SUPERVALU'S BAKERY IS SLICING 500 SLOW ITEMS

ROSEANNE HARPER

HAZELWOOD, Mo. -- Supervalu's bakery manufacturing arm, Hazelwood Farms Bakeries, is dropping 500 low-volume products in an effort to sharpen its focus.

The 500 items represented the slowest movers among the 1,400 products currently manufactured by Hazelwood, based here. Many of them were reportedly not competitive enough at retail on a price basis.

"After a thorough analysis of our business processes and over 1,400 Hazelwood product offerings, we found that over half of these products represent less than 5% of our business," Walter VanBenthuysen, chairman and chief executive officer of Hazelwood Farms Bakeries, said in a statement.

"This move will allow us to focus on products and services that are most important to our customers," VanBenthuysen added.

The company's statement did not name the products to be eliminated, save for decorated cakes. It also did not identify the products and services that would get increased attention as a result of the changes.

Industry sources told SN that the company would probably concentrate on lines such as proof-and-bake breads and rolls, considered its biggest strengths, as well as its technical support services.

VanBenthuysen could not be reached for further comment. A spokeswoman for Supervalu, Hazelwood Farms' parent company, emphasized that the decision to cut the product portfolio was based purely on the numbers.

"This was a Hazelwood

Farms decision, not a Supervalu decision, and it was strictly a business decision based on those products being low-volume items, and not being competitive," said Rita Simmer, at Minneapolis-based Supervalu.

"I know a lot has been said and written about restructuring at Supervalu, but this has nothing to do with restructuring," Simmer added.

Simmer pointed out that the cuts on Hazelwood's business for the most part will not lead to the elimination of entire product lines, but rather the trimming of variety within many lines.

"For example, in the fried doughnut line, which had 15 items, one or two items such as doughnut fritters will be eliminated; and some items in the yeast-raised bread category will no longer be made," she explained.

However, in its statement Hazelwood did say that it will drop the entire line of decorated cakes "currently offered." A local industry source familiar with Hazelwood Farms' operations said the company will still be able to supply decorated cakes to its retail customers, but made by different manufacturers.

The industry observer told SN that the time was probably overdue for the company to reduce the variety of its products, and the move represents a shift in approach toward meeting its customers' needs.

"The company built its business on being willing to customize, to do special orders, things that the larger manufacturers wouldn't do, and to offer a lot of variety; but the number of products just kept growing until there was too much variety to manage," the source said.

The source used decorated cakes as an example of the approach.

"They have had 7-inch and 8-inch decorated cakes and quarter-sheets, half-sheets and full-sheets in yellow and white and chocolate with different icings, and the prices weren't competitive at retail. I've seen their quarter-sheets retailing for $2 more than others that were comparable," the source said.

Hazelwood's decorated cakes are hand-decorated. "Assembly line, yes, but done by humans," the source said, "so it's probably not cost-effective for them."

The decision to stop its production line of decorated cakes will prompt Hazelwood this March to lay off 100 employees at its St. Louis facility where the cakes are made. Simmer at Supervalu told SN that Hazelwood's plan to cut its manufacturing load should not appreciably affect its retail customers, because "the company is working to find alternate sources of the products."