Montana bakers filling void left by Sweetheart shutdown

2012-12-08T00:15:00Z 2013-04-13T00:05:06Z Montana bakers filling void left by Sweetheart shutdownBy ED KEMMICK ekemmick@billingsgazette.com The Billings Gazette

The closure of the Sweetheart bakery in Billings last month has been a huge boon for at least two other Montana bakeries.

"It's helped our business tremendously," said Kyle Nielsen, the owner of Grains of Montana.

Nielsen opened a 10,000-square-foot bakery in Billings four years ago and suddenly finds himself supplying a much larger market, thanks to the absence of Sweetheart Bakeries, makers of Wonder Bread, Twinkies and other familiar brands.

"This gives us tremendous exposure to new accounts," Nielsen said.

Over in Three Forks, Wheat Montana owner Dean Folkvord is also enjoying a surge in business.

"Sweetheart owned the market, literally. They were the 800-pound gorilla," he said. "It's really a dramatic situation for a bakery like ours that has been competing with them for more than 20 years."

Al Jones, an independent business consultant in Billings, has been following the fortunes of Sweetheart for more than 10 years, dating to when he worked in economic development for the state Commerce Department.

He said the Sweetheart bakery in Billings was the only production plant the company had in Montana, and it had none in the Dakotas, Wyoming or Idaho. The Billings bakery produced bread and buns, with other products like Hostess Twinkies and Sno Balls shipped in from distant bakeries.

But the bakery's reach was broad and deep in Montana. Jones said it supplied nearly all the bread for Wal-Mart, Albertsons and IGA grocery stores. Folkvord said Sweetheart also supplied stores in remote communities all across eastern and northern Montana.

"They took care of everybody everywhere," he said. "They took care of all the small markets."

They took care of them to such an extent, Folkvord said, that he heard some stores on the Hi-Line ran out of bread after the mid-November closure of the Billings Sweetheart bakery.

Jeff Finley, co-owner of Finleys' Food Farm in Chinook, said things didn't get quite that bad at his store, but "we were dwindling our supplies down pretty quick" in the weeks following the shutdown.

His shelves have since been restocked, partly by Wheat Montana, which has gone from 10 percent of his bread inventory to 25 percent. The rest of the gap has been filled by bakeries that distribute through Associated Foods, which has a warehouse in Helena, he said.

A lot of the bread being distributed by Associated Foods is made by Dunford Bakers in Utah, Finley said.

In the wake of the Sweetheart shutdown — part of Hostess Brands' nationwide bankruptcy liquidation — Finley learned that many of his customers never knew how much Sweetheart bread they were eating.

People generally knew that Sweetheart made Wonder Bread, but many other brands were also produced by the corporation, including Western Family, Standish Farms and Roman Meal. In addition, Sweetheart made "store brand" breads that would be sold under an Albertsons, IGA or some other label.

Finley said some of his customers assumed he had forgotten to order their favorite bread and was using the Sweetheart shutdown as an excuse for not stocking it.

"I don't think they believed us for the first week," he said.

The way he sees it, Wheat Montana could make some inroads into the traditional market, regardless of who eventually replaces Sweetheart.

"Once they try it, I think they'll stick with it," he said.

Folkvord certainly hopes so. He said Wheat Montana was able to cherry-pick in some of the larger markets served by Sweetheart but hadn't made much of an effort in some of the smaller towns on the Hi-Line or in far Eastern Montana.

"Those were the areas Sweetheart really owned. We've enjoyed this push," he said.

Production at Wheat Montana is up 30 percent over last year, and Folkvord has switched from a four-day-a-week baking schedule to six days a week. He's also made about 20 new hires, bringing total employment to a little more than 200.

At Grains of Montana, the numbers are up, too.

"We're aggressively hiring right now," Nielsen said. "We've added some staff, and we're trying to hire more."

Two recent hires include bakers left jobless by the Sweetheart shutdown. Nielsen said they're finding a much different atmosphere at his bakery.

"They have much more appreciation for the dough," he said, doing hands-on baking instead of running a machine. "Here, they go home with flour all over them."

And sure enough, former Sweetheart baker Daniel Harness was rolling onion rolls by hand at Grains of Montana on Tuesday. He had been there less than a week, having lost his job at Sweetheart — where he worked on the "bun line" — about a year after starting there.

"I like this because it's a more quality product," he said. "At Sweetheart it was all go, go, go. It was all about quantity."

Jones said Sweetheart's relentless focus on production rather than innovation was what got the company in trouble. He said it hadn't done much advertising in 10 years and ended product development long before that.

Sweetheart was a pioneer with its whole-grain Roman Meal bread in the 1960s, Jones said, but it barely evolved after that. And as bad as that was in the  bread market, it was even worse in the snack food division.

"You haven't done anything for 30 years in a fickle child's market?" Jones said.

The same attitude was apparent in other aspects of the business, Jones said. The closest Sweetheart bakery west of Billings was in Seattle.

"At the home office, you ignore things like the Rocky Mountains that might affect your distribution. The degree of stupidity has been increasingly amazing," Jones  said.

It's hard to say how the market will level out, Jones said, but Franz Bakery, based in Portland, Ore., has been pushing into Montana for a decade and is a likely candidate to expand into former Sweetheart markets.

Franz also seems like a good candidate for buying the shuttered bakery here, Jones said.

Folkvord, with Wheat Montana, said Oroweat out of Denver is also moving into Montana. He expects other companies to make a push into the region, especially  given all the oil-related development in North Dakota and Eastern Montana.

"We don't know if this thing's going to last for a long time," Folkvord said, but in the meantime he is able to "expand one customer at a time."

Nielsen said he expects to see increased sales for another three to four months before things start leveling off.

Grains of Montana makes 30 bread products and 40 pastry products. Nielsen hopes the Sweetheart shutdown and the increasing emphasis on locally produced foods will put his products on a lot more plates in the area.

"We're as local as you can get," he said.

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