Flowers Sticking to Branded Strategy

Aug. 15, 2022
Flowers Foods is holding to its long-term strategy of shifting emphasis to branded products over private label.

Flowers Foods is holding to its long-term strategy of shifting emphasis to branded products over private label, even as the latter surges during inflationary times, executives said at the latest earnings call.

Flowers reported sales in the second quarter of $1.13 billion, an 11% increase over the same period last year. Net income, however, was down 4.8%, to $53.7 million.

Earlier this year, CEO Ryals McMullian said that Flowers would be focusing more on its own brands such as Dave’s Killer Bread, acquired in 2015. In remarks to analysts discussing the second-quarter results, McMullian acknowledged that private-label foods in general had gained share because of inflation. But he claimed that it was because prices on private-label goods have not yet gone up as sharply as branded ones, especially in mass retail channels like club stores.

“A lot of that private label share growth was being driven in mass [retailers],” he said. “And what we’ve seen in mass is retail prices being held down, which kind of creates a bit more of a gap than you might have historically seen.”

McMullian also said that Flowers was held back to some extent in the quarter by capacity constraints, caused by problems in sourcing packaging and other challenges, but that these have resolved.

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