Case Study: Grupo Bimbo

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Q4 - OE_Strengths
What do you see as Flowers’ particular strengths?
"What attracts me to the company is my sense that they have good governance. And Grupo Bimbo has a very large market share. Grupo Bimbo has twice the market share of Flowers Foods. And Flowers Foods has more than twice the market share of Pepperidge Farms. Flowers has longevity. Longevity works for them. And I appreciate some of their technology, but what I really appreciate is the industry is shaping up so that there are going to be two main industry participants of consequence, Flowers Foods and Grupo Bimbo. And one of the things that realm attracted me to the company is when you look at the officers and senior managers, these are all folks with relevant and durable and
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"Grupo Bimbo. Pepperidge Farms is owned by Campbell’s, and Campbell’s overshadows Pepperidge Farms, as far as business so that is not an investment peer. What I call a ‘look alike’ would be Kellogg’s, because of the direct store distribution. Ad little bit Frito Lay because of direct store distribution, but they have brand equity and Flowers Foods has none. And Lance."
Why do you prefer this over other capital deployment options?
"Pay down debt. I only say paying down debt so that they can actually invest more internally. Those go hand in hand, I don’t cotton to any more acquisitions. And I would like to see the balance sheet get a little strengthened. I think they are ‘toting around’ just a little too much debt. But my hope is that outside of their core markets is where we can see share growth. And as a consequence we get some operating margin expansion."
In your view, what can Flowers do to drive shareholder value over the next 12-24 months?
"Just execute – just cut through costs and push the margins a little bit."
Q23 -

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