Flowers Foods to raise prices

by Jeff Gelski
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NEWTON, N.C. — Executives of Flowers Foods., Inc., Thomasville, Ga., reported on plans to raise prices in December and also talked about how the three-year bankruptcy of competitor Interstate Bakeries Corp., Kansas City, has changed the competitive landscape of the baking industry on Oct. 4. Their comments came during an analyst day at the company’s bakery in Newton.

Flowers Foods plans to raise prices again in December following an increase of about 3.5% in August, George E. Deese, president, chairman and chief executive officer, said. Expected rising commodity costs for 2008 led Flowers to make the decision. Mr. Deese addressed the issue of consumers possibly choosing to buy brands that are less expensive.

"The biggest fear is people will trade down," he said. "There’s no evidence, absolutely zero, so far to show that is true."

He said the entire food industry is facing the same challenge of rising commodity costs.

"Am I concerned about it? Yes," he said. "Am I losing sleep over it? No. I say that because historically you do have up markets in commodities on occasion.

"But what I do have confidence in, is the management team and the people we have in our organization to always deal with issues that come up."

He added of the I.B.C. situation, "All of us know that our largest competitor has been in bankruptcy for three years. The competitive landscape has changed. It is changing."

Mr. Deese said Flowers Foods has seen sales growth in its mid-Atlantic region.

"Over the last several years, three bakeries in our region were closed by one of our competitors," said Joe Tashie, a regional vice-president responsible for the mid-Atlantic region.

In new products, Flowers Foods plans to launch 100-calorie mini cupcakes and mini muffins in November.

"While the overall cake category is flat, we’re seeing growth in the better-for-you segment of this marketplace," said Allen L. Shiver, president and chief operating officer of Flowers Foods.

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