Like many U.S. flour milling companies, Panhandle Milling LLC was established with the acquisition of a single flour mill. Also like many milling companies, Panhandle has expanded into numerous related categories that complement the core milling business.
While at most companies such diversification took place over many years, Panhandle has moved at lightning speed to create a business model the company’s executive team believes ideally situates the company for the rapidly evolving market for grain-based products in the early 21st century.
PHM was established in 2016 when three seasoned flour milling executives — Peter Bisaccia, John Mason and Bryan Ledgerwood — joined forces with another investor, John Cure, to acquire a flour mill in Dawn, Texas, U.S. Over time, several other veteran milling executives joined their team, many of whom had been colleagues within the flour milling industry
The Dawn flour mill business purchased in 2016 was acquired from Richardson Milling. The buyers decided to restore the mill’s original name — Panhandle Milling Co. While the company has expanded to numerous other locations in the past 2½ years, the changes made at Dawn are emblematic of the company, its views of hat it takes to succeed in milling today and its ambitions for the future.
A number of Panhandle executives sat down recently with Milling & Baking News, a sister publication of World Grain, to chronicle the company’s progress.
“When we purchased the Dawn facility, it was just a flour mill,” said Bisaccia, president. “And then we saw the capabilities of that facility far beyond flour milling. Fast forward to today, it’s not that flour milling is unimportant to what we do, it’s that the other pieces of what we incorporated into that facility let us begin to see our growth platform.”
What Bisaccia and his colleagues described was a company focused on finding underserved niches and emerging opportunities in flour and other grain-based ingredients. A broadening geographic footprint, wide-ranging packaging capabilities and increasing customer interest in ancient and specialty grains have created an opening, the executives said.
In addition to upgrading the Dawn flour mill, a bakery mix and specialty grains cleaning and grinding operation have been added at the site. Both additions are aimed at serving significant niche markets.
“It was a 5,000-cwt flour mill, and we have added a state-of-the-art mixer that can handle high fat content — up to 25% fat in the mixes,” said Scott Freebern, vice-president of technical milling and engineering.
Illustrating the market for such products, he said tortilla makers seek tortilla flour together with fats pre-blended so that tortillerias and home bakers don’t need to mix in the fat. Conventional mixers are unable to handle high levels of fat.
“It has to do with how the fat is blended in with the flour, and you get a lot of clumping of the fat,” Freebern said. “Our system has a special shearing system that actually cuts the fat into the flour.”
Biscuit mix represents another potential application for the mixer. The mixer was supplied by Bühler, Inc., Plymouth, Minnesota, U.S.
“The mix comes out almost as a dry ingredient on the back end,” Bisaccia said. “Typically with those applications people use spray-dried oils, which are a lot more expensive.”
In addition to the unique bakery mix capabilities, Panhandle added an unusually large array of packers at Dawn. All told, the company now has 11 packers company wide, with capacities ranging from a 4-ounce form, fill and seal to 2,000-pound bulk tote.
“The customers talked, and we listened,” Bisaccia said. “We’ve added packaging capability based on customer demand.”
Mason, a partner with PHM Brands, added, “We want to have as much opportunity to be a solution to the market as we can. So that’s why we have so many packers. We’re doing some very cool things.”
Over the past two years, the company has built out this model with a number of acquisitions and capital projects overseen by Freebern. The business has been renamed PHM Brands as an umbrella that includes Panhandle Milling, New Mexico Milling, Specialty Blends, Specialty Grains and Viobin. The company operates from six different locations, including its Denver, Colorado, U.S., headquarters.
From the moment the Dawn facility was acquired, the company moved to deemphasize traditional, bulk standard flour milling as part of the company’s business model.
“We knew from day one that we couldn’t compete with the big guys,” Mason said. “We saw that as an opportunity to branch into specialty flours, organics. We’ve probably grown our organic business 1,000% a year. Then adding the mix capability helped move us toward more value-added business as well.”
Gaining value-added business requires high-octane customer service, Bisaccia said.
“One of our biggest wins has been where a large retailer came and said, ‘Hey, we have a project for you, but you’ve got to be on the supermarket shelf in four months,’” Bisaccia said. “Concept to supermarket shelf, we hit the number — four months. And that really spring boarded us. People saw that we can get customers to market as quickly as they want.”
The third element of the Dawn complex is a specialty grain business that cleans and grinds a wide variety of grains, from quinoa and teff to non-GMO corn. Customers range from tortilla makers and ancient grains distributors to snack food manufacturers looking for an ingredient for a mix, a bar or any number of snack products.
“Some of these cleaned grains are going into ethnic markets, like those for Middle Eastern food,” said Timothy Devey, director of marketing.
Bisaccia said Dawn, in the middle of the Texas panhandle, has a number of strategic advantages.
“From a raw material standpoint in terms of corn, wheat and specialty grains like sorghum and millet, we have a very big drawing area within a couple hundred miles of us bringing a lot of these source materials in,” he said.
Particularly valuable is access to organic grain, Mason said. He said Dawn is located near several organic dairies. As a result, organic farms are heavily concentrated in the area, allowing the company to buy organic grain competitively, he said.
Dawn also is well suited for supplying the tortilla flour to the Hispanic market, Mason said.
“We call ourselves the masters of the tortilla flour,” he said. “A lot of it is because the local wheat crop produces just a silky, perfectly made tortilla flour. That Texas area around Dawn grows some incredible wheat for functionality in tortilla, which is hands down our No. 1 product.”
Panhandle has continued to invest at Dawn, Freebern said.
“We have added grain storage bins, different cleaners and packaging equipment,” he said. “Then we made the flow of the specialty grains cleaning plant optimal. We can add equipment as needed so there’s a lot of flexibility in that plant where we can clean the magnitude of products that we source. We added a high-end color sorter that you don’t see in a lot of grain cleaning systems to make a lot of those products.”
Panhandle has tripled its warehouse storage capacity, which gives important flexibility, Bisaccia said.
From Dawn, PHM already is shipping specialty product nationally, Bisaccia said.
The Panhandle executives give Freebern extraordinary credit for effecting the transformation at Dawn and other company facilities. A graduate of Kansas State University, Freebern has been a miller for more than 20 years, including several in wheat and specialty milling at ConAgra Foods, Inc. before joining Richardson International Ltd. as a technical milling specialist in 2006.
“I’ve seen two different sides of grain milling, and I’ve been able to combine the two into one,” he said. “You don’t get to see everything if you are in one side of the industry your whole career.
“I spent a decade in the oat milling business. We did barley, oats with Viterra, 21st Century Grain and Richardson and experienced a lot of things that a normal wheat miller wouldn’t.”
Freebern expressed appreciation toward a number of suppliers with helping with facility upgrades, including Bühler; CETEC Cereal Technologies, Inc., Elkridge, Maryland, U.S.; and, with its wide array of packaging equipment, Paglierani srl, Rimini, Italy.
In fact, Panhandle has been engaged by Paglierani to serve as technical U.S. representatives for the company in the United States.
A case study for Freebern’s craft was a mill Panhandle acquired in Farmington, New Mexico, U.S., in July 2016. The facility has daily milling capacity of 2,300cwts.
While crediting previous owners with making good faith efforts to enhance the performance of the Farmington mill, Mason said the mill has benefited from a comprehensive reflow. A new tempering system and new dusters were installed.
Freebern said whole wheat and bulk loadout capacity have been added at Farmington, and the programmable logic controller has been upgraded.
“We did quite a bit,” he said.
Much more than is the case with the Dawn facility, the New Mexico mill is focused principally on wheat flour. The mill has capacity to pack a range of bags, from 2 pounds to 50 pounds. Bisaccia estimated production in New Mexico is 90% sacked, mostly family flour and tortilla flour.
While there are no plans for either specialty milling or mix capabilities in New Mexico, Bisaccia said the property has unique potential. Panhandle operates the mill through a relationship with the Navajo Agricultural Products Industry (NAPI).
“The facility sits in the middle of about 110,000 acres of farmland under 640 pivots — probably 75% of it is irrigated,” Bisaccia said. “We’ve been working with NAPI about different varieties of wheat or other grains to be grown there. We’re going to have organic capabilities there, too.”
New Mexico also serves as a distribution center for a new PHM initiative targeting the brewing and distilling industries. The company sells malted barley produced by a partner, for customers with breweries or distilleries.
“We aren’t brewing or distilling; we are selling grains into that marketplace,” Bisaccia said. “We’ve created a brand called Bins to Bottles at Dawn, with the grain cleaning equipment, but we’ve also expanded the capabilities in New Mexico where we’re bringing in malted barley and other types of grains to really look at the West coast for that craft brewing and distilling business.”
The mill in New Mexico produces family flour under the Phoenix brand, an all-purpose/tortilla flour that Mason characterized as more of a value brand than Panhandle all-purpose family flour. The mill serves the Arizona and Southern California markets.
Wheat germ business
More recently, Panhandle has expanded north and somewhat east with a move into the wheat germ business. In the age of ancient grains, plant-based protein and other trendy ingredients, wheat germ may seem downright old-fashioned. The PHM executives could not disagree more vigorously.
“When you look at wheat germ, it is a nutritional powerhouse,” Bisaccia said.
Two acquisitions were completed within a few weeks of one another in the spring of 2018 and included buying Viobin LLC, a Monticello, Illinois, U.S., producer of defatted wheat germ and specialty oils, and a wheat germ plant in Michigan City, Indiana, U.S.
For its wheat germ product facilities, the company purchases raw wheat germ from flour millers.
“We’ll extract oil, and we end up with two core products — wheat germ oil and de-fatted wheat germ,” Mason said. The wheat germ oil is incorporated into many products that PHM offers.
The wheat germ is toasted and ground into various granulations for a wide range of applications. Removing the fat extends the shelf life of wheat germ.
“It goes into cereals, snacks,” Devey said. “For example, it all allows you to extend products like cocoa, without having to pay like the high price of cocoa. Instead you add some de-fatted wheat germ in there — it gives a high nutrition profile but similar flavor.”
Ledgerwood, another PHM partner, emphasized wheat germ’s nutrition credentials.
“It’s high in protein, high in fiber — 26% to 30% protein,” he said. “It’s high in mineral content. It’s non-GMO. It’s vegan.”
While it has been a popular health food ingredient for decades, in recent years word-of-mouth rather than dedicated selling has been how wheat germ has been marketed, Mason said. He predicted the product will respond well to renewed and focused attention.
That go-to market strategy will be assisted by Elizabeth Arndt, director of research and development.
“She is probably one of the leading experts on wheat germ and its health benefits,” Ledgerwood said. “We will tap into her expertise as we expand into this market.”
In addition to its wheat germ business, Viobin has a stand-alone facility with grinding capabilities that is gluten-free.
“We’ve already seen the fruits of that grinding capability,” Bisaccia said. “We’re in a two-year agreement with someone who wants ancient grains to go through that facility.”
A second mix facility and additional packing equipment will be added at Michigan City, Mason said. The packing capabilities will allow PHM to offer its distilling and brewing services from the Indiana location.
The 17-acre site at Michigan City gives the company the ability to expand there.
“In order to blanket the country now, Michigan City is our next phase,” he said. Michigan City is about a one-hour drive from Chicago.
In June 2018, Panhandle acquired a grain elevator in Pritchett, Colorado, U.S., from Bartlett Grain.
“It’s just a good natural pull for our wheat supply,” Mason said. “We’ve bought a lot of grain from there in the past.”
Bisaccia added, “The acquisition helps keep us competitive for our customer base in the local and regional flour market.”
The executives view marketing as another key to success, noting that considerable design work is done in-house. This includes packaging design and the development of marketing concepts. Devey said marketing will be key if the company’s different initiatives are to achieve their potential.
“How can we take wheat germ and make it more relevant today and incorporate it into products to solve problems customers don’t even know they have yet?” he asked. “I think that’s what makes us different; I say we operate like a tech company, but we’re not. We’re a food company that operates like a tech.
“What separates us is our mix capabilities, our specialty grains capabilities, and now the wheat germ and wheat germ oil. Those are areas we see a lot of growth. We’re really excelling at, we have a niche, and we have the facilities to do it really well.”
While flour milling remains a core business of PHM, there is nothing stodgy about the company, Devey said.
“It’s a very entrepreneurial culture, and we just get excited,” he said. “It’s a big reason why I and so many of us joined the team. The passion is contagious. You have an opportunity and you call Scott (Freebern). Scott says ‘maybe,’ and then an hour later he calls back and says, ‘Yes, I’ve figured it out.’”
Ledgerwood also characterized the culture as disciplined, an important quality since the company’s top executives telecommute from all over the country.
“We hold each other accountable,” he said. “We all work from afar. There’s a high degree of trust and honesty.”