Barbara’s Bakery Inc.

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Barbara’s Bakery Inc.

3900 Cypress Drive
Petaluma, California 94954
U.S.A.
Telephone: (707) 765-2273
Fax: (707) 765-2927
Web site: http://www.worldpantry.com/cgi-bin/ncommerce/ExecMacro/barbarasbakery/home.d2w/report

Wholly Owned Subsidiary of Weetabix Ltd.
Founded: 1971
Employees: 175
Sales: $80 million (2006 est.)
NAIC: 311230 Breakfast Cereal Manufacturing; 311919 Other Snack Food Manufacturing

A subsidiary of the United Kingdom’s Weetabix Ltd., Barbara’s Bakery Inc. is a natural baked goods company based in Petaluma, California, that eschews the use of artificial ingredients, preservatives, hydrogenated oil, or refined white sugar. Instead, Barbara’s relies on spices, vanilla extract, almond extract, lemon oil, chocolate extract, herbs, and other fruits, vegetables, and plant materials to produce natural flavors. The company also relies on canola oil, expeller pressed oils (which do not rely on petroleum-based chemicals or solvents), and other oils high in oleic acids, which are believed to help manage cholesterol levels.

Barbara’s breakfast cereals include four flavors of Puffins; Organic Weetabix, produced by the parent company; Organic Wild Puffs; Alpen, a Swiss style muesli; Barbara’s O’s, a healthful version of the popular Cheerios; and the Barbara’s Family Favorites line of other alternatives to common cereals, including Organic Brown Rice Crisps, Organic Corn Flakes, and Organic Honey Crunch ’n Oats. Barbara’s offers such cookies as Snackimals, animal shapes made without the artificial flavors, artificial colors, preservatives, or trans fats used in most animal cookies; six varieties of fig bars; and 100-calorie snack packs of organic mini cookies, available in chocolate, oatmeal, and ginger flavors. Barbara’s snack bar offerings include granola bars, multigrain cereal bars, and fruit and yogurt bars.

Barbara’s also offers crackers, Wheatines saltine-style crackers and Rite Lite Rounds, as well as salty snacks, including four varieties of cheese puffs. Barbara’s products are found across the United States and Canada in natural foods stores as well as on the specialty aisles of supermarkets. They are also sold online through the company web site. Manufacturing, warehousing, and administrative functions are carried out at the company’s facilities in Petaluma and Sacramento.

COMPANY FOUNDED: 1971

Barbara’s Bakery was established in Palo Alto by 17-year-old Barbara Jaffe in 1971. As reported by Northbay Biz, a monthly business magazine serving Sonoma, Marin, and Napa, California, she “was a 1960s flower child who wanted to drop out of the establishment. In an effort to keep her from running off to a commune or becoming a roving Grateful Dead groupie, her father encouraged her to open a small natural foods bakery.” Therefore, according to this account, Jaffe used the money intended to pay for her college education on bakery equipment and rent on a small storefront.

Santa Clara’s Press Democrat offers a slightly more prosaic rendition of the origins of Barbara’s Bakery, maintaining that the 17-year-old Jaffe launched the business in Palo Alto “mostly because she declined going to college but loved to bake.” Her family set her up in business, but in the early days the one-person operation “devised recipes for products that were manufactured and packaged by other companies.” Barbara’s Bakery started out with a storefront and a dozen products, and built its reputation on natural breads. The business moved from Palo Alto to Santa Clara, South San Francisco, Novato, Marin, and finally in 1988 established its headquarters and main plant in Petaluma. In addition, the company operated a facility in Sacramento.

WEETABIX ACQUIRES COMPANY: 1986

By the time Barbara’s Bakery made its way to Petaluma it no longer produced the original 12 products, having branched out into a number of different product lines under the Nature’s Choice label, including cereals, crackers, and snack bars. Furthermore, Barbara’s Bakery was no longer owned by the Jaffe family. In 1986, when sales were in the $5 million range, Barbara’s Bakery was bought by the United Kingdom baking giant Weetabix. Barbara Jaffe stayed on as an adviser and consultant until 1992, when she left to start up another food company, NewMarket Foods, to develop low-fat, lowcholesterol, all-natural ice cream toppings, instant chocolate milk powder, and puddings.

The origin of the Weetabix product can be traced to Australia at the end of the 1800s when baker Edward Halsey established the Sanitarium Health Food Company and introduced one of the country’s first breakfast cereals, Granose, an unsweetened pressed flaked wheat biscuit. In the 1920s Sanitarium acquired Grain Products Company, creator of a rival product called Weet-Bix, which proved more popular than Granose, especially in England, where it was introduced in 1932 as Weetabix by another company that took the name Weetabix Limited, founded by South African immigrants. The George family bought this business in 1947 but avoided the U.S. market, which was dominated by the likes of Kellogg’s, Quaker Oats, and General Mills, instead importing Weetabix into Canada. In 1971 the company became involved in the muesli cereal category, launching Alpen. Ten years later the company moved into the U.S. market, acquiring Van Brode Milling Company to introduce its branded products and becoming involved in the private label cereal business. It then sought to add more products by creating new versions of Weetabix and through acquisition. Buying Barbara’s Bakery was part of that strategy.

Weetabix installed a new president, Gil Pritchard, to run Barbara’s Bakery and the company’s slate of products settled around 100 items, divided between four categories: cereal, snack bars, cookies and crackers, and salty snacks, which relied on sea salt instead of processed salt. For sweeteners the company relied on fruit juice concentrate, and as many organic ingredients as possible were also used, including organic flour milled from wheat grown without pesticides, replacing standard whole wheat flour. The new corporate parent also used its marketing clout to grow sales by taking Barbara’s Bakery beyond the independent health stores where the brand had made its name and into the national health food grocery chains such as Whole Foods and Wild Oats as well as into major supermarket chains, Ralphs and Safeway.

Moreover, Weetabix’s deep pockets were tapped to increase greatly spending in a host of areas, including nutritional and market research, recipe and ingredient formulation, manufacturing technology, and improved packaging. Aside from providing support, Weetabix did not interfere with the way Pritchard ran Barbara’s Bakery, but rather took a long-term approach, reinvesting profits into growing the business rather than declaring a dividend.

Weetabix also encouraged the subsidiary to be bold in taking chances. In the early 1990s Barbara’s Bakery introduced a snack chip called Basically Baked. Consumers rejected it because of the poor taste and the product was pulled. The misadventure cost the company about $200,000 but Weetabix management did not lose faith in Pritchard, who was given an opportunity to learn from the mistake. An improved approach to research and product screening grew out of the failure and led to future success stories.

COMPANY PERSPECTIVES

We are focused on delivering delicious organic and natural cereals and snacks that appeal to consumers who demand great tasting food in their healthy lifestyle.

Breakfast cereal was the growth engine for Barbara’s Bakery in the late 1980s, when sales improved by nearly 70 percent from 1987 to the start of the 1990s, driven in large measure by the popularity of oat bran cereals. However, when the oat bran fad began to wane in 1990, cereal sales suffered. Barbara’s Bakery focused more attention on other categories to make sure it did not become too dependent on one particular product line.

Furthermore, the company phased out less popular items and introduced new products while taking care not to increase dramatically the total number of products. For example, Barbara’s Bakery became one of the first companies to offer blue corn tortilla chips in the early 1990s. It also developed a blue potato chip produced from actual blue potatoes called True Blues and a multigrain snack called Potillas, a hybrid of a potato chip and a tortilla. In 1995 the company introduced five tortilla chip varieties made with organic corn and natural seasonings, and a year later unveiled a new mini–oat biscuits breakfast cereal, Barbara’s Shredded Oats, and its Snackimals children’s cookie line. In addition, during this period Barbara’s Bakery brought out a number of other low-fat snacks, including a pair of cheese puff products and three snack cracker products: Rite Lite Rounds, Cheese Bites, and Pizza Bites.

By 1992 annual sales reached the $25 million range. That number grew to $35 million in 1996 from 120 product lines. As a result, Barbara’s Bakery was listed as the fifth largest agriculture and food products company and the 80th largest company overall in Sonoma County. The company’s 11 breakfast cereals provided the lion’s share of revenues, totaling about 40 percent.

Barbara’s Bakery, once solely catering to a narrow sliver of the market, found itself becoming more mainstream as it entered the next century. An increasing number of consumers, especially baby boomers, were either following new low-fat, low-carbohydrate diets, or at least making a gesture toward healthy eating by substituting highly processed snacks for the kind of healthful alternatives Barbara’s Bakery had to offer.

The company also benefited from a high number of products that received kosher certification. Increasingly, non-Jews were also seeking out kosher foods because of the perceived health benefits. The surge in demand was reflected in the 71 percent jump in sales from 2000 to 2001, to $65 million. The company also did some contract baking and packaging for other natural food companies, such as Clif Bar Inc. To keep pace with the expected sales increase, Barbara’s Bakery invested $3.5 million in a new distribution center in Petaluma, providing welcome relief after years of coping with cramped conditions. Another $500,000 was also spent to upgrade the parking lots.

PRITCHARD LEAVES: 2001

After 15 years at the helm, Pritchard left in 2001 to become president and chief executive officer at nSpired Natural Foods. He had played a key role in growing Barbara’s Bakery a dozen fold and positioning it for even further growth. After his departure, the company continued to roll out new products while weeding out ones fading in popularity, as the total product count swelled three fold beyond the 100 mark that the roster had been limited to for so many years. In 2001, for example, Barbara’s Bakery introduced Salsa Flavor Pinta Chips, made from organic corn and ground pinto beans.

Among the top organic breakfast cereal manufacturers in the country, Barbara’s Bakery built on its position further in 2003 by launching Original Organic Wild Puffs, lightly sweetened air-puffed kernels of organic wheat; and Honey Rice Puffins, a low-fat cereal made from whole-grain rice and sweetened with pure honey, cane juice, and molasses. Also in 2003 Barbara’s Bakery unveiled the Organic Go Go Grahams snack, and four varieties of Puffins Cereal & Milk Bars. A year later the company supplemented Organic Wild Puffs with Organic Wild Puffs, Caramel, which relied on allnatural caramel flavor. In 2005 Barbara’s Bakery added Cocoa Organic Wild Puffs, and later in the year introduced a new snack and meal-replacement product, fruit and yogurt bars, available in four flavors.

KEY DATES

1971:: Seventeen-year-old Barbara Jaffe founds company in Palo Alto, California.
1986:: Weetabix Limited buys Barbara’s Bakery Inc.
1988:: Headquarters relocate to Petaluma, California.
2001:: CEO Gil Pritchard leaves after 15 years.
2006:: Barbara’s Bakery becomes part of Weetabix North America.

While Barbara’s Bakery grew its business in the early 2000s, changes were taking place with its corporate parent. In November 2003 the European buyout division of private equity firm Hicks, Muse, Tate & Furst acquired Weetabix. After Hicks, Muse suffered some significant losses in the technology and telecom sectors, it was forced to spin off the European unit, which became Lion Capital in April 2005. Lion Capital began looking to shed some assets and in June 2005 announced that it was interested in selling Barbara’s Bakery in order to focus its attention on the Weetabix, Alpen, and Ready Brek brands. Although there was speculation that the likes of Kellogg’s, General Mills, and Kraft Foods might be interested in acquiring Barbara’s Bakery, in the end the company remained in the Weetabix fold, albeit within a new consolidated corporate entity. In 2006 Barbara’s Bakery was combined with The Weetabix Company Inc. and Weetabix of Canada Ltd. to form Weetabix North America.