I know some
of these are available but not in great variety where I shop.
I would like to see Mission Tortillas and Rosita's Corn Tortillas.
I try to buy United brand items. However, I have had trouble with the
United-label tortillas sticking together, so I now purchase name brand
tortillas.
I would like to see more plain (white flour, white corn) tortilla products
with reduced calories and no trans fat. Most of the products come in
different flavors that my kids do not like.
61
Consumer Preference Survey

General Comments / Product Innovation






What happened to Mrs. Baird French Rolls with sesame seeds? They were the
ready to bake in the bread section.
I would like to be able to find a high quality bread like the fresh baked bread from
bakeries in NYC. Chewy crust, dense middle...substantial and satisfying with
quality ingredients. If bakeries in NYC and California can make bread like the
Europeans, why can't we in the "breadbasket of America" be able to purchase
high quality bread? I am tired of the same old "sandwich" bread, boring...give me
something better and I will pay for it!
Develop a whole grain dough for bread machines (It may exist, but I'm unaware)
as this would be purchased.
Frozen wheat rolls, ready to thaw and bake.
Hearth of Texas white bread is always good. If some other bread products were
sampled at the store, I might consider buying them if I could taste them first or let
my children try them.
I really enjoy snack cakes, but they are frequently dry tasting. Make sure
whatever you look at is moist.
62