BakeryandSnacks.com hosted an exclusive 15-minute roundtable at Interpack 2014 with CEOs from three global bakery equipment majors.
Ken Newsome from the Markel Bakery Group, Amanda Hicks from Auto-Bake Serpentine and Michael Witzak from Rondo met in person for the first time to talk business, politics and innovation.
Innovation race: Pace faster, breadth wider…
Starting off the discussion, Newsome said the pace of change among consumers worldwide had accelerated, driven in part by a rising global middle class.
“So, the issue facing equipment companies is how do we have high flexibility in our equipment so that our customers can meet this broad demand, as well as this changing demand, so they can continue to evolve their products as the customer’s demands demand.”
Hicks agreed, dubbing the shift a “global intersection”. “Just as we’ve got fusion food in restaurants, so we have in the bakery sector.”
There was also a merge in demand for efficiency and sustainability, she added.
However, Witzak said the demands still varied slightly between developed markets and emerging markets.
“…For the developed markets, we’ve come much more to processes and give solutions in terms of new baked goods to follow the trends like gluten-free, long shelf-
life… We are asked to deliver solutions in terms of recipes, not only machinery,” he said.
While demands for expertize beyond machinery could also be found in emerging markets, he said that there was a stronger focus on delivering the end product here. “This is something that needs a lot of knowledge.”
Hicks agreed and said business was certainly more driven from the consumer, shortening the distribution channel.
Newsome added: “Consumers are becoming more sophisticated, so they’re making demands, the retailers are putting the demands on the bakers who in turn are putting it on us.”
Challenge: Giving a global bakery company local knowledge
Asked how each CEO managed to staff their company in light of these fast changes and market demands, Witzak said business was very different now compared to two decades ago.
“20 years ago out of 100 employees, we had 10 bakers; 10 product specialists. Today we have 20 or 30 product specialists.”
While building and construction of machinery had become easier, he said the demand for local bakery specialists across the globe had risen and needed to be answered to.
Newsome said language and cultural differences in different global markets added complexity to finding the right people for these jobs.
Hicks said there had to be a combination of local understanding about culture but also the ability to access and utilize knowledge from other markets.
All three CEOs agreed that it was crucial to be on the ground to do business as it enabled local production and innovation that remained relevant.
“It’s about showing commitment. It’s no longer acceptable to sail in and sail out,” said Hicks.
Careful management choice breeds success
Asked if work had become a logistical nightmare, Newsome said business was certainly tougher as it really was 24/7 and there was always competition.
Hicks said this was why Auto-bake Serpentine had chosen to operate with two co-CEOs: a structure that worked well for them but was not necessarily the answer for other companies.
Witzak said selecting management for a global bakery company was a strategic issue that needed careful consideration, and it was something that was getting harder for a specialized sector like bakery. “We have a very simple strategy in Rondo, we say first who, then what.”
Hicks said that long-term investment in people and management was key to arming the business with the ability to overcome challenges: financial, political or other.
Future hope amid financial and political crises
Asked about how the immediate future of the global bakery market would shape up, Newsome clarified that there was no single bakery market. “There’s a market in China that’s different than Australia. Certainly Russia is different today than it was a few months ago.”
Because of this, he said it was important to be present with people who knew each market accordingly.
Witzak said Russia was a promising market in terms of growth but that the political situation had hit business severely because of exchange rates that had impacted pricing.
However, Hicks explained that as larger companies, they could use past experience to better manage such situations, particularly political or economical crises.
“Having all the corporate history, one of the advantages of working with companies like ourselves is that we’ve got spread. So, when one market unfortunately for maybe a short-term or longer-term problem dips, we’re busy with others and we can give those customers time for their currencies to strengthen… it means that we’re there for the long-term even if their current situation means they may not be able to invest,” she said.
Newsome said that irrespective of market hiccups, there was a strong future ahead for global bakery because more and more consumers were eating baked goods.
Exciting and dynamic future set
Asked what area of bakery would see the biggest growth, Witzak said it was very dependent on the region. However, he said it was important to note that Chinese consumers had started to eat more bread.
Hicks said: “I think it’s a mosaic… Collectively there are a lot of exciting things. There are some products that come and go very fast: trendy things. There are some base-line products that it’s a commodity they expect; it’s a staple.”
She noted that the growth of middle-class had driven sophistication in the global bakery market.
Newsome said: “We’re fortunate to be in a very dynamic global market that we’re going to have our situations with Russia, situations with Asian financial crises, but over time I think we’re fortunate to be in a good industry.”