A very popular baker of artisan, organic bread has sold a controlling interest to the world's largest baking company. 

Stone House Bread has long been known for its high-quality baked goods, particularly its legendary sourdough. Founded in 1995 in Leland before moving to Traverse City, the company now distributes throughout every corner of Michigan and parts of Ohio and Indiana.

Now, Stone House’s ownership team has sold a majority stake in the company. The Stone House team did not disclose the buyer, but it has been publicly reported elsewhere that it's a subsidiary of Mexico-based Grupo Bimbo. The company, which has more than 150,000 employees across 35 countries, declined to speak on the matter.

Stone House was founded by Bob Pisor, who in 2007 sold to Tonie Zahm-Spearing, Charlie Spearing and Jeff and Annette McMullen. The company has seen major growth since then, first under Zahm-Spearing’s leadership as managing owner and later in tandem with Jeff McMullen.

“Tonie and Jeff together just drove tremendous growth over the past three years,” Charlie Spearing said. “That team … was a force multiplier.”

Feedback on their products was excellent, suggesting it was an increasingly big hit with consumers.

“We found out that in any store we were in, we were the fastest growing and held the highest market share of any bread company … double the value of the next competitor,” Spearing said. “Really what we found out is we were the highest volume per store and fastest-growing sourdough company in the country.”

The company has also been riding a wave of consumer preference for more wholesome products and a lot of recent interest in sourdough.

“There are these really awesome gut health benefits that have just kind of surfaced in the last three years. And our bread is natural; uses organic flour. So we had kind of this perfect storm,” Spearing said. “And then it's got a very strong artisan feel to it, which is another sector that's growing very quickly.”

Considering Stone House’s strong growth and broad appeal, the company started to get interest from major buyers in recent years. The ownership team was ready to sell.

“We were open to structure and we were open to how much we sell, but just given the dynamics of the past few years, we knew there was a huge growth opportunity,” Spearing said.

The team worked with Golden Circle Advisors, an investment bank in Traverse City, to solicit potential buyers. After interest from several major players, they found one they liked and made a deal that recently closed. Terms were not disclosed.

Spearing said the buyer’s size and extensive distribution network made them very attractive.

“There's nobody out there that has a better ability to scale us quickly,” he said. “They have sales channels in every town, every state, everything in the country. In the world, actually.”

All current local production will be maintained, Spearing says, and the new buyer “really likes the Traverse City component of this whole thing." But Stone House products will also begin to be made elsewhere.

“Right now, we have our … head of process out at a couple of [the buyer’s] bakeries showing them how to make our products. So we’ll just continue to repeat that as we scale across the country.”

The deal is set up in a way that specifies that the new majority owner can buy out the Spearing, Zahm-Spearing and McMullen minority stakes at any time after two years, Spearing says. After nearly two decades of ownership, it’s a bittersweet feeling.

“Tonie put her heart and soul into it for 17 years –  it really was her baby. Now she’s got to send her baby off to college. So she definitely has some emotions,” Spearing says. "[But] this is what we bought it to do. We wanted to scale it and eventually sell it. And, you know, we're all in our mid-fifties and this was the time for us.”

The nice part is hanging around for at least two years as the new buyer grows the company.

“Their plan involves the company scaling to at least 10 times where it is right now … so the sweet part of this is that financially there’s an opportunity for our rollover equity to grow into something very significant,” Spearing said. “But the other thing is that hopefully five years from now, you’ll find Stone House Bread in every corner of the country and we’ll go, ‘Wow, can you believe it?’"

Editor's note: This story is featured in the December edition of the Traverse City Business News (The Ticker's sister publication). Click here to subscribe to TCBN, and click here to see where to find it on newsstands.