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Case Study: Skinner Baking Builds a Brand

For years, a family bakery sold unbranded pastries to supermarkets. Should the owner now put his name on the box?

Danny Wilcox Frazier

WHAT'S IN A NAME? His grandfather put the family name on pasta nearly a century ago. Now, Jim Skinner says resurrecting the brand will secure his company's future.

His bakery business was doing just fine. But in the fall of 2007, Jim Skinner called a meeting of his executive team and three-person sales force to discuss a big strategy shift. It was time, he believed, to reinvent the company and its image. For most of its 25-year history, the James Skinner Baking Company had been strictly a wholesale operation, selling unbranded Danish, coffeecakes, and cinnamon rolls to supermarkets and national bakery brands. Over the years, the business grew steadily, under the radar of consumers. The strategy produced profits nearly every year, and today the company, which employs 300, has yearly sales of about $60 million. Not bad for a family business in Omaha whose first customer was a six-store supermarket chain called Hinky Dinky.

Yet Skinner always had his sights on something more. If Skinner Baking was already selling nationwide, why not get the recognition and the riches that come with a successful national brand? The pastry packages already carried a label instantly recognizable to customers. All the company needed to do was add the Skinner name. Skinner floated his idea with his vice president, Audie Keaton, who warmed to the concept. But convincing the veteran sales team proved another matter. Longtime sales chief Doug Dinnin doubted a branded product would ever be worth the trouble, particularly because it could threaten one of Skinner Baking's main businesses -- providing no-name Danish and crumb cakes to supermarkets. (If the product is unnamed, the thinking goes, consumers will assume it was baked on or near the premises.) "The last thing I wanted to do was jeopardize the business that we had built," says Dinnin.

For Skinner, the fascination with branding was part instinct and part sentimental longing. As much as he wanted to expand the business, the pull of family lore also tugged at him. Back in 1911, his grandfather and great-uncle founded the Skinner Manufacturing Company. Besides developing one of the first macaroni-and-cheese products, the company created the iconic Raisin Bran brand, which became a bestseller before it was sold to what is now U.S. Mills. Hershey then purchased the rest of the Skinner company in 1979.

In 1983, Jim Skinner and his father, Lloyd, itching to get back into their own business, bought Hinky Dinky's baking facility, for just under $1 million. For a few years, the company sold its products as far afield as New York under the Catherine Skinner Danishes brand, named for Jim's mother. But in 1985, a national baking company offered Skinner Baking a large contract to produce goods to be sold under the national baking company's name. Skinner had a lot to gain: a guarantee of year-round business and an established company willing to tutor its younger partner. The downside: Skinner had to forfeit its own branded line.

The move paid off. But over time, Jim Skinner felt the business was too dependent on a few contracts from big-brand bakeries and supermarket chains, such as Kroger and Hy-Vee, a 200-store Midwestern chain. He had never forgotten the fate of another midsize food manufacturer he did business with in the 1970s. After it lost its two largest contracts, including one with the U.S. military, that company went belly up.

The only sure way to avoid that fate, Skinner was convinced, was to build a consumer brand. In March 2007, the company hired Andy Greenberg, a former paper company executive, as the company's first marketing chief, charged with developing a branding strategy. Greenberg had never worked for a food company, but he had a deep knowledge of packaging after nearly 25 years of selling labels to the supermarket industry. "I wanted someone who really would be looking from the outside in," Skinner says.

In September, Skinner met with his staff in the company's bunkerlike conference room. What followed was a three-hour conversation in which the executive team made its case to the sales staff. Keaton announced that the company was ready to take a new step by creating a branded product that would be sold in supermarkets' in-store bakery sections. (There is an important distinction in the grocery business between the in-store bakery and the shelves on which national brands are displayed.) He argued that the 8 percent annual growth rate of strip-Danish sales could double once customers associated the Skinner Baking brand with its cranberry and apple Danish. Without a strong brand name of its own, moreover, Skinner Baking would face a future in which it would remain hostage to the whims of a few big customers. "If you don't have a brand, you're a manufacturing facility," Keaton said. "If you do have a brand, you're a company."

Greenberg stressed that the branding push would work only if the sales team's members were fully on board. After all, they had been with the company for years and had close ties to customers. He asked them to think about re-creating the initial vision of the company. "If we could blow this company up and start over," he said, "wouldn't you rather go to market with a branded product?"