SMALL BUSINESS; Flour Is Family's Bread and Butter; Food: Historic Capitol Milling, supplier to artisans and supermarkets alike, prepares for big expansion.
The Los Angeles Times; Los Angeles, Calif.; Sep 17, 1997; Denice Hamilton;
PHOTO: "We are specialty millers," says Capitol Milling
President Doug Levi. Doug Levi is part of the third generation of the family
that has owned Capitol for 114 years.; Photographer: Clarence Williams/ Los Angeles
Times
Los Angeles was a small town when Capitol
Milling first threw open its doors for business in 1831. Wheat grown in the San
Fernando Valley was hauled by horse to Capitol's site on the edge of Chinatown,
where it was ground into flour for the city's bakeries.
Today, Capitol Milling still thrives on its
reputation as a small, family-run business, even though it is a
multimillion-dollar company that sells to customers as diverse as Ralphs
Grocery Co. (a client for more than 100 years), Foix French Bakery and artisan
foodie outfits such as Nancy Silverton's La Brea Bakery.
"We are specialty millers, and we will
custom-mill flour to fit every bakery's need for every type of product,"
says Doug Levi, the president of Capitol Milling and among the third generation
of the Levi family that has owned Capitol Milling for the last 114 years.
Customers say that what distinguishes Capitol
Milling from its competitors--which include such giants as General Mills and
Archer-Daniels-Midland--is quality and service.
"They're a big company, but they work on a
smaller, more personal scale," says Karen Salk, a partner in Breadworks,
an artisan bakery in the Fairfax District.
"Our salesman lives for flour," she
continues, praising John London, 70, who is Doug Levi’s first cousin and
who started with Capitol in 1949. "Sometimes breads don't come out for
some reason, so we call him, and he can tell you, 'Have you checked this, have
you tried that, what's your water temperature?' And he'll check to see if
there's been any change in his supplier. They're a good resource."
Capitol does little advertising, relying on
word-of-mouth and its reputation within baking circles. These days, artisan
bakers account for as much as 10% of sales, up from practically nothing in 1989
when Nancy Silverton started La Brea Bakery. The mill operates 24 hours a day,
up to six days a week, and includes a three-story brick building considered the
oldest commercial structure in Los Angeles.
But that bit of history may change next year
when Capitol Milling, with two other partners, opens a larger plant in Colton
capable of milling more than 1 million pounds of flour daily--more than
quadruple current production.
"As time goes by, their ability to
modernize at the old site is difficult," says Josh Soosland, a senior
editor at Milling and Baking News, a trade publication, who says the new
facility will catapult Capitol into the ranks of large national mills.
"Right now, they are a small mill, and there are inefficiencies to being
that small."
The new mill will be operated in conjunction
with Kruse Investment Co. on an 11-acre former feed mill owned by Kruse that
already has grain storage. A third partner, Christian Konsgore, is associated
with Grain Millers Inc. in Washington State.
While Konsgore is an investor and advisor,
Kevin Kruse, who will be Capitol Milling's new chief executive, has a long
family tradition in L.A. milling. He is the grandson of Otto Kruse, who founded
O.H. Kruse Grain & Milling in 1935, the largest animal feed manufacturer in
Southern California.
After Kruse died, the family sold the company
and three of its plants, keeping only the 11-acre site in Colton. Under the new
deal, Levi will remain Capitol's president. He declined to discuss financial
details of his current operation or the planned expansion.
What will happen to the historic downtown L.A.
site is unclear. Soosland says he's heard the owners will shutter the old site.
Levi says he might keep the old mill open.
In the warehouse, a film of flour coats
everything and gives the light an unearthly glow. Pallets of different flours
are stacked to the ceiling, next to occasional piles of neatly swept flour from
burst bags.
The flours are as varied as the city itself:
whole wheat, unbleached white flour, malted barley, pumpernickel, rye, a
nine-grain mix, corn flour headed for tortilla factories, flour for making
Chinese noodles and flours with whimsical names such as Montana Sunlight Hi
Gluten Flour.
"Someone came in with a sample of flour
made in another country, and we analyzed it and replicated it," Doug Levi
says proudly.
John Levi, 26, the fourth generation of his
family in the business, says he started working at the mill during high school,
rotating through the warehouse, then sales, to learn the industry. While
attending business school, he took a year to study milling at Kansas State
University in Manhattan, Kan., the nation's breadbasket and one of the best
places to learn about grain.
The younger Levi says that each generation has
gone happily into the family business, and there has never been any talk of
selling. On the contrary, Capitol is ripe for expansion, he says, because the
company has no debt and is able to supply only part of the flour that its large
clients need.
Capitol Milling was built in 1831 by
Massachusetts sea captain Abel Stearns, who at one time was the largest
landowner in Southern California. Originally it was powered by water that
flowed from a man-made channel running along Alameda and North Spring streets.
The Southern Pacific Railroad hadn't even been
built then, so the mill depended on horse-drawn wagons. In fact, says Doug
Levi, Capitol Milling rolled the barley that fed the mules that helped build
the railroad.
The company had two other owners before it was purchased in
1883 by a young German-born merchandiser named Jacob Loew, who teamed up with
his German immigrant nephew, Herman Levi, and immediately began to expand the
mill and install a state-of-the-art, 150-horsepower steam engine. Both men
married daughters of another pioneering Southern California family, the
Newmarks. The mill soon tripled its output, producing 150 barrels, or 29,400
pounds, of flour a day. Upon Loew's death in 1921, Levi took over the business.
During his tenure, the plant switched from steam power to electricity, and
production increased to 107,800 pounds of flour a day.
Today, Capitol retains the feel of an older
era, from the oak-paneled offices decorated in 1922 to the framed antique flour
sacks (the industry has since switched to more hygienic paper) that hang in a
conference room. A ring used to tether horses is still attached to the
building.
But while times have changed, the demand for flour--a basic staple of life--has only increased with the years.
"The population expansion in Southern
California means more flour will be sold," John Levi says. "Bread,
cookies, bagels . . . they all need flour."
*Two years after this article, in 1999, the
Levi/Loew family and its partners sold Capitol Milling Co. to ConAgra, Inc. an
international conglomerate. Doug Levi and his son John Levi are still working
in the milling business.
*ConAgra
Acquires Capitol Milling
Omaha, Nebraska, March 31, 1999
ConAgra, Inc. (NYSE: CAG) has acquired
certain assets of Capitol Milling Co. LLC from Kruse Investment Company, Inc.
and Premier Cereals LLC in a cash transaction. Terms were not disclosed.
Capitol Milling operates a flour mill built
last year in Colton, California, near Los Angeles. ConAgra Flour Milling
Company plans to expand the mill, which currently has a daily capacity of
11,500 hundredweights, or 1.15 million pounds of flour.
"We are delighted to acquire a brand
new, state-of-the-art flour mill in the fast-growing Southern California
area," said Darek M. Nowakowski, president of ConAgra Flour Milling
Company. "Capitol Milling will give us a strong base from which to serve
customers on the West Coast."
ConAgra Flour Milling Company, a longtime
leader in the U.S. flour milling industry, has 24 mills in 14 states.
ConAgra Flour Milling Company, headquartered
in Omaha, is part of ConAgra, Inc., an international diversified food company
also headquartered in Omaha.