After a five-year absence, Interstate Bakeries Corp.'s (IBC) position as an innovation leader in the baking industry appears to be back. "The R&D team has been freed of everything that held them back from a speed, focus and innovation standpoint," Jacques Roizen, IBC's interim chief marketing officer, tells Baking Management. "They now have the resources and the support, from a strategic standpoint and from a management standpoint, that are necessary to put their talent to work."
In the last few months, the Kansas City, Mo.-based bread and sweet good bakery released new products, marketing campaigns and redesigned packaging as part of its strategy to emerge from Chapter 11 bankruptcy protection. The company hopes to reverse its recent mediocre record of innovation with a renewed focus on research and development and marketing. Roizen is spearheading IBC's marketing and development efforts until a permanent replacement is found. He is part of the Alvarez and Marsal team that was hired to emerge IBC from bankruptcy protection.
In the years preceding IBC's bankruptcy filing, many in the baking industry noted a significant slowdown in the company's new product efforts. This slowdown appeared parallel to the company's declining performance. The company failed to capitalize on major trends such as premium breads and Hispanic markets, and was late to market on other smaller trends.
"In September when the company filed for bankruptcy, there was not much in terms of an innovation pipeline," Roizen says. "The last innovation was Baker's Inn™, which was very impressive, but at the same time, it was the first innovation in a long time."
Shortly after the bankruptcy filing, Roizen conducted a two-week review of the bakery's brands and opportunities. Next, he formulated a strategy aimed at helping the company's short-term future.
"Consumer packaged goods companies traditionally have a large portfolio of brands and a large portfolio of initiatives," Roizen says. "While this sometimes accounts for the value of the company, it's also a source of distraction. You have to focus on your key brands-the ones that are the largest with the most potential."
IBC pegged three brands to focus its innovation efforts on: Wonder®, Hostess® and Baker's Inn™. The company chose Baker's Inn™ not for its size, but for its short-term potential, Roizen says.
Focusing its efforts on the Wonder® brand name was a no-brainer for IBC. The bread brand has immense name recognition, but a lack of innovation has stalled sales. The company launched White Bread Fans 100% Whole Grain from Wonder® in July to boost sales and give consumers what they want.
The product has the taste and texture of white bread, the company says, but is a 100% whole grain bread. Similar "white wheat" products that use varying amounts of whole grains have been available for a while, but IBC's new product is the first bread on the commercial market to mimic white bread's attributes in a 100% whole grain formulation.
"We started working on the product in October, and we were absolutely convinced that our competition would have something similar in the pipeline and beat us to market," Roizen says. "It is very interesting to find out seven months later that we were the first to the market. It was surprising that no one in the industry came up with a real 100% whole grain bread that tasted and felt like white bread."
Making a 100% whole grain bread that tasted and felt like white bread was a must for IBC. "It needed to be 100% whole grain to capitalize on the trend toward whole grain, instead of having an opportunistic sticker on the label that means a couple of whole grains were dropped in the bag before it was closed," Roizen says.
White Bread Fans 100% Whole Grain from Wonder® is slightly tan in color and available in San Francisco; Sacramento, Calif.; Kansas City; Omaha, Neb.; Memphis, Tenn.; and Little Rock, Ark. The product is expected to be released nationwide in early 2006.
IBC's Hostess® and Wonder® brands have a lot in common. Both brands have enormous name recognition, and both brands lacked innovative launches until recently. IBC rejuvenated its Hostess® product line by introducing new packaging, forming promotional partnerships and launching a new line of Hispanic sweet goods.
Hostess'® new packaging features updated photography and contemporary graphics. The new packaging was launched in California, Arizona and Nevada, and the company expects the new packages to hit nationwide distribution by the end of the year. The company supported the new packaging with an ad campaign.
The company also launched a line of Hispanic Hostess® products called Las Delicias de Hostess®. This product launched in August and contains the following varieties: Cup Cakes in strawberry, pineapple and dulce de leche flavors; Pastelitos (Zingers) in strawberry with coconut, pineapple with coconut, and coconut with chocolate frosting flavors; and Pound Cake in pecan, raisin and plain varieties.
IBC also formed a promotional partnership with the Charlie and the Chocolate Factory movie. As part of the partnership, Hostess® Cup Cakes launched a limited edition of Chocolicious Wonka Cakes featuring movie-themed packaging, purple icing and a creamy filling.
In the years leading up to IBC's bankruptcy, one of the company's only innovative launches was the Baker's Inn™ line of premium breads. The company recently mounted a national television and magazine advertising campaign to support the product line. IBC also introduced four new varieties of Baker's Inn™.
These actions, combined with developments with the Hostess® and Wonder® brands signify a return to innovation for IBC. "This year, we have had five strategic initiatives already," Roizen says. "And this is a good start, but it means nothing if there are not another six to eight initiatives in the pipeline."
The attitude of IBC's new management team is quite a departure from the old guard, where cost-cutting, not innovation was the focus. "Part of our role at Alvarez and Marsal is to come in and evaluate the capabilities, fix what requires improvement and to make sure our actions survive us when we're replaced by permanent management," Roizen says.
So far, the new management team has laid a solid base of innovation to put the company back on the right track.