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Wonder Bread revival could reopen Sacramento bakery

Published: Sunday, Sep. 22, 2013 - 12:00 am
Last Modified: Sunday, Sep. 22, 2013 - 10:37 am

Wonder Bread is returning to supermarket shelves soon, perhaps as early as Monday. If consumers eat enough of the spongy white bread, they could breathe new life into the shuttered Hostess Brands bakery in Sacramento.

Nearly a year after Hostess went out of business, a Georgia baking conglomerate called Flowers Foods Inc. is about to reintroduce Wonder and other Hostess breads to the sandwich-eating public. It’s the culmination of a $355 million gamble by Flowers, which is banking on the notion that shoppers still hunger for Wonder despite a ten-month absence – and a decades-long shift in tastes towards whole wheat, sourdough and other specialty breads.

In a deal brokered through bankruptcy court, Flowers in July bought 20 Hostess wholesale bakeries, including Sacramento’s, along with the rights to Wonder, Home Pride wheat and several regional brands of bread.

For the time being, all the breads will be produced at Flowers’ existing bakeries. If sales materialize as Flowers expects, some of the Hostess plants are expected to reopen. The Sacramento plant produced Wonder.

“The product demand will dictate when we reopen those bakeries,” said company spokesman Keith Hancock.

Wonder’s popularity remains a big question mark, though. Raley’s, for instance, isn’t making any shelf space available.

“There has been zero customer demand, and Raley’s has no current plans to carry it,” said John Segale, a spokesman for the West Sacramento grocer, in an email.

Investment analyst Timothy Ramey, who follows Flowers’ stock for D.A. Davidson & Co. in Portland, isn’t ready to swallow the idea that Wonder 2.0 will be a huge hit.

“It will be revived – whether it’s a long-term success remains to be seen,” Ramey said. He said white bread in general has been losing market share to “the stuff with the nuts and the raisins and the seeds – the healthier bread.”

Company officials, however, are considerably more optimistic about Wonder, a 92-year-old brand that defined bread for generations of Americans and is credited by some historians with pioneering sliced bread in supermarkets. Flowers says Wonder, with its colorful polka-dot wrapper, was a $397 million-a-year business before Hostess collapsed in bankruptcy last November.

“Wonder is a powerhouse brand,” Chief Executive Allen Shiver said at an investment conference in Boston earlier this month. “Wonder had the highest household penetration of any white loaf bread.”

The company also disputes the argument that white bread is a crumbling slice of the market. Shiver cited industry data showing white bread has 22 percent of the baked-goods market, translating into $3 billion in annual sales.

One factor in Wonder’s favor: Flowers, already the nation’s second largest baked-goods maker, is known for making big acquisitions work. While the company’s brands are mostly focused on the East Coast, Flowers is broadening its national presence; in February it acquired the Sara Lee and Earthgrains businesses in California from Mexican baker Grupo Bimbo. Flowers earned $159.7 million on sales of $2 billion in the first half of this year.

“There’s nobody that has the track record they do,” said Josh Sosland, editor of Milling & Baking News, a trade publication in Kansas City, Mo.

Sosland said Americans have already responded favorably to the revival of Twinkies and other Hostess snack items, which were reintroduced in July after a pair of private equity firms bought most of Hostess’ remaining assets.

“My impression is the Hostess (snack foods) reintroduction has gone pretty well,” Sosland said.

It’s not clear exactly when Flowers will reintroduce Wonder and the other Hostess breads it acquired. A company website devoted to Wonder said the iconic brand will return Monday. Hancock, though, said the rollout could actually take several days.

The company will proceed cautiously before reopening any of the Hostess bakeries. “Over the next few months, we expect to announce which bakeries we’ll need,” Shiver said at the Boston conference. The Sacramento plant is the only Hostess plant on the West Coast acquired by Flowers.

Hostess’ collapse last November was costly to Sacramento. The closure of the bakery, in an industrial neighborhood on Arden Way, eliminated 225 plant jobs and several dozen more in distribution. Many of the jobs paid as much as $19 an hour and were emblematic of a shrinking sector of the Sacramento economy – blue-collar employment with decent wages.

That sector took another hit just the other day, when rival food maker Bimbo Bakeries USA announced it would close its 128-employee Elk Grove plant in November. Bimbo said the plant has been inefficient, and production will be transferred to other Bimbo facilities.

One of those facilities could be the Bimbo plant in Sacramento’s Oak Park neighborhood. “I’m sure most of it will go to the Oak Park plant,” said Martin Zimmerman, secretary-treasurer of Local 85 of the Bakery, Confectionery, Tobacco Workers and Grain Millers union, which represents workers at both facilities. “That’s a high-speed plant.”

A Bimbo spokesman said he didn’t have any information on how Elk Grove’s production will be dispersed.

As for Hostess, Zimmerman said he’s received no information on when the Arden Way plant might reopen.

The bakery union’s international organization raised questions in February about Flowers’ purchase of the Hostess bread business, complaining to the bankruptcy judge that the Georgia company wouldn’t commit to using union labor once the plants reopened. Hancock said the company is committed to hiring the most qualified workforce, but he couldn’t comment on the union’s concerns.

Zimmerman said he hasn’t had any discussions with Flowers about employing union members at the Arden Way Hostess plant.

“We’re hopeful that ... we can work with them,” he said.

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

Read more articles by Dale Kasler

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