Flowers Foods has said that it does not expect private-label products to gain further market share in the US bakery category.
Speaking to analysts during a conference call, chairman, president and CEO George Deese said that he does not see private label as a threat to Flowers’ branded business.
“I’ve always said that it is a mature category and I do not see private label gaining that much market share in the future,” Deese said.
According to Deese, in dollar terms, private label already accounts for 25-26% of sales in the category.
Earlier today (19 August), Flowers said that it saw second quarter sales increase 13.6% jump in second-quarter revenues, driven by acquisitions and strong growth of branded retail sales.
Branded retail sales increased by 10.7% during the quarter, despite fears that US consumers would trade down to private-label products in response to the downturn.
“Competitive activity and more product promotions has probably been an effective tool against private label at the moment,” Deese revealed.
Deese said that the company had been buffered from the recession in the US because “bread seems to sell in bad times as well as good”.
While the recession has not – as yet – had an adverse impact on sales, it has hampered Flowers’ acquisitive ambitions, Deese revealed.
“We have our line in the water and we are fishing real hard. I do feel though that a lot of companies are waiting for the economy to pick up before they might sell because it has been a difficult situation and earnings may not be as strong, so they may not get as much for the business. But we are very active. Historically we have grown by acquisition and we will continue to grow by acquisition and organically as well. So we are very excited by those opportunities.”