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SMALL BUSINESS

Flour Is Family's Bread and Butter

Food: Historic Capitol Milling, supplier to artisans and supermarkets alike, prepares for big expansion.

September 17, 1997|DENISE HAMILTON | SPECIAL TO THE 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 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.

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