Grupo Bimbo: Meet the Mexican CEO Who Made Your English Muffin
It may say Thomas' English Muffins, but the company behind the iconic breakfast food is 100 percent Mexican.
Slowly but surely, through acquisitions and determination, Grupo Bimbo of Mexico is now the largest bakery company in the world—selling even more in the United States than they do in its home market Mexico. Listed on the Mexican stock exchange, Bimbo brought in $13 billion in revenue last year, $6 billion of which came from its U.S. operations. (Bimbo is the diminutive of the Italian word for baby—Bambino.)
In the States, Bimbo owns snack cake companies Sara Lee & Entenmann's, and in the bread market it is the company behind Boboli, Thomas English Muffins, Arnold's, Mrs. Bairds, and other regional brands. Bimbo reaches 95 percent of the Wal-Marts, Krogers, and Costcos in America.
CEO Daniel Servitje told CNBC, in his first ever U.S. television interview, that he's not done yet. "Here in the U.S., we've been focused more on the large retailer, the supermarkets," he said. "Now we think we can go to the next stage. What about dollar stores, drug stores, or c-stores? And there are thousands of those in the U.S. that are not served in the system."
To do so, they will invest another $1 billion in U.S. infrastructure over the next five years—most of that for much-needed modernization.
"The industry in the U.S. has been an old industry that has been quite fragmented. So many of the plants that we have found have been in existence for 80, 90, 50 years, so that's the baking industry in the US.," he said. "Now that we have scale in each city and town, we can have the opportunity to leverage that scale with new, more efficient lines. That will allow the consumer to have a product that is more consistent and also fresher than the one that we had before when we had fewer bakeries of smaller size."
After acquiring Sara Lee in 2011 for roughly $700 million, many thought that Grupo Bimbo was a natural buyer of Hostess Twinkies when the brand became available during bankruptcy proceedings earlier this year. But it may have been a bit more than the company could chew at this point, with Grupo Bimbo still digesting not only the Sara Lee acquisition, but also two other purchases including a bakery company in Argentina.
"2012 for us was a tough year, we had to digest these acquisitions, then we were confronted by high commodity costs and the reluctant consumer in the US. So things didn't play out as we expected that year," Servitje said. "But as I told you, we have a long-term vision where we are and where we want to be. We tightened our budgets, and we were able to unleverage ourselves and that's the path that we're on right now. We're investing in what we already own and we want to unleverage so we have more flexibility into the future."
—By CNBC's Michelle Caruso-Cabrera. Follow her on Twitter: @MCaruso_Cabrera