Do not take this Bimbo lightly. In Mexico -- where pan Bimbo is synonymous with soft, white sandwich bread -- Grupo Bimbo is the country's largest commercial baking operation. It is one of the top bakers in the world as well, with some 60% of its sales taking place outside Mexico. Offering 8,000-plus products under some 100 umbrella brands, Grupo Bimbo produces bread, cookies, and tortillas under the Tía Rosa, Bimbo, Wonder, and Marinela brands. It also makes salty snack foods under the Barcel brand and candies under the Ricolino label. Not content with dominating the Latin American bread markets, the company owns Texas-based Mrs. Baird's and Bimbo Bakeries USA, both of which serve the southwestern US.
Bimbo's operations consist of 156 production plants, most of which are located in the US and Latin America. Critical to securing a top-shelf position, the company's products are pushed to market through some 50,000 distribution routes and more than two million points of sale in 19 countries, mainly in the Americas.
Geographically, the US is Bimbo's big market; it generated more than 45% of the company's sales in 2011. However, the US delivered 30% of the company's operating profit, in part due to distribution network costs along with higher fuel prices and losses sustained by Sara Lee's North American fresh bakery business, acquired that year. Mexico, which accounted for 40% of all sales, remains Bimbo's earnings engine, driving 70% of operating profits, thanks mainly to distribution efficiencies. Latin America, which posted a bump in demand, contributed the remaining sales in 2011, but suffered a deepening loss over the prior year. The market's earnings slump was attributed to higher distribution expenses and the costs of building a new plant in Brazil. Bimbo also has a modest presence in China, selling bread and pastries under the Bimbo brand from its two plants. (The financial performance of China is combined with Mexico.)
All told, in fiscal 2011 (ends December) Bimbo posted a slight decrease in net earnings atop more than a 14% rise in sales. Although sales over the last five years have climbed, the company's year-over-year operating income has waned since its peak in 2009. Top-line results were driven by volume sales in Mexico and Latin America coupled with higher pricing (aimed to offset an uptick in raw material costs) and the contribution from three acquisitions. Nonetheless, earnings were diluted by costs and losses related to the company's acquisitions and their integration along with the impact of expanding Bimbo's distribution network.
Bimbo's strategy focuses on growth through acquisitions that build its local presence in the markets in which it operates, as well as broaden its portfolio of big brands. In 2011 the company marked several milestones. In the US, it purchased Sara Lee's North American fresh bakery business for $709 million. The deal not only added to Bimbo's capacity with a nationwide manufacturing and distribution network, but catapulted the bread maker to rank among the largest US bread producers. Bimbo plans to invest $1 billion over the next five years to upgrade and build new facilities as it shutters others.
In Europe, Bimbo secured one of Iberia's #1 bread brands by acquiring Sara Lee's fresh bakery operations in Spain and Portugal for €115 million ($158 million). Separately, Bimbo extended its Latin American roots by buying out Argentina-based Fargo, the country's largest maker and supplier of bread and bakery products (and the only acquisition that delivered an operating profit in 2011).
Bimbo's acquisitive appetite was piqued perhaps by its 2009 takeover of US fresh baking business Weston Foods. Bimbo paid a whopping $2.5 billion, capturing the Arnold, Brownberry, Entenmann's, Freihofer, Stroehmann, and Thomas' brand names. The deal also made Bimbo a competitor to reckon with in the US bread market as it expanded the company's distribution network to tap the growing number of US Hispanic consumers.
Taking a bite out of Mexico's confectionery market, Bimbo in late 2010 acquired Dulces Vero, a maker of lollypops, gumdrops, taffy, and other sweet staples of Mexican schools sold by the country's street vendors. As part of the deal, Dulces Vero joined forces with Bimbo's Barcel snacks division.
Grupo Bimbo is majority-owned by CEO Daniel Servitje and the co-founding Servitje family. Started in 1945, Bimbo was named for the bimbo cub bear, considered "as white as flour and as soft as bread."