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Thursday, May 26, 2011

What Tastykake brings to Flowers

Tasty Baking Co. was the fastest-growing snack cake brand in the US when it was being sold at a fraction of its former value to Georgia-based Flowers Foods, according to a new report by Mitchell B. Pinheiro at Janney Montgomery Scott.

Pinheiro says Tasty's two plants, the new South Philadelphia bakery and the frying plant out in Oxford, which makes doughnuts, and honey buns for Wal-Mart (20% of total Tasty sales), can be expanded to handle more Flowers' products, which include Mrs. Freshley's doughy sugary snacks.

But don't expect too much from consolidation, Pinheiro added.

Tastykake might be able to fit $500 worth of additional Flowers products on its 1,000 routes per week. But that would only add about 1% to Flowers' total sales. Tasty snack-cake routes currently generate around $7,000 per week.

"The vast majority of Tasty's routes will remain as snack cake-only routes, as most of Tasty's routes do not have the capacity to handle the volume of an average bread route," Pinheiro pointed out.

Tasty will be more helpful in getting Nature's Own and other Flowers brands into northeast US supermarkets and maybe into Wawa (which buys 10% of Tasty's production).

Tasty is the #4 snack cake brand in the US, after McKee, Hostess and private labels and in front of Horsham-based Bimbo USA, Kraft Foods, and Flowers. That's extra impressive when you consider Tasty has the smallest market area of the group. And Tasty has boosted dollar sales faster than any other brand over the past month, the past three months, and (almost) the past year, according to industry data Pinheiro posted.

So why did Tasty sell? High costs, and production problems with the new plant, made it tough for Tasty to turn bigger sales into profits.
Posted by Joseph N. DiStefano @ 12:20 PM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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