George Weston Limited fuels Canadians through those long winters. About 95% of the company's sales come from its 63%-owned Loblaw Companies Limited, Canada's largest supermarket operator (with more than 1,000 stores under some 20 banners including Loblaws, Extra Foods, T&T, and Zehrs Markets) and the country's largest wholesale food distributor. The rest comes from Weston Foods, with operations in Canada and the US that focus on freshly baked goods, frozen dough, biscuits, and other bakery products. (Its Interbake Foods division is a major supplier of Girl Scout cookies in the US.) Chairman Galen Weston owns about 63% of the company, which was founded by his grandfather in 1882.
Both Loblaw and Weston Foods are facing challenges resulting from changing consumer preferences concerning what to eat and where to shop. In response, George Weston has been restructuring both businesses to better match changing tastes. The weak economy on both sides of the US and Canadian border have put a damper on sales. Total sales rose less than 1% in 2010 vs. 2009 and were slightly below 2008 levels. The Loblaw segment outperformed Weston Foods with sales up about 1% vs. a nearly 4% decline for Weston Foods. Loblaw's 2010 sales got a boost from the acquisition of T&T Supermarket in late 2009. (T&T is Canada's largest retailer of Asian foods.)
Looking to position itself on a more profitable path to growth, George Weston purged a couple of its businesses. In early 2009 the company sold its US-based fresh baked and baked goods business Dunedin Holdings to Mexico's Grupo Bimbo for about $2.5 billion. The sale included the Arnold, Brownberry, Entemann's, Freihofer, Stroehmann, and Thomas' brand names. (The company's Interbake Foods and Maplehurst Bakeries businesses in the US were not included in the transaction.) Previously, George Weston had sold its Neilson Dairy business to Saputo.
Cash from the divestitures was used to introduce new higher-margin products that customers want to eat and to fund acquisitions. To this end, George Weston acquired Keystone Bakery Holdings, a US provider of frozen cupcakes, doughnuts, and cookies for in-store bakeries and foodservice firms. The $185-million deal expanded the frozen baked goods division of its Maplehurst Bakeries unit. Aside from sweet treats, George Weston is looking to shift its product mix to include more whole grains, as an increased focus on healthier breads has hurt sales of white-flour-based products. In late 2010 the company acquired artisan and European-style bread manufacturer ACE Bakery for C$110 million (US$108 million). Based in Toronto, ACE was made a subsidiary of Weston Foods (Canada). Its breads are distributed in Canada and the US.
Loblaw, which is in the last year of a five-year restructuring plan, is facing increased competition from non-traditional rivals, such as Wal-Mart Canada and Costco Wholesale Canada, which are claiming a growing share of the retail grocery market. In response, the company is cutting prices and sprucing up its retail stores. It's also aggressively expanding its low-price Real Canadian Superstore format, which numbers more than 100 stores, and its No Frill chain of discount supermarkets to better compete with foreign superstore operators. In recent years, Loblaw has been shuttering struggling Provigo stores.