Girl Scout Cookies: Thin Mints Shortage, Other Surprises
Did you know, for instance, that despite their reputation as a product prepared by small, privately owned bake shops around the country -- companies with homespun names like "Little Brownie Bakers" and "ABC Bakers" -- Girl Scout cookies are actually owned by "Big Cookie"?
A Mirror for America
That's right. It's not just in the supermarkets that the food-industrial complex has taken over American life. Even in the nostalgic world of little girls in green jackets hawking cookies door to door, mergers and acquisitions have consolidated what once was a largely mom-and-pop industry into just a couple of gigantic players.
Since their "invention" in 1917, Girl Scout cookies have mirrored trends found elsewhere in American industry. Beginning in the kitchens of Girl Scout parents, moving then to local, licensed bakery operations, and ultimately involving 29 commercial bakeries scattered across the land, the number of bakers baking Girl Scout Cookies has since reversed course, declining steadily over the last few decades.
By 1978, the Girl Scouts had whittled down the number of bakers licensed to prepare their cookies to just four. By the early 1990s, they'd cut that in half. Today, just two bakers (the aforementioned Little Brownie Bakers and ABC) handle all Girl Scout Cookie business in the nation.
Don't Judge a Cookie by Its Carton
What's more, despite their quaint names, these two shops are anything but small businesses. Turns out, both ABC and Little Brownie are owned by much larger, publicly traded conglomerates -- arms of "Big Food" in America.
ABC Bakers, which bills itself as "the oldest and most experienced licensed Girl Scout Cookie baker" and boasts a history of baking Girl Scout cookies as far back as 1937, is owned by Richmond, Virginia-based Interbake Foods LLC -- a $90 million annual business according to Dun & Bradstreet Hoovers. According to S&P Capital IQ, further up the corporate chain, Interbake is in turn owned by Canada's George Weston Limited (WN), a $35 billion enterprise, and one of Canada's biggest bakery companies, in addition to being owner of Canada's largest retailer (Loblaw Companies Limited).
Little Brownie's owner, meanwhile -- despite the name -- is anything but little. It's owned by Kellogg (K), by way of the latter's Keebler subsidiary. At more than $14 billion in annual revenue, Kellogg is one of America's biggest packaged-food companies.
Read the Ingredients
Now, this is not necessarily a bad thing. The Girl Scouts explain that concentrating their baking at just two big businesses helps to "ensure lower prices and uniform quality, packaging and distribution." And the Girl Scouts note that the bakers still forward them revenue equal to "approximately 65-75 percent of the local retail price," and that a portion of this is in turn "shared with participating Girl Scout troops and groups."
So no matter who does the actual baking, the Girl Scouts are basically still working on a "one for you, three for me" system when it comes to divvying up the profits -- and the bakers have to pay for ingredients out of their own pockets. (Those little girls are some very sharp negotiators.)
The decision to tie up with "Big Cookie" does have downsides, however. For example, there was a big brouhaha last month over reports that the Little Brownie Bakers factory in Louisville, Kentucky, was requiring workers to work weekends and overtime to keep up with demand -- forcing workers to come in on Thanksgiving Day, Christmas Eve and New Year's Day -- and threatening employees with firing if they fail to comply. Those are the kinds of labor practices more often associated with big industry -- which Girl Scout Cookies have in fact become -- than with mom-and-pop bakery shops. Meanwhile, despite all the overtime, tight production capacity has resulted in a Thin Mint shortage on the East Coast, with the potential for shortfalls in supply of the new gluten-free Toffee-tastic cookie and Rah-Rah Raisin" as well.
In fact, if there's anything that will convince the Girl Scouts to return to its roots and let more small businesses get involved in the business of baking Girl Scout Cookies -- that might be it. Labor disputes come and go, but one thing Americans just won't stand for is an interruption in their supply of Girl Scout Cookies.
Motley Fool contributor Rich Smith is partial to Thin Mints. Fortunately, he has an "in" with the Girl Scouts, in the form of two budding saleswomen. He has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.