Philly Deals: Tasty may expand in Chester County

A Flowers Foods truck in Georgia. Tastykake sales are up since Flowers bought it, partly due to its bread-?truck routes. HAROLD BRUBAKER / Staff
A Flowers Foods truck in Georgia. Tastykake sales are up since Flowers bought it, partly due to its bread-?truck routes. HAROLD BRUBAKER / Staff
Posted: March 22, 2012

Flowers Foods, the Georgia-based bread- and snack-maker that bought Philadelphia's Tasty Baking Co. last year, is weighing whether to build a new bread bakery in the Philadelphia area.

The company "is a week or three away from an announcement of a new bread bakery with access to the eastern Pennsylvania market," writes Mitchell Pinheiro, food-industry analyst at Janney Capital Markets, in a report to clients Monday, after visiting with Flowers officials at the company's South Philadelphia snack factory.

Asked Flowers' plans, spokesman Keith Hancock read a statement: "The Pennsylvania market is a priority for Flowers Foods. Feasibility studies are currently under way to determine the best alternative for adding capacity to support our sales plans for the Mid-Atlantic region."

As the packaged bread and snacks industry consolidates, Flowers has been looking to purchase an existing industrial bakery in the region, but Pinheiro says the company has lately leaned toward building a new "green field" plant. One possible site, he said, is the property surrounding the existing Tasty doughnut- and honey-bun-frying plant in Oxford, Chester County.

The existing Oxford plant, originally built by Keebler, now makes packaged snacks for Walmart and other clients. The site has room "to double its footprint," plus "direct access to rail and a good labor market," which makes Oxford "a prime location for expansion," Pinheiro wrote.

Oxford is near Chester County's southwest corner, near low-wage Cecil County, Md., and southern Lancaster County. Amazon.com is building a giant distribution center in Middletown, Del., close to Cecil County's eastern border, in hopes of tapping a similar labor market nearby.

Flowers is also a "likely buyer" Holsum and Butter-Krust bread sales businesses in central Pennsylvania that Grupo Bimbo, maker of Stroehman's, Entenmann's, and dozens of other brands, has agreed to divest to meet government antitrust concerns, Pinheiro adds. Mexican-owned Bimbo's U.S. headquarters is in Horsham.

Flowers has lately boosted production at the partly state-financed South Philly Tastykake plant, which opened in 2010. As an independent company, Tasty had a tough time working the bugs out of its initial production runs and was unable to turn a profit on the facility.

But Tastykake sales are up under Flowers management, thanks partly to additional sales from Flowers' bread-truck routes. So the plant, which was operating at less than half capacity when Flowers bought it, is now reporting "steady growth" and better margins, Pinheiro says.

Flowers is also poised to exploit rival Wonder Bread and Twinkie baker Hostess' bankruptcy, Pinheiro adds. Hostess has a plant in Northeast Philadelphia and distribution centers in King of Prussia, Wilmington, and Atlantic City.

Printers combine

George Schnyder's IBS Direct, a King of Prussia direct-response printer, says it has purchased Aaron Hollander's Imtek L.L.C., Bridgeport, N.J., four months after it purchased Mark Smith's Mars Graphic Services, Westville, Gloucester County.

Operations are being combined at IBS's King of Prussia plant, said IBS president Ted Sherwin, and the acquired firm's workers have all been offered jobs there.

Sherwin declined to disclose the sale price. Citizens Bank of Pennsylvania helped finance both deals.

With increased capacity, "we are expanding our geographic reach into the Midwest and South and taking on more national customers," Sherwin told me. The enlarged IBS counts AAA, direct mailers, ad agencies, home-equity lenders, and envelope manufacturers as clients.

The combined company employs 120, nearly triple IBS's premergers total. The company says sales have more than doubled as a result of the acquisitions and new business.

In a statement, seller Hollander called IBS "the right fit" for the 14 people he'd hired for Imtek. The firm specialized in "retail, automotive, financial services, travel, catalog, education, publishing, and health care" companies.

Contact Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com, or follow on Twitter @PhillyJoeD.

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