Grocery Store Guru

All about the grocery industry, from a store level perspective.

Maple Leaf CEO steps into a GF mess

I read with great interest an article posted by Jax over at Gluten Free Ontario. You can read it here:

http://www.facebook.com/#!/GlutenFreeOntario/posts/226739044115922

For the record, I don’t thing he meant to portray GF the way that he did. We must remember that this was not a prepared statement (which one can go back and correct), but comments made during a conference call. For all I know he may actually believe that GF is bunk (I know many in the grocery industry that do, and liken it to Atkins), but even if that’s the case I can’t imagine he’d go on the record in the name of his company and say it.

What I do think is that GF makes a great scapegoat for the issues that the Canada Bread unit of Maple Leaf foods is having right now.

Canada Bread’s major competitor is Weston’s Bakery, which owns the license for Wonder Bread in Canada. Their parent company is Weston, which also owns the Loblaws family of grocery stores (Loblaws, No Frills, Fortinos, Valumart, YIG, Zehrs and others). It’s not a stretch to see why these grocery stores feature the Weston Bakery breads rather than the Dempsters breads (sorry – Canada Bread will always be Dempsters to me!) And even though that only cover 1 of the 3 major grocery retailers in Ontario, they’re the one gaining market share.

So rather than blame declining sales on the declining market share of their customers – a problem that Maple Leaf has no control over, why not frame it as people moving to a GF diet… something he then portrays as a solvable problem. The investors listening to the conference call would rather hear that the sales decline is the result of a solvable issue than something that out of the company’s hands.

As for the statement about making a GF bread, I don’t doubt that Maple Leaf has no interest in making a GF bread – but not for the reasons given. Again, the CEO makes it sound like there’s no money to be made there, and that all GF bread tastes bad. Anyone that’s tried Udi’s or the new Kinnikinnick breads knows that’s simply not true. So why wouldn’t they be interested?

The amount of money that Maple Leaf would have to sink into making a GF bread would be huge. Usually, when introducing a new product, the investment is almost all in the marketing – they already have the plant and some of the machinery. It’s a matter of re-purposing part of the facility, or even sometimes just scheduling a different run on the same machinery. For a GF bread, however, it’s a different story. There is a general mistrust in the GF community of anything made on shared machinery, or even in a shared facility. I think that Maple Leaf is aware of that, and know they would need all new machinery at a minimum, and preferably a different facility. That causes capital issues, as well as Logistics issues.

This soon after the Listeria issues that Maple Leaf had, I don’t think they’re willing to risk another contamination event either!

To pull this long ramble together, I think the CEO knew he had to shoot down the notion of a GF Bread, and could use GF as a great scapegoat for Canada Bread’s disappointing numbers. I just think he chose his words poorly, and could have benefitted from a prepared statement on the matter. Maple Leaf already provides a lot of GF option through it’s other business units – Schneider’s has GF options, and Maple Leaf is the largest supplier to M&M Meat Shops, including some of their GF options as well. It would do the GF community well to continue to support the companies that are making and labeling their products GF, even if their CEO needs a kick in the pants.

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August 9, 2012 - Posted by | Industry

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