Company Profile Natural Ovens Bakery
Headquarters: Manitowoc, Wis.
Natural Ovens' Valparaiso facility houses one bread line and various systems to produce bagels, cookies, muffins, and buns and rolls.
Natural Ovens adds omega-3 fatty acids and fiber to its bread products.
Natural Ovens' 100-ft. tunnel oven bakes the company's wide assortment of products.
After baking, Natural Ovens' loaves are depanned and conveyed through two spiral conveyors.
Natural Ovens boosts the health content of its bakery foods by adding ingredients that are both functional and healthful.
Paul Stitt, founder of Natural Ovens Bakery, is not afraid to say what he thinks. Although firmly entrenched in the baking industry for nearly 30 years, and proud of that fact, he is never shy about discussing what he perceives as the faults of the industry that has brought him success. And, according to Stitt, the industry has its fair share of faults.
Central to these faults, Stitt says, is the baking industry's continued use of bleached white flour, white sugar and hydrogenated fats. Although at least one of these ingredients can be found in almost all of the bakery foods produced in this country, Stitt believes they are poisoning the human body.
"When you start making bread, you should never start with bleached white flour," Stitt says. "The only really good use for bleached white flour is killing rats."
Although probably 90% of the bakers in this country would vehemently disagree with Stitt's assessment of bleached white flour, it's important to see beyond the statement and look at the bigger picture.
When America's obsession with carbohydrates and health began developing in the last two years, almost every bread baker in the country saw their sales stall. To some degree, a segment of consumers stopped buying bread, and in particular white bread, because they were bombarded with "expert" testimony and zealous author interviews about the dangers of carbohydrates. "People put all breads and all carbs in the same bag and said they're all bad," Stitt says.
This rising sentiment among American consumers has put many bread bakers in a quandary. How does one grow sales in a category if a growing segment of consumers think the product is bad for you?
Stitt's statement on the quality of bleached white flour does not represent a majority attitude among consumers, but it does represent the big picture currently dominating the bread industry. Consumers are sidestepping white bread in significant numbers to purchase premium breads that not only taste good, but also can be chock full of healthful properties. This exodus from the white bread category is evident in statistics from Information Resources Inc., which measure fresh white bread sales, excluding Wal-Mart. For the 52-week period ended May 23, total white bread unit sales fell 6.2%, and not one brand among the top ten selling white bread brands reported an increase in year-over-year unit sales.
This consumer preference shift is an ideal complement for Natural Ovens Bakery and its mission to improve the health of America one loaf at a time.
Upping the ante
For a little more than 25 years, Natural Ovens Bakery has maintained a small, modest but growing business. Headquartered in Manitowoc, Wis., the company was founded by Paul Stitt because he noticed a shortage in preservative-free whole grain breads in the Midwest. To fill this need, Natural Ovens manufacturers a line of breads, muffins, bagels and cookie products that it sells to supermarkets in the Midwest and some southern states.
After 25 years of consistent sales growth, the company decided to up the ante and become a major player in the bread industry. It recently completed the construction of a 60,000-sq.-ft. bakery in Valparaiso, Ind., that houses a bread line and various pieces of equipment to manufacture bagels, cookies, muffins and buns.
This new plant allows Natural Ovens to expand its reach and further spread its message about the importance of healthful bakery foods. This message has spread to other high-volume bakeries as well, and many multiplant bakeries are beginning to see the benefits of producing whole grain, healthful breads.
"No one paid attention to us in the past because I was just a radical out in left field. But now that we're one of the most profitable bread companies in the United States, and growing the fastest, they say maybe he's not quite so stupid as we thought," Stitt says. "I've come from the far fringe to be the mainstream."
Although the products created by Natural Ovens are yet to be solidified as mainstream, the market for functional and healthful bakery foods is expanding, and not just by fringe players. Thomasville, Ga.-based Flowers Foods' launch of its Healthline stable of products has signaled that fringe bakers are not the only ones intent on formulating breads with specific health attributes.
Attempting to formulate a healthful bread is a win-win situation because all bread has inherent healthful properties. Although the positives and negatives of bleached white flour can be and have been debated, it's hard to deny that every loaf of bread provides some healthful properties, such as folic acid, iron and niacin. So then, what makes a bread healthful in the eyes of consumers?
"I suggest all bakeries start out with unbleached, high-protein flour," Stitt says. "That gives you a good base for starting. It gives you more nutritional value, more protein and you just have a better quality flour."
And, bakers should not limit themselves to just one type of flour or one type of grain per product, Stitt says. Natural Ovens uses a multitude of flours and grains in the production of its bread products to impart both a quality flavor and healthful benefits. "If you put in too much of any one grain, you can end up with an imbalanced flavor," Stitt says. "You need multiple grains, and multiple grains have a flavor enhancing effect on each other. The other thing is that the healthiest diet is a diet of various whole grains, not just one."
For example, the bakery's Original Lo-Carb Bread contains a variety of flours and grains, including bean flour, stone ground whole wheat flour, untreated high-gluten wheat flour, soy flour, sorghum flour, wheat bran, oat groats and ground flaxseed. According to George Douglas, Natural Ovens' manager of Valparaiso operations, the company incorporates bean flour into its low-carbohydrate formulas because it's an excellent source of fiber and very low in carbohydrates.
Full of fiber
Another trait of Natural Ovens' healthful breads is their high-fiber content. To manufacture its high-fiber breads, the company has to pay close attention to mixing times and moisture levels. According to Stitt, mix times for a high-fiber bread have to be defined to the nearest second, and going either 20 seconds short or long of this time can result in a bad batch.
Incorporating significant amounts of fiber in a bread also requires the addition of other ingredients. "We learned that in order to put a lot of fiber in bread, you have to pump in a lot of protein to hold it together," Stitt says. After testing various forms of protein, including soy protein, the company opted for wheat protein. "We found that whole wheat protein is by far the best protein there is to help hold bread together," Stitt says.
However, a bread with significant amounts of fiber and wheat protein can be hard to digest. "After incorporating wheat protein and fiber, you wind up with a bread that's like sawdust and you can't swallow it because it's so dry."
To resolve this issue, the company turned to ENRECO Inc., which is a division of Natural Ovens Bakery that supplies specialty ingredients such as flaxseeds and antioxidants. The food technicians at ENRECO and Natural Ovens worked together and discovered a process for treating flaxseed that "made the bran slip down the throat," Stitt says. "It's a ground, stabilized specialty variety that we use. It makes the bread much more palatable and easy to swallow."
The flaxseed also boosts the omega-3 fatty acid content of Natural Ovens' products, which is clearly labeled on each loaf of the company's bread.
Besides creating whole grain breads with significant levels of fiber and flaxseeds, Natural Ovens also boosts the health content of its breads by adding ingredients that do not necessarily perform a function other than being healthful. For example, the company incorporates oat groats and wheat bran into some of its formulas for the sole purpose of improving the health content of its bakery foods.
The company also includes a vitamin and mineral mix in each of its batches. This mix consists of calcium carbonate, magnesium citrate, vitamin C, citric acid, zinc sulfate, niacin, vitamin B12, folic acid, vitamin B6, chromium Polynicotinate, thiamin, riboflavin, seleno yeast and vitamin D2.
Besides boosting the health content of products, Stitt says the company's vitamin and mineral mix also ensures that consumers feel full after eating the company's products. "It's one of the key factors to put into a food product so people do not eat that much," Stitt says.
However, Stitt cautions that using too many vitamins may have an adverse effect. He recommends incorporating 10% to 15% of the recommended daily allowance per serving.
Creating a healthful bread chock full of fiber and other nutrients presents many challenges. These challenges only get tougher as one moves the product from the research and development lab to the plant floor. The inside of Natural Ovens new Valparaiso plant resembles most highvolume pan bread facilities. The company uses a single-arm horizontal mixer to mix its dough; a ram and shear four-pocket divider and moulding-system to form its dough; a 100-ft. direct-fired tunnel oven to bake its bread; two spiral conveyors to cool its products; and a bread slicer and bagging system to package its breads.
Despite its appearance though, manufacturing Natural Ovens' products is far from ordinary. "Making regular white bread is a no-fail process. But with our types of products, you have to be really sharp because it seems that the weather, the moon and the sun affects how the bread rises," Stitt says.
According to Stitt, the main challenge in manufacturing Natural Ovens' breads are the non-traditional ingredients the company uses in its products. "You have to constantly monitor the process because no matter how hard you try, the ingredients have some built in variables in them," Stitt says. For example, the company uses many ingredients, such as bean flour, that are relatively new to the baking industry. As a result, no two pallets of bean flour will ever be the same.
These ingredient variables have forced Natural Ovens to employ equal parts manufacturing science and artisan bread baking into its process. This process requires the company's employees to maintain a constant watch over the product and how it performs.
Spreading the word
With its Valparaiso facility up and running and a recent sales boost from its low-carbohydrate breads, Natural Ovens is positioned to capitalize on consumer trends toward healthful, whole grain products. "As soon as we have enough funds generated, we're going to start building plants like this (Valparaiso) all over the U.S.," Stitt says. "Unless our competitors start to wise up and make healthy breads, we're just going to take their lunch money away."
Although far from dominating the bread sector, Natural Ovens' scaled back business model creates an interesting dynamic in the bread industry. For example, the company does not pay slotting fees or advertise, but still manages to acquire and maintain shelf space next to the giants of the bread industry. The company also does not have to worry about paying dividends to shareholders or its owners. The company's unique funding program mandates that its profits are divvied into three areas: 10% goes to research and charities, 25% goes to employee bonuses, and 65% goes to the company's growth and development. According to Stitt, these factors enable the company to generate cash much faster than typical bakeries.
Another factor in the current success and future profitability of Natural Ovens is the margins it garners from its line of bread products. "The profit margins are huge in healthy breads compared to the profit margins in conventional bread," Stitt says.
A key factor in Natural Ovens' margins is the company's ability to demand a high price point from consumers. "Bakers have to think that the real value of a healthful bread product is $5 a loaf, and then you can afford to put in better ingredients," Stitt says. "Some companies are driving themselves broke and they can't figure out what's wrong. But if they made a bread that was worth $5 a loaf, people would pay $5 a loaf. But if your bread is only worth $1 a loaf, people will only pay $1 a loaf."
Charging $5 for a loaf of bread may appear as an impossible and ridiculous notion to some bakers. However, as bread volumes continue to decline, it would benefit everyone in the industry to innovate new products and new models to market bread. Although Natural Ovens' business plan may not be for everyone, it certainly has its benefits in terms of making money and promoting health.
"My advice to the white bread companies is that if you're in a hole, the first thing you need to do is quit digging, and start going the other way, which is up," Stitt says. "Creating healthful products is their only salvation."