"This is exactly what we need," they said to each other. "This can take Tasty Baking into the future." And right from the start, it has.
Through quick thinking and fast action, Tasty Baking made its own luck. The news that UB would close its snack food plant broke during the Thanksgiving weekend in 1995. The announcement prompted Mr. Watts to make a quick drive 50 miles down the road from Tasty's Philadelphia headquarters to peer through the fence at the site. A few days later, Tasty managers walked through the facility for the first time.
Getting fast approval from Tasty's board of directors, Mr. Watts and his staff did the deal with UB by fax. It would be six months more before the company let the rest of the industry learn about the deal. The sale closed in July 1996. Less than six months later, the plant shipped its first Tastykake Honey Buns, producing them at rates of more than 200 per minute.
PURCHASE STRATEGY. It takes vision to accomplish such tasks, and clear vision supports Tasty's plan for strategic growth. "The acquisition is a continuation of the company's strategy to increase its core business, expand geographically and seek strategic acquisitions," said Mr. Watts.
While the terms of the purchase agreement with U.B. were not disclosed, Mr. Watts said the price was attractive. He said the total cost of the facility and its initial production line came to roughly $17 million.
"We have a neat Cinderella story here at Oxford," he continued. "There haven't been a lot of new plants in the sweet goods industry recently. Here, not only did we bring jobs back to life, but we also made a good deal for Tasty."
Tasty Baking, with annual gross sales of more than $200 million, now distributes products in 38 states. In addition to its plants at Philadelphia and Oxford, Tasty Baking owns Dutch Mill Baking Co., Wyckoff, NJ. It acquired the producer of boxed donuts and fat-free angel food cakes in August 1995.
The company just wrote a new three year strategic plan. it outlines five key strategies: 1 - new product introductions, 2 - base business expansion, 3 - cost management controls, 4 - infrastructure improvements and 5 - maximizing new companies' potential. The last point concerns itself specifically with Dutch Mill and Oxford, and it notes that the company plans "to continue to seek other new acquisition candidates that fit our strategic profile."
"When it feels right and fits our plan, we move ahead," Mr. Watts said.
Although a number of food companies were very interested in the Oxford property, Tasty prevailed. "We were fast and flexible and there first," said Mr. Watts.
Such foresight allowed Tasty to retain key building amenities - especially the state-of-the-art ingredient system and the electrical, refrigeration and air-handling utilities. Foresight also enabled UB to reach its financial objectives in the liquidation. The rest of the three snack processing lines was sold through auction.
Mr. Pixler, who joined Keebler in 1988, was the project manager for the Emerald Baking project in Oxford. When the snack facility opened in February 1993, he became its plant manager. He also got the task of closing it down in November 1995. He conducted that important first tour through the plant by Tasty's executives.
"We came with the plant. Tasty bought our contracts, too," laughed Ed Pixler and Lynn Curry, operations manager.
"It made sense for us to make Ed a part of our team, too," said Mr. Watts.
BREAKFAST MARKET. "Breakfast is Tasty's fastest growing segment," Mr. Watts said.
Donuts are Tasty's fastest growing core product line, according to the company's 1995 annual report. Tasty expects donut sales to increase at double digit rates for the foreseeable future. It's a market that the 83-year-old company first entered during 1985. During 1996, Tasty sold nearly 20 million units of Honey Buns and Pastry Pockets.
"The Oxford plant fits a lot of our future plans," Mr. Watts said.
Specifically, it fit the need to self-produce Honey Buns, which were previously made by a contract manufacturer. But this product required a long line, one that wouldn't fit into the Philadelphia plant. The company also wanted to expand into Danish and other yeast-raised speciality items. That's what Oxford brings to Tasty's table.
