Extraordinary time for this industry

by Morton I. Sosland
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While great changes have been occurring in the global grain industry for some years now, largely within countries and even continents as industries like grain merchandising and flour milling have been restructured, “extraordinary” may be properly applied to events unfolded recently in the Western Hemisphere. At no other period in a long history has the fundamental structure of both bread baking and wheat flour milling been transformed in such a total or striking manner as now under way. It has attained the point where the industry of grain-based foods in North and South America is on the verge of being totally different from what it was a short time ago.

Baking comes first to mind in view of how Grupo Bimbo, the Mexico-based baking giant, is acquiring Canada Bread Co. to give it ownership of the largest baking business in Canada. Considering that Bimbo in the past year purchased baking operations that gave it leadership of the U.S. wholesale baking market, that it is the baking leader in several top Latin American markets, and that it has interests in Europe and elsewhere in the world, this full-bore move into Canada gives a sweep of Western Hemisphere bread baking. Bimbo has accomplished a corporate transformation surpassing what might only once have been dreamed of in any industry.

All hail to Daniel Servitje, the chairman and chief executive of Bimbo, who has guided Bimbo to these heights. Billions of dollars have been invested to acquire baking businesses to create a group that appears hellbent not just on dominating a single hemisphere but on creating a globe-circling business. Happily for grain-based foods, its base derives from humankind’s most important food, bread. Bimbo’s strategy reflects not just faith in and support for the centrality and quality of the principal product of grain-based foods, but of its own total commitment to thoughtful, careful and skillful management. Only then could Bimbo have undertaken moves reflecting nearly unlimited geographic ambition.

Keeping watch over, if not abreast of, Bimbo’s actions has become the principal task of its competitors in baking. As if Bimbo’s moves were not enough, the vast changes occurring in the past year in the balance of baking’s leadership unfolded a scenario of huge change. Putting all of this into the reality — no longer just vision — of an industry totally transformed is no exaggeration.

Baking’s presence in almost every part of the food system might appear to give it unprecedented importance to how grain-based foods evolve. Baking is only one part of this equation. No company is more aware than Bimbo of how its success depends not just on what it achieves internally but on the products, services and much else it obtains from suppliers of all sorts. Once a leading flour miller itself in Mexico, Bimbo as part of its dramatic remake has separated milling into a company it no longer owns. It is the fundamental restructuring of baking that accounts in part for the pending merger in U.S. flour milling to join the mills of Cargill-CHS and ConAgra Foods into a new company that would be the world’s largest miller.

Completion of this milling merger, now indicated for the second quarter of 2014, partly makes up for what has been relative quiet in milling. It is not beyond imagination to expect other moves in flour milling that may be influenced to varying degrees by these baking changes. Just as deep and broadly affecting are simultaneous shifts under way in grain merchandising.

This chain of events exerts a tremendous impact at every conceivable level of grain-based foods. It is likely that everyone with a front-row seat to such momentous events is going to examine these times as not just extraordinary historically, but exceptional from the viewpoint of each person’s own experience. Already obvious is that what is happening marks a giant forward leap in the proud history of what now is most assuredly the new grain-based foods industry.