A conversation with Greg Schlafer
May 7, 2013
by Joshua Sosland
In his 21 years at General Mills, Inc., Greg Schlafer has witnessed extraordinary change in the flour business that remains an important part of one of the world’s most admired consumer packaged goods companies. As chairman of the North American Millers’ Association (NAMA), Schlafer said the need for and inevitability of change is not incompatible with a healthy respect for tradition in what he learned early in his career is a “noble industry.” (Editor’s note: In mid-January, it was announced that Schlafer has moved to a position in the potato business with ConAgra Foods. See page 12 for more information. He has since resigned as chairman of NAMA.)
In an interview last fall with Milling & Baking News, sister publication of World Grain, Schlafer discussed how the place of flour within General Mills has changed in the company’s U.S. business to better complement the nationwide footprint of its markets and brands. The interview was held during the NAMA annual meeting at The Grove Park Inn in Asheville, North Carolina, U.S.
As a representative of General Mills actively involved in NAMA, Schlafer is heir to a distinguished tradition. He was the first NAMA chairman from the company since James J. Feeney headed the Millers’ National Federation in 1982-84, while he led General Mills Sperry Division. Other MNF leaders of the company, chairmen and honorary members, included James Ford Bell, Harry A. Bullis, Charles Bell and Gerald S. Kennedy. Including representatives of The Pillsbury Co. (acquired by General Mills in 2001) in this roster adds John S. Pillsbury, Howard W. Files and Dean McNeal.
A 1991 graduate of the University of Minnesota, Schlafer joined General Mills right out of college, taking a position on the distribution side. Eighteen months later, having moved from department to department within the mill, Schlafer’s young career made an unexpected turn when he went to work for the sales manager at the plant.
“I had not planned on sales,” he said. “I had planned on distribution, becoming a plant manager.”
Work that began as entry level sales assignments at a single mill expanded steadily over the next 20 years to the point his corporate oversight spans all of the commercial sales of flour at the company as well as the entire amalgam of General Mills products sold to away-from-home customers, including food service and convenience stores.
In the interim, the company paid for Schlafer to attend the University of California, Los Angeles, where he graduated with an MBA. All told, he spent 12 years in Orange County, eventually managing the regional sales office for the company’s three western mills — Los Angeles; Vallejo, California (now closed); and Great Falls, Montana.
What early in his career was a straightforward path veered abruptly in 2001 with the Pillsbury acquisition.
“That changed everything,” he said. “They had a massive food service division — much larger than ours. We moved bakery flour away from family flour and the mix business, what for many years was the Sperry Division. Bakery flour made more sense to move into Bakeries and Foodservice, since flour was calling on the same customers. It needs to be about the customer.”
In 2003, Schlafer moved to Minneapolis as director of bakery flour, responsible for all flour General Mills sold with the exception of family flour. From there, the list of units Schlafer covered grew larger — first to include sales to in-store bakeries and then food service. The latter portfolio continued to broaden, including not only flour but mix, dough, ready-to-eat cereal, snacks, yogurt and frozen baked products.
“It’s our full portfolio of products,” he said. “When you buy a granola bar at a convenience store — that falls under the Bakeries and Foodservice umbrella. Most companies refer to this sector as away-from-home channels, which covers a wide range of outlets, from retail bakeries to gas stations.”
Positioned for the future
Over time, General Mills has been “reshaping” the division to right size it, expanding in certain areas and making divestitures in others “where opportunities were not as good,” Schlafer said.
“After 10 years of change, we feel very good about how we are positioned for the future,” he said. “Our sales teams are fully up to speed, and we’re in a growth phase.”
Asked how the milling business has evolved during his time at General Mills, Schlafer said it has become “more strategic.”
“Keep in mind I was very junior 20 years ago, but it felt very regional in its orientation,” he said. “Today, we have a national approach with our customers and our brands. It is more brand focused. We have learned a lot from being a consumer packaged foods company. Our flour business over the last five years has become better at leveraging those tools. For example, we may help a distributor manage a flour category.”
He said many distributors find the flour category complicated, in part because of a tendency toward stock-keeping unit proliferation. If a chef or other customer requests a particular specification, an additional stock keeping unit (sku) may result.
“You don’t want 500 different flour sku’s,” he said. “We go in with a total category approach. We understand brands, and we have a large direct sales force.”
Schlafer said the latter points are central to the company’s continuing success in the sacked flour market. “It is differentiation — brands and people,” he said. “Most of our business is branded sacked flour. We have terrific sales people. They are able to provide solutions in a difficult to understand category, something that resonates with customers. Our business has been growing nicely.”
An added advantage the company is able to leverage is the breadth of the products it offers beyond its heritage milled products. “When we walk into a distributor, we discuss much more than flour,” Schlafer said. “We’re in all three temp states — dry, refrigerated and frozen. We have a broad conversation.”
While these conversations may be a far cry from those in the days of the Washburn Crosby Co. (the former name of General Mills), flour milling still has an important place at the company, Schlafer said. “Mills are important to the business,” he said. “We have broad origination resources. In some cases we have vertical integration. The model works really well.”
Emphasizing that the actual milling of wheat is far from an afterthought at General Mills, Schlafer noted the company has been investing in wheat and oat research to ensure an adequate supply of some of its most important raw materials.
“For instance, we’re doing research with 25 growers in Idaho to find ways to make nutrient management and pest management more sustainable,” he said.
The company operates five U.S. flour mills, with locations in California, Montana, Iowa, Missouri and New York. Its 77,500 cwts of daily milling capacity make it the sixth largest U.S. milling company, a ranking that understates the importance of General Mills in the U.S. flour market.
In addition to the flour it mills, the company buys large amounts of flour from other milling companies.
For at least a decade, General Mills has been thought to be far and away the largest user of flour in the United States. It assumed this position with the acquisition of Pillsbury — a major flour user that had sold all its mills during the 1990s (General Mills sold roughly half its mills in the mid-1960s, but has never exited flour milling). Given that he is involved in a broad array of food categories, including yogurt and granola bars, Schlafer said he remains upbeat about the outlook of flour-based foods.
“Absolutely,” he said. “Yes, it is a very large, mature category. Consumers may ebb and flow with movements like Atkins and gluten free. But we offer nutritious products like whole wheat toast and fun products like cupcakes. Over time it is a good category. I will say that if you have a large category that is sluggish, the best way to grow is through innovation. Bob McDonald of Procter & Gamble said, ‘Promotions may win quarters, innovations win decades.’”
As an example at General Mills, Schlafer said a success in the pancake category demonstrates that well considered, incremental improvements sometimes achieve great results.
Targeted at school cafeterias, the company’s Pillsbury brand mini-pancakes have sold extremely well in the two years since they were introduced, Schlafer said.
“We certainly didn’t invent the pancake,” he said. “But schools needed help meeting nutrition regulations. The pancakes contain whole grains and less sodium and fat. Kids don’t like their food touched. The packaging allows for easy preparation. Operators don’t like the cost or mess of syrup, and in our product the maple flavor is baked into the pancake. Innovation kick starts growth. Most innovation is insight driven.
“The mini pancakes help increase K-12 participation in breakfast. There is such a large number of children who don’t get breakfast at home. We know that when they eat breakfast, kids are better students. This fits well with our mission — Nourishing Lives.”
Schlafer complimented the baking industry for exactly this kind of insight-driven innovation in recent years, citing sandwich thins as one example.
Humbled by chairmanship
While he joined General Mills a quarter century after the company ceded its position as the largest flour miller in the world with a massive milling shutdown in the mid-1960s, Schlafer said he is very mindful of the company’s milling tradition and feels a powerful link to the company’s heritage.
One of my first bosses was Don Anderson who had been with the company since the early 1950s,” he said. “I learned from him that this is a noble industry. These are good people, and you need to respect its traditions.
“I could not have imagined myself here 20 years ago, elevated to this position by my peer group. It’s humbling. I’ve been very fortunate to be in an industry and with a company that has allowed me to take care of my family. I hope to learn over the next couple of years and to become a better leader. Paul (Maass, outgoing NAMA chairman) and leaders before him did so much for this organization. This job very much is a case of ‘standing on the shoulders of giants.’ It’s our job to keep it moving forward.”
Asked what issues facing NAMA stand out to him as the incoming chairman, Schlafer complimented his predecessor and NAMA staff.
“I feel fortunate that thanks to Paul and the other members and Mary (Waters) and her team, no issues are emergencies on day one,” he said. “We always will have issues to work through. Biotech, not just for wheat, but for oats and corn. Nutrition is an issue with vitamin D and the role it may play.”
Asked for his view of the prospective fortification of flour with vitamin D, Schlafer offered a position that could be described as open minded but cautious.
“We want to learn more,” he said. “D3 is an animal product. What might that mean? The corollary to folic acid doesn’t work, since that was mandated. What do bakers think? What do consumers think? The intent of our work is positive. We need to vet it out to make sure it is right for the industry.”
L. Joshua Sosland is the editor of World Grain’s sister publication Milling & Baking News. He may be contacted at firstname.lastname@example.org.