TAKEOVERS GIVE HOBART BIGGER CHUNK OF THE BAKERY

JENNIFER QUAIL

TROY, Ohio -- In a series of acquisitions designed to open up a whole new market, Hobart Corp. here is providing equipment and support services to in-store bakeries.

"The plan has really been evolving over the past 12 to 14 months," said David Casto, president of Hobart U.S.'s food retail division. "Just about every time we were positioned to externalize the strategy, we would refine and make more changes."

The company, long-established in the supermarket deli and food service, was drawn into the bakery side as the department evolved from a simple merchandising center into a full-scale manufacturing operation. At first, Hobart began providing turnkey solutions for bakery retailers, back in 1989. Casto said the company started in the oven business, with a very limited line.

Industry consolidation accelerated the ISB development, and Hobart found it had to adapt its programs to the changing marketplace. In part, this meant creating a national support program from more diverse regional operations. The strategy required a combination of products and services that would be appropriate for the increased activity in in-store bakeries.

"We took our 101 years of food-service experience and started to augment it with outside acquisitions," explained Casto. "This brought more expertise and a broader product portfolio which better supports this last department within the four walls of the supermarket."

Hobart's brand image and reputation were built in the meat department of the supermarket, according to Casto. The company began as a purveyor of the prep, labeling and packaging equipment that was used in the meat department. From there it evolved into a purveyor of automation service scales and software packages. Hobart entered its next growth area during the early stages of deli development, a relationship that ultimately helped the firm migrate to the supermarket fresh meals forum.

But with all its supermarket involvement, Hobart still had not tapped the possibilities of the bakery department.

"We had a partial role and participation in bakery," said Casto. "We had the largest share of mixing in the bakery industry, but we stopped short of providing a full solution."

To increase its penetration into in-store bakeries, Hobart acquired Baxter, based in Seattle, in October 1997 and Baker's Aid, based in Syosset, N.Y., in November 1998. But the buyouts alone did not create a new market for the company.

"What we had, basically, were three islands of expertise that had built relationships and expectations with the customers they served independently," Casto said. "What we launched the first part of this year was an integration effort that puts together a team we're referring to now as Hobart Bakery Systems."

Each of the companies was originally identified for its individual business objective. Casto said the Hobart baking oven was a well-respected bread-producing oven, Baker's Aid did an extremely good job on sweet goods and Baxter produced basically a combination oven.

"What you're going to see us do over a period of time is continue to refine our offering, not necessarily [by] eliminating anything, but augmenting our customers with the right product, for the right application, in a much broader portfolio," he said.

Casto said the acquisitions had given Hobart the leverage it needed to present itself to the bakery industry as a total equipment solution. Each company brought something different to the total mix, he said.

"We're in the process now of migrating to the over-banner of Hobart Bakery Systems," he said. "But currently, for purposes of brand recognition, we are still offering the different models by their own representative company."

He added that, through the three brands, Hobart has a relationship with most of the significant players in the supermarket industry. Individual chains, however, have a different view of Hobart, based on how the relationship was started.

"We're recasting ourselves as more of a committed player to the [bakery] industry," continued Casto. "One that is offering the foundation that we learned in the meat department -- incorporating a variety of products with systems experts and a variety of solutions."

He said the combination of companies allows Hobart to provide any piece of equipment that an in-store bakery could need.

"The message we want to give the retailer is, the acquisitions offer us the ability to provide the best product and practices for our customers by matrixing the expertise between Hobart, Baker's Aid and Baxter," he said.

Casto pointed out that in-store bakeries trying to expand their business can't always afford professional pastry chefs, and therefore often have to rely on employees with little or no training. He said beginners can learn to operate their machinery easily.

"Our product is employee-friendly, with a set of controls that perform consistently," he said. "So in the event of a limited employment base, or frequent turnover, the bakeries can consistently produce the products their customers expect."

The equipment is sized to maintain product volume production, or limited production, depending on the application, to insure retailers minimal shrink and maximum sales. Casto added that employees can easily use Hobart machinery to produce consistent products.

According to Casto, Hobart consulted product suppliers -- like Dawn Food Products, based in Jackson, Mich. -- to insure their equipment would allow the retailer to develop consistent, quality products.

Casto said Hobart was very sensitive to the requirements, characteristics and expertise of this department.

"We've orchestrated an alignment within our own organization to maintain a group devoted completely to the bakery department," he explained. "They're not cross-functional salespeople; they're not cross-functional trainers; they are chartered to become industry experts."

He said Hobart's focus was not only on selling and supporting equipment, but providing service in peripheral areas, like keeping up with what's going on in the sweet goods industry or new developments in frozen dough or bakery technology. The company is a counselor for its customers on both trends and practices.

Hobart has brought in industry expert Rick Nettle as general manager of the bakery organization. Nettle has been with Baxter for 25 years, gaining experience in manufacturing, engineering and sales for the bakery industry. His most recent position was executive vice president of Baxter.

Casto said Nettle would use his bakery career experience to focus daily on product development, sales and management and on tracking industry trends and processes. "We believe focus and expertise is a requirement to be a real industry partner in this department," said Casto.

The Retailer's Bakery Association show played host to the introduction of some of Hobart's new technology. The company showcased mini-rack ovens for the lower-volume operation, theater-type bakery operations and combination ovens that proof and bake in one station -- a result of the combined engineering efforts of the company and its newly acquired resources.

"We're going to be releasing new application products over the next 12 months, as well. It's really just a byproduct of synergizing the different companies' expertise," said Casto.

"Today, it's a real system sale and a counseling responsibility that we take on for our retailers," he added. "Bringing area expertise, and maintaining focus on it, is a win-win situation for both of us."