Flowers Foods CEO Talks Simple Mills: ‘Minor’ Synergies, But ‘Significant Long-Term Upside’

Flowers Foods’ management team sees significant growth potential for Simple Mills following its $795 million acquisition, as executives outlined plans to broaden the snack and baking mix brand’s distribution, accelerate new product development and amplify brand awareness during a conference call today.

Once the transaction is finalized, expected to be next month, Simple Mills will operate as an independent subsidiary of Flowers Foods and will remain based in Chicago and Mill Valley, Calif., led by its founder and CEO Katlin Smith and the existing leadership team.

The new parent company plans to handle the business with a “fairly light touch, particularly in the early days” to preserve its entrepreneurial spirit, said Ryals McMullian, chairman and CEO of Flowers Foods. The playbook draws from its successful acquisitions and integrations of Dave’s Killer Bread and Canyon Bakehouse.

“Much like the self-proclaimed ‘bread heads’ fiercely loyal to Dave’s Killer Bread, consumers have demonstrated a strong loyalty to the brand and a willingness to follow Simple Mills into new segments,” McMullian said.

Simple Mills’ portfolio of premium cookies, crackers, snack bars and baking mixes will continue to be produced by its existing network of co-manufacturers and distributed through a warehouse model rather than transitioning to Flowers’ direct-store delivery model, McMullian said. He emphasized the margins of the business are already “attractive” and noted Flowers has no immediate plans to bring production in-house.

“I’m happy to be perfectly transparent on this – there are some minor cost synergies here, probably not as many as you would maybe traditionally see. The real prize here is the forward-looking growth rate of the business and our ability to help them continue to scale that business, grow the distribution, grow the velocity [and] continue to innovate,” McMullian said.

Simple Mills generated an estimated $240 million in net sales in 2024, up 14% over the prior year. McMullian noted the brand has less than 10% household penetration in crackers and cookies and less than one-third of total distribution points compared to leading cracker brands.

“We see significant long-term upside potential in the large categories in which the brand has been gaining share, with a total available market size of approximately $32 billion,” he said.

Currently, Simple Mills products are available nationwide in more than 30,000 natural and conventional stores. McMullian indicated there is a major opportunity to grow sales with those existing customers by increasing the number of items carried at each store.

“For example, category leading brands offer more than twice as many items per store than Simple Mills does, which presents attractive potential upside,” he said.

Flowers Foods also expects to expand Simple Mills’ footprint in foodservice and convenience, two areas where its current presence is limited.

Additionally, McMullian said the company will help accelerate Simple Mills’ already “very robust innovation pipeline” by adding new products in its existing categories and “entering new categories in snacking and beyond.”

“Simple Mills’ robust internal research and development capabilities, including in-house labs, and deep technical understanding of alternative flours and other ingredients provide a repeatable innovation approach that has consistently generated a pipeline of successful products,” he said.

What’s in it for Flowers Foods?

Headquartered in Thomasville, Ga., Flowers Foods produces a broad portfolio of bread and sweet baked goods under brands that also include Nature’s Own, Wonder and Tastykake.

“You know, our core category is a slow-growth category,” McMullian said, referring to the broader bread market, which has experienced dollar and unit sales declines in recent quarters.

“We certainly have some highlights within that category… but we have been searching diligently for other growth accretive areas to move into… and we take a very disciplined approach to that.”

The addition of Simple Mills strengthens Flowers’ position in high-growth spaces within better-for-you snacking and increases its branded retail sales as a percentage of total net sales.

“The categories that they play in today are growing categories. They are exceeding the category in terms of growth rate. They have taken what might a few years ago have been perceived as a niche product and have taken it mainstream,” McMullian said.

“One of the things that got my attention early on about this business is that while all of the products are gluten-free, they don’t really lean very heavily into that gluten-free equity, and as a matter of fact, only about 17% or 18% of their shoppers are gluten-free shoppers.”

Simple Mills has been hailed as a pioneer of the clean label movement, beginning with its launch of baking mixes crafted with almond flour, organic coconut sugar and fruit like apples or bananas. From there, the brand expanded with ready-to-eat offerings ranging from chocolate chip cookies to cheddar crackers to soft-baked bars, all featuring minimal ingredient decks.

“When I look at grocery shelves today, I’m amazed at how radically different they are than when I started Simple Mills over a decade ago,” Smith shared in a LinkedIn post.

“We’ve transformed the center aisles with delicious, nutritious pantry staples made with stunningly simple ingredients; pioneered the use of innovative nutrient-dense nut, seed, and vegetable flours; partnered with farmers to implement regenerative practices and reimagine a more sustainable, less extractive food system; and, most importantly, helped raise the bar of what consumers can and should expect from their food.”

Smith expressed excitement for the partnership with Flowers Foods, noting a “compatibility of our cultures, missions and values” centered on honesty, integrity, inclusion and sustainability, as well as a shared commitment to maintain Simple Mills’ ingredient and product standards.

McMullian also cited an alignment of values between the two organizations, mirroring its prior combinations with Dave’s Killer Bread and Canyon Bakehouse.

“We have a long history of generating growth through acquisitions, having purchased more than 100 companies since going public in 1968,” he said. “In that time, we’ve learned that while the strategic and financial benefits of a transaction are certainly important to maximize those expected benefits, it is crucial to have a strong cultural fit.”