Over the past decade Bimbo, Mexico’s leading industrial bread maker, has expanded its overseas operations to 15 nations of Latin America and Europe. Foreign operations now account for 25% of gross sales, but only 4% of profits. Investors are grumbling about Bimbo’s overseas performance and management is likely to tame its aggressive expansion.
The prime motivator for Bimbo’s international expansion was saturation of the Mexican bread market, of which Bimbo held a 90% share until recently. Management remains optimistic that foreign investment will pay off, citing that over the past seven years sales have grown an average of 9.4% and profits climbed 7.7%.
In Latin America Bimbo is struggling with a low level of industrialised bread consumption and a preference for fresh bread produced in neighbourhood bakeries. However management sees great growth opportunity in the region as consumers increasingly turn to supermarkets for their food shopping and opt for industrialised bread that will stay fresh between less frequent trips to the store.
By Steve Lewis, just-food.com correspondent