Bob's Red Mill Natural Foods, Inc. - Company Profile, Information, Business Description, History, Background Information on Bob's Red Mill Natural Foods, Inc.

5209 SE International Way
Milwaukie, Oregon 97222

Company Perspectives:

Bob's Red Mill is dedicated to the production of natural foods in the natural way. With all the sophisticated knowledge of recent times, no machinery has yet been developed that grinds grain into flours quite as well as the flint-hard quartz millstones used by millers since Roman times. Bob's Red Mill products are still ground this way. Automated packaging equipment efficiently places our premium stone ground flours into colorful "down home" style bags that are recognized throughout the U.S. and Canada. Milling expertise gleaned from old milling journals, coupled with over 30 years of innovative, hands-on milling experience has given Bob Moore the hard-won "secrets" to milling success.

History of Bob's Red Mill Natural Foods, Inc.

Bob's Red Mill Natural Foods, Inc. mills all common grains and many unique grains into healthful flours and meals, cereals, bread mixes, pancake and waffle mixes, and muffin and quick bread mixes. Its 400-plus products sell through 70 different distributors in both the natural food class of trade and the specialty grocer class of trade throughout the United States and Canada as well as through the company's onsite retail store. The company only purchases organically grown and Identity Preserved seed grown commodities (in accordance with the California Organic Food Act of 1990).

1978-88: The First Ten Years

The initial idea for Bob's Red Mill started in the 1950s when Bob and Charlee Moore lived on a five-acre dairy goat farm in northern California. Bob worked as a Firestone tire store manager, while Charlee stayed at home to raise the couple's three boys. Charlee valued whole grain foods, and her interest in grinding her own flour, coupled with Bob's lifelong love of machinery, started the Moores thinking about setting up a mill of their own. "Coupled with an interesting history, I wanted to eat right, live right, be independent, do something fruitful and healthy, work with my family and not contaminate the world," Moore said in Horizon Air Magazine.

Around the year 1800, high-speed steel roller mills ended the need for the old, slow-turning stone mills that had supplied the world with flour for centuries. However, modern grinding processes often pulverized the grains. Stone grinding, to the contrary, used flint-hard, quartz millstones that blended the germ, its oil, the bran, and the endosperm. The lower temperatures at which stone grinding took place preserved the "good fats," vitamins, and minerals of the grain. Moore learned what he needed to know about mill operations from old milling journals and books. After a chance reading in 1968 about old stone grinding flour mills, Bob visited more than 50 old flour mills around North America and the British Isles searching for usable millstones from the 1880s. With the help of an old miller who was inventorying old American gristmills, he was able to acquire several sets of stones from an old, water-powered flour mill in North Carolina in 1969, and, in 1972, he and his sons set up Moore's first operation in Redding, California.

In 1977, Bob and Charlee moved to Portland, Oregon, with the idea of going to seminary, but within six months, they had discovered and purchased a 19th-century flour mill near Milwaukie, Oregon. They painted the building red and began stone grinding grains into flours and cereals using two sets of stones from the former Boyd mill near Dufur in north central Oregon and other sets from old mills in Tennessee and Indiana. Their stone grinding process involved suspending grain above the mill in 2,000-pound sacks and pouring it across the chiseled surface of the slowly turning stones to turn it into a soft, warm flour that poured onto a narrow conveyor belt at the rate of 1,200 pounds an hour. The buhrstones weighed approximately 2,000 pounds--a bit larger and thicker than two manhole covers.

Moore's Natural Foods sold its products almost exclusively in the Portland area, and business grew steadily, helped along by the growing commitment on the part of consumers to natural foods. Among the mill's steady customers were both local health food stores (which Moore's supplied with its small, cellophane-wrapped bags of flours and larger bags for sale in bulk) and Safeway and Fred Meyer supermarkets. Then, in 1988, with annual sales approaching $3 million, an arsonist burned down the company's historic grist mill, destroying everything except the stone buhrs. Almost indestructible to begin with, the stones were saved when hundreds of pounds of stored grain fell on them from the second floor during the fire and snuffed out the flames, keeping them from shattering in the heat, as well as preserving the gears that turned them.

1988-94: Bob's Red Mill Begins Broader Distribution

"After the fire," according to Moore, "it took incredible effort to sustain business with Fred Meyer. I had a responsibility to stay in business for both my customers and employees." Friends flew Moore over the state of Oregon to search for another old mill, but Moore decided to reestablish his business in a Milwaukie, Oregon industrial park. The Moores borrowed $2.5 million to build a 60,000-square-foot warehouse that had plenty of storage, power, and space for expansion--and a sprinkler system--for the new Bob's Red Mill, Inc.

In 1996, the Moores brought on two new partners, Dennis Gilliam, who became vice-president of sales and marketing, and John Wagner, who became vice-president of administration in an effort to increase revenues rapidly and pay off the new company's debt. Gilliam had experience in the printing business and led the company to expand into wholesaling its products. He persuaded the Moores to attend a national trade show in California where the company hooked up with Quality Brokerage of California, a food brokerage that had just lost a national supplier. This connection led to another important one with Nature's Best, the company's first regional distributor.

Gilliam sought out other trade show opportunities for Bob's Red Mill. To distinguish itself at these shows, the company built an elaborate exhibit with large pictures of old grist mills and a miniature working mill that actually ground grains at the booth. "We went all out for the first five years or so," Moore admitted in a 1999 Oregonian article. The strategy worked. In 1992, the company succeeded in persuading Chicago-based Kehe Food Distributors, Inc. to showcase the company's entire product line. Kehe opened doors to the company to accounts in new regions. By 1999, Bob's generated more than 90 percent of its sales by supplying wholesalers throughout the United States and Canada and had grown 310 percent since 1990. It had further broadened its distribution network in 1994 when Tree of Life in Florida became its first nationwide distributor.

1995-2004: Rapid Growth Culminates in New Construction

The rapid growth that followed brought new challenges for Bob's Red Mill, including debt. The company saved money by repairing its own equipment, creating its own production machinery, and buying used machinery from Seattle-based Fisher Mills, Inc. It also bought used equipment at auctions and used packaging equipment from Boyd's Coffee of Portland, which it was able to implement because coffee is the same granulation as ground cereals. However, despite cost, the company continued its practice of employing a three-stage screening and grain cleaning system, testing every load of its product for moisture, proteins, and purity, and conducting random tests for fiber and fat content at local laboratories.

By the mid-1990s, the company's sales were approaching $6 million. During the second half of the decade, revenues grew 25 percent annually. By 1999, business boomed as consumers stocked up on supplies in anticipation of Y2K. Mail-order profits leapt by 133 percent, while sales at the company's small store jumped 80 percent. The company, which by then had 40 distributors, 20 brokers, and web-based sales, added a 10,000-square-foot warehouse and bought three new milling machines.

Sales continued to increase at an average of 25 percent a year into the next century as consumers maintained their interest in eating whole-grain foods. With Safeway and Fred Meyer taking the company's products beyond North America, and General Nutrition Stores selling them in Saudi Arabia, Bob's Red Mills employed 80 workers on round-the-clock shifts. "When times are tough, people move away from the more esoteric, more frou-frou foods and move back to the basics where they perceive a full value and good nutrition," Gilliam explained in a 2004 Portland Daily Journal of Commerce article. Bob's Red Mill responded to the greater interest in its products by launching five new wheat-free, gluten-free products and adding a gluten-free milling area and lab testing in 2001.

In 2002, it began construction on a new multipurpose building, its Whole Grain Store and Visitors Center. The two-story building, which housed the company's corporate offices, and mail-order warehouse and 50,000-square-foot manufacturing plant, also contained an 18-foot-tall operational water wheel, a working stone mill that used French buhrstones from the 1800s, a breakfast and lunch café, outlet store, bakery, deli, bookstore, historical milling equipment displays, and cooking classroom. Designed to resemble a 19th-century mill building, the building's interior featured heavy timbers and wrought iron connections.

Still needing more space, the company doubled its warehouse and distribution capacity to 65,000 square feet by moving its distribution facility half a mile down the road from its new building two years later in 2004.

"This is a proud moment for Bob's Red Mill," Moore had announced in a 2003 Portland Daily Journal of Commerce article. "We started this company with a dream to support the health and well-being of the community, and 25 years later, we have built a strong foundation in whole grain nutrition across the nation. Now we are able to share the history of stone milling and provide a first-hand look at how our hundreds of products can be used. Business is good, and we keep growing and growing." Business promised to keep on growing in 2004 as Gilliam represented the company at an Oregon Department of Agriculture trade mission to Seoul, South Korea, and Osaka, Japan.

Principal Competitors:General Mills, Inc.; Goya Foods, Inc.; Pepperidge Farm, Inc.


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