Call Paul Stitt a health-food nut. A whole-grain zealot. A man waging a nutritional jihad.
How else to describe the owner of Natural Ovens of Manitowoc, an $8 million baking company growing at 20 percent a year, who takes only a $35,000 salary? Then he offers to give away his recipes and advice to any would-be competitor willing to bring his Nutty Wheat, Hunger Filler and other healthy breads to new markets across the country.
”They can come in here, work for six months and learn how to do it and then go home and do it,” Stitt said. ”We have all we want. But we`d like every man, woman and child to have a chance to buy this kind of product.”
Unusual.
”Unbelievable,” marveled Thomas Henry Chmiekewski, owner of a Houston commercial bakery who recently toured Stitt`s operation. But also totally in character for Stitt, a 51-year-old former biochemist at Quaker Oats Co. who has a brilliant scientific mind, an almost mystical belief in the virtues of healthy eating and maybe not so much business sense.
Anyway, for the iconoclastic Stitt and his partner and wife, Barbara, the traditional rules of business don`t apply. There is only a burning desire to make as much bread as they can in their small Wisconsin bakery and get it to the markets they serve: Wisconsin, Minneapolis and Chicago.
In spite of his reluctance to follow normal business practice, which surely would dictate that he expand aggressively to new markets or at least strike licensing deals with powerful outsiders, Stitt has built Natural Ovens into a force in the hotly competitive supermarket business.
The company, which sells a variety of baked goods made from whole grains and flax seed, claims to hold 4 percent of the Milwaukee market. In Chicago, it may have only 2 percent, but, for an independent, Natural Ovens has garnered impressive shelf space and increased sales in both the Dominick`s and Jewel chains.
”He`s got nowhere to go but up,” said Dan Nelson, the senior vice president at Dominick`s who first welcomed Stitt`s products into the chain.
Sales for the fiscal year ended July 1 at privately held Natural Ovens increased 23.1 percent, to $8.1 million on a net profit margin of 5 percent, quite strong for the commodity-oriented bread business. A typical loaf of Natural Ovens sells for $2.40, which is 40 cents to $1 more than most other breads.
Last year`s sales would have been higher except that Stitt said he got nervous and pulled back when the growth rate exceeded 30 percent before midyear.
He had been burned before by growing too fast.
”I`ve seen so many companies in this world expand too fast and collapse,” he said. ”I just want to be loyal and take care of our present customers and be around for many years to come.”
Stitt`s only real interest in expanding into new territory is his hope to negotiate deals with church groups and other organizations to set up small, community-based Natural Ovens bakeries in inner-city locations to make his bread available to the poor. He also dreams of one day opening a farm and food museum.
The Stitts believe a good diet goes a long way toward curing not just medical but societal ills, including criminal behavior. Barbara Stitt, in fact, is a former Ohio probation officer who made a healthy diet a requirement for her charges.
”Whole grain bread should be the centerpiece of every meal,” Paul Stitt said. ”If everyone had three or four slices at every meal it would eliminate obesity in America and heart trouble and a lot of other problems.”
The Stitts see the potential new bakeries as a way of addressing such problems, as well as offering strong economic opportunities where they are desperately needed. The company says it is negotiating deals with two churches in Chicago and Milwaukee to open the first satellite bakeries.
Stitt began his career with the intention of helping the world`s poor and undernourished. He worked for a chemical company developing a cheap source of protein from methanol until the project was killed when managers couldn`t find the profit potential. Then he moved to Quaker Oats where he did research on new foods.
In both cases he felt alienated by a corporate culture he saw as fixated on the bottom line and uninterested in satisfying human need. At Quaker, he said, his career effectively ended when he developed a protein concentrate so rich in nutrients that people could eat only one breakfast bar, instead of the usual two.
”To a marketing company, that`s not terribly desirable,” he said.
He left Quaker and spent three years struggling to make ends meet in private research before opening a health-food store in 1976 and then buying a commercial bakery in Manitowoc. He also wrote an angry book denouncing the giants of the food industry for their callous disregard for nutrition. He has since toned down his rhetoric and credits companies such as Quaker with developing some beneficial products.
Stitt`s idealism has gotten him into trouble more than once. After buying the bakery he alienated customers by discontinuing the sale of the delicious but nutritionally vapid sweet rolls they craved. And his first wife divorced him in the early years of the bakery when his decision to sacrifice a promising research career for health food seemed foolhardy.
But that same dedication has gotten Stitt through several scrapes when a less-committed person might have quit. When a relationship with an outside, profit-oriented investor quickly unraveled and the company was practically bankrupt, Stitt fought the investor in court and then bought him out with borrowed money. He also survived several financial debacles brought on by inexperience, including the day his neophyte bookkeeper presented him with $150,000 in overdue bills he had kept hidden under a desk blotter.
”In some instances, he`s succeeded in spite of himself,” said Jim Peters, a financial consultant brought in to fix Natural Ovens and to act as its one-day-a-week chief financial officer. ”He`s operated probably with some financial naivete and made some basic mistakes. He`s entirely motivated by a mission, which in his case is to have better health in the world through better nutrition.”
Still, while Natural Ovens loaves may be too dense and not sweet enough to appeal to the Wonder Bread set, they have attracted thousands of loyal customers, some of whom order the bread by mail from other parts of the country.
Ray Lahvic, editor emeritus of Bakery Production & Marketing magazine in Chicago, said Natural Ovens is probably the largest natural-bread company in the United States.
”He`s a niche marketer and it`s a growing niche, part of the larger health trend in the food industry,” Lahvic said. ”He`s done an excellent sales job and his products are good.”
Peters believes that if the Stitts were aggressive, their $8 million Midwest bakery could become a $60 million national bakery.
Natural Ovens sells 16 different breads, five muffins, a half-dozen rolls, granola and pancake mix. None contain artificial ingredients or stabilizers. Most are made with whole grain flours and ground flax, a seed rich in omega-3 fatty acids, fiber and lignan. Lignan is described by scientists as an anti-estrogenic organic chemical compound.
Most people buy Natural Ovens bread because nutritionists recognize the benefits of a diet that includes whole grains, which provide a good source of complex carbohydrates, dietary fiber and certain vitamins and minerals. People can consume too much fiber, however, which can be dangerous.
Nutritionists are less sure about flax`s contributions. Flax, a northern grain, is found in a few cereals, but Natural Ovens may be the only company in the United States using ground flax seed in bread. The company recently signed a multimillion-dollar deal to deliver ground flax to a Japanese firm.
Stitt holds two patents related to its use. Until he came up with a method of stabilizing it with zinc and vitamin B-6, flax quickly turned rancid when ground.
Stitt believes in flax`s health benefits. And animal studies conducted by the University of Toronto`s Department of Nutritional Science are promising. They credited the omega-3 fatty acids in flax with lowering cholesterol, while flax`s lignan was shown to have possible anticarcinogenic effects.
”So far there seems to be some promise, but there are more studies being done to have more conclusive answers on both issues,” said Dr. Lilian Thompson, who conducted the lignan study.
Other scientists are even more cautious.
”There are certainly healthful components in flax seed and they should be studied further, but I think it`s a little early to be making
recommendations,” said Mindy Kurzer, an assistant professor of nutrition at the University of Minnesota who studies diet`s role in cancer prevention.
The Food and Drug Administration doesn`t oppose flax, but a spokesman said the agency has not studied it enough to to officially sanction it. Instead, the FDA has relied on private-sector tests to allow its use.
Without preservatives, Natural Ovens breads have a supermarket shelf life of just four days or less. So Stitt designed a special double bag to retain freshness. He employs his own fleet of trucks to race the products to market. The company bakes about 16,000 loaves a day and transports them overnight in the company`s four tractor-trailers to Natural Ovens` own distribution centers in Milwaukee, Eau Claire, Minneapolis and Chicago, where a fleet of smaller trucks delivers them to stores.
The company does practically no advertising. Instead, it builds business on word-of-mouth and loyalty. To retain customers, the Stitts write weekly newsletters with nutritional advice and customer comments, which are inserted into each loaf package. The Stitts said they get as many as 50 letters a week, which they answer personally with a letter or even a phone call.
Paul Stitt said the battle to break into chain stores was difficult. He hawked bread in the aisles of an independent store in 1978 to get the attention of Milwaukee`s chains.
In Chicago a few years later, he went on a radio talk show to discuss his book and got 6,000 mail orders for it from listeners. He then asked them to write to Dominick`s to pressure the grocery into carrying Natural Ovens. When Dominick`s gave him a shot in several stores, he spent a weekend at one. Wearing a sportcoat, tie and an earnest expression, he sold 1,200 loaves.
