July 1, 2004
In the in-store bakery/deli and foodservice bakery channels, the pundits preach health and wellness with breads and super-indulgence with sweet goods, but don’t forget that freshness and new product innovation also ring a bell with consumers.
When it comes to eating out, Americans love to pig out. When it comes to eating on the run, consumers simply are eating a ton. When it comes to making a diet regimen last, maybe time-pressured people should slow down and not eat too fast.
Besides, isn’t that what your parents taught you in the first place?
Jerry Smiley, founding partner of Roselle, Ill.-based Strategic Growth Partners, notes that the hectic lifestyles of consumers could be yet another reason for the plumping of the population. For all too many ever-mobile Americans, the dashboard diet and the curse of convenience foods are tempting them to eat too much, too quickly.
“When you’re eating on the go, you’re eating fast, and that hunger meter doesn’t have the time to respond,” Smiley explains. “By the time your stomach signals you’re full, you’ve eaten that 4,000-calorie lunch, and then you suffer from lightheadedness and sleepiness in the afternoon.”
In fact, Americans now consume an average of 200 calories more a day than they did some 20 or 30 years ago. While on-the go meals account for a good portion of the additional calorie consumption, snacking on all types of foods accounts for the rest, according to the U.S. Department of Agriculture.
In the foodservice arena and the in-store bakery channels, takeout is becoming increasingly popular. While quick-service restaurants (QSRs), sandwich shops and pizza joints have been riding this trend for years, a greater number of casual dining establishments ranging from Outback Steakhouse to T.G.I. Friday’s restaurants are packing meals for the road or for dinner at home. In fact, Smiley notes, some 15% of the revenue reported for Chili’s restaurants now comes from takeout.
In many cases, separate doors and parking places are provided for consumers who don’t have the time — or just don’t want to eat in. That’s one reason why the casual dining segment of the foodservice industry continues to do well in the face of competition from Wendy’s, Burger King and McDonald’s, all of which have successfully upgraded their menus with more healthful offerings and higher-quality items, such as Black Angus burgers on premium-quality rolls.
The venture into takeout is also a response by casual dining restaurants to the influx of such fast-casual restaurant chains as Baja Fresh, which provide the quality of casual dining with the speed of a QSR operator.
According to Food Marketing Institute Trends, 17% of all supermarket shoppers report that they eat their main meal away from home three times a week or more. Perhaps even better news is that 31% of those between 15 and 24 say they eat at least three meals outside the home each week.
While more casual restaurants offer takeout, 35% of consumers reported that they ate takeout at QSR chains. On the other hand, some 27% did carry out from supermarkets, and another 18% did so from restaurants, FMI reports.
Year of the Sandwich
Ironically, at a time when consumers have gone crazy over carbs, the most mobile of meals — the sandwich — is experiencing a popularity boom. This trend is good news for the baking industry and for suppliers of breads, buns and rolls.
According to Food Beat Inc., the Wheaton, Ill.-based company that monitors what’s on the menus of the nation’s Top 200 restaurant chains, sandwiches were the second-largest meal part behind entrees last year. Of the 2,498 sandwiches on these chains’ menus, 1,907 were non-burgers. Of all new items, nearly 20% were sandwiches, according to Food Beat’s fourth quarter newsletter in 2003.
In addition to a greater number of sandwiches, the chains are offering higher-quality breads and rolls and more exotic varieties. Instead of white bread, sandwiches are being made with lavash, sesame rolls, ciabatta, pesto focaccia, Texas toast, flavored tortilla, peppered brioche buns, New Orleans French bread, Asiago rolls and Grecian rolls, to name a few.
In addition to convenience and value, freshness is fueling the sandwich trend. Consumers simply like meals that are prepared in front of them or made to order.
According to the International-Dairy-Deli-Bakery Association (IDDBA), taste, freshness and quality ingredients influence sandwich purchases more than other factors.
In IDDBA’s “Sandwich Study: Consumer Attitudes, Buying Behavior and Purchase Drivers,” published last year, 73% of consumers noted that taste had the most influence on their sandwich purchases, while 21% said it had some influence and 5% said it had little or no influence. Some 76% of women and 62% of men said taste matters, which might or might not fuel the debate that ladies have more taste than gents.
Meanwhile, 66% listed freshness as a major influence. According to the report, establishments could spark more impulse sales and customer loyalty by highlighting product freshness in marketing materials. Additionally, 59% listed quality ingredients as a major decision factor in their sandwich purchases.
The success of Panera Bread over the last few years has fueled the resurgence of the upscale sandwich trend. No longer is bologna or PB&J on white bread a representative example. The Paneras of the industry now offer high-end meats, exotic cheeses and fresh vegetables on such breads as three-cheese semolina, Kalamata olive and country-style.
Foodservice operators, including QSR chains, also are creating sandwiches that offer health-conscious consumers more choices. For instance, Wendy’s Ultimate Chicken Grill sandwich contains fewer calories and grams of fat than many burger-and-fries alternatives.
Not only are consumers enamored with fresh, but they also are more passionate about baked items that are hot and fresh.
In response to Blimpie, Schlotzsky’s, Togo’s and Quizno’s, which offer hot-and-fresh sandwiches, Subway plans to add toasters to its 17,000 units throughout the nation by the end of the year. Currently, many Subway shops only have microwaves.
Although many consumers equate freshness with nutrition, oftentimes that is not the case. A hearty roast beef with mustard-mayonnaise, goat cheese and tomato can rival the greasiest of burgers in fat and calorie content. The Chicken BLT salad at Wendy’s has 710 calories and 47.5% of fat, reports Prevention magazine. Arby’s Fresh Market sandwiches have been a hit, but some of them such as the Ultimate BLT contain calories and fat levels in the dietary danger zone.
“If you look at the calories and fat of some of those sandwiches, they’re probably as bad or worse than eating a Whopper,” Smiley says. “However, because the sandwiches are prepared fresh and in front of you, there’s the perception that they’re better for you.”
Four Bread Segments
Smiley estimates that the foodservice and in-store baking channels are about a $20 billion market annually. Manufacturers shipped approximately $13 billion worth of product into the foodservice channel last year and about $7 billion to in-store bakeries, he says.
Additionally, Smiley breaks down the bread category into four segments, each of which is experiencing different rates of sales growth. On the low end are commodity breads and rolls, specifically white bread.
“That’s the category that has really taken the brunt [of the damage] with this Atkins diet craze,” Smiley says.
Next up are soft, whole grain and premium breads such as those used in the thick-sliced Fresh Market sandwiches Arby’s offers. In the deli, such premium breads would include brands such as Pepperidge Farm, Arnold’s, Nature’s Own and King’s Hawaiian, which many supermarkets use to make up sandwiches.
“They’re still a soft bread, but they’re booming because they’re perceived as higher-quality products and because they’re healthful products that are made with whole grains,” Smiley notes.
A third group, he says, includes the lower-end Italian and French breads. “Those are also suffering because they are generally made out of processed white flour,” he adds. “There’s a perception that those breads aren’t as healthful as whole grain.”
At the highest end are the artisan breads such as those produced by Ecce Panis and LaBrea Bakery. These breads, Smiley says, have not been impacted by low-carb diets because they taste better, even if they are high in carbohydrates.
“Keep in mind that artisan bakeries are still doing well, “ Smiley says, “and they’re doing it by making bread with four ingredients — flour, water, yeast and salt — and sometimes without commercial yeast, using natural fermentation. Then they’re adding ingredients that are good for you, such as oats and flaxseed, and consumers are eating it up.”
At the IDDBA show, held in Washington, D.C. in June, at least a dozen exhibitors had chefs on hands to show in-store bakery/deli operators how to make their breads into upscale sandwiches that command a premium price.
At Brooklyn, N.Y.-based Damascus Bakery’s booth, for example, corporate chef Dave Martz prepared a variety of sandwiches made with the company’s Panini Flatbread or a variety of lavash called the Rollup. Unlike typical tortillas, pitas and lavash, the Rollup is a 7-in. rectangular piece that holds more ingredients than previous wraps.
“You can put the same amount of ingredients in a 7-in. square piece as you can in a 12-in. round one,” Martz notes.
Martz says the Rollup is ideal for carb counters because a 2-oz. version can hold up to 8-oz. of fillings, and the flaxseed variety has only 6 gm. net carbs.
King’s Hawaiian introduced a variety of sliced Hawaiian breads that it can now produce in its new plant in Torrance, Calif.
Meanwhile, Fancy Pokket Corp. launched a variety of reduced-carbohydrate pizza crusts, tortilla wraps, flatbreads, bagels and pita breads that are high in fiber and cholesterol- and trans-fat-free. The Moncton, New Brunswick-based company sells its products to in-store bakery/delis, major retailers and other customers under either a private label brand or its Fancy Pokket and Paco names.
Without a doubt, Rockville, Md.-based Bakery de France introduced the highest-end artisan bread, a 64-oz. tourte. The traditional rustic French bread takes three days to make, and the fully baked frozen product is sold in a box that holds one round tourte or in a case that holds two 2-ft.-long loaves.
“We’re encouraging our customers here to sell it by the half, quarter or even by the slice,” says Nadine Salameh, director of operations. “We sell cookies by weight. Why not bread. It’s for people who really have a passion for great bread.”
At Bakery de France’s booth, a chef featured tartines, the open-faced sandwiches that are popular in France, with slices of the tourte topped with mozzarella and tomatoes, grilled peppers, cheese and other fresh ingredients. The bakery also showcased a line of 32-oz. rustic breads, including a seeded rye, black forest multigrain and other varieties.
Teixiera’s Bakery, known for its line of traditional Portuguese breads, expanded beyond its core items into artisan breads. The Newark, N.J.-based bakery featured rustic breads made with pesto, black olives and other upscale ingredients.
“We’re trying to fill a niche in the market and fill it with unique products. We’re moving from being a regional player to being a player on a national level,” says Marvin Eversdyke, president. “There’s a movement away from frozen dough. In-store bakers and foodservice operators are looking for more parbaked and fully baked frozen items. Most of the chains are looking for ways to cut back on labor. Rising operating costs are becoming more and more of a factor.”
Like many other bakers, Teixiera’s, also known as the Portuguese Baking Co., has rolled out ciabatta rolls, which are becoming as ubiquitous as Kaiser rolls and dinner rolls in the market. Berwyn, Ill.-based Turano Baking Co. produces them for the Chicago market and beyond, while Cleveland, Ohio-based Orlando Baking Co. has been manufacturing them for years — even before many Americans knew what ciabatta was.
Even some of North America’s largest bakers have been going more whole grain. With the purchase of Grace Baking in California, Toronto-based Maple Leaf Bakery has added new rustic and artisan products. At IDDBA, Maple Leaf featured new whole grain baguettes as it tried to get consumers to climb the ladder and eat higher-quality breads. It also introduced a sweet wheat baguette that it makes for the Cheesecake Factory into the in-store bakery and retail channels.
For the morning breakfast eating occasion, Avon, Ind.-based Harlan Bakeries Inc. featured a new line of low-carb bagels made at its Denver plant.
“I think there has been some high trial of low-carb products, but we’re seeing our customers also asking for a more boiled, traditional bagel,” says Hugh Harlan, president of the company.
Meanwhile, Park Avenue Boiled Bagels, based in West Caldwell, N.J., partnered with an equipment manufacturer to produce a “bagel shop bagel” that’s more upscale and crispier on the outside with an extended shelf life, notes Bruce Levenbrook, president. To create the bagel he desired, the company uses a thermal oven instead of the traditional rack oven. The product is seeded on both sides and typically comes in a 4-oz. size.
Levenbrook adds that consumers are moving to smaller bagels. The hefty bull bagel, weighing in at 5 oz., is simply too big for many people.
“I think we’re moving from a bull bagel market to a traditional bagel market, where the products are 3 and 4 oz. instead of 5 oz.,” Levenbrook says.
Fat Chance with Carbs
Not surprisingly, the show floor was loaded with low-carb products. Damascus Baking featured low-carb pitas. Lewis Bakeries of Evansvile, Ind., displayed its extended line of lower-in-carbohydrates Healthy Life breads, rolls and buns.
Hope’s Cookies in King of Prussia, Pa., offered low-carb, low-trans-fat and sugar-free cookies. The reduced-carb varieties come in chocolate chip and double-fudge flavors. Retailers, however, seemed to be more interested in indulgence when it comes to sweet goods. That doesn’t surprise some industry observers.
“The two areas that are doing considerably well in the bakery are artisan breads and upscale desserts,” Smiley notes. “Indulgence is a very strong trend. If consumers are going to consume carbs and calories, they want a good bang of flavor as well. That want it to be worth their while.”
Although carbohydrate concerns have been in the forefront, obesity is the larger issue — one that is becoming a major catalyst for changing consumer behavior. According to the Chicago-based foodservice consulting firm, Technomic, 61% of deli shoppers admit that they are overweight. More than 21% of shoppers have kids that are overweight. Some 26% suffer from high cholesterol, high blood pressure and/or diabetes — life-changing medical conditions that often scare patients into altering the food they eat.
Obesity, says Robert Goldin, Technomic’s executive vice president, “is a topic of extreme importance that will affect all food providers in a significant way. Obesity is a catalyst for change.”
According to Technomic’s “Deli Shopper Survey 2004,” 90% of deli-goers are aware of the obesity epidemic, while 67% are very or somewhat concerned about it. In all, 60% of shoppers say they have changed their eating habits by eating more vegetables, fish, baked/grilled chicken and fewer french fries, fried foods, donuts, fried chicken and salty snacks.
Even Winston-Salem, N.C.-based Krispy Kreme Doughnuts acknowledged that fad diets are impacting the sale of its donuts, especially in supermarkets and other channels where they’re not freshly coming out of the fryer. Perhaps another blow to the company is that Wal-Mart, the nation’s largest retailer, is teaming up with Randolph, Mass.-based Dunkin’ Donuts. In May, Dunkin’ opened up its first store inside Wal-Mart, and more of such stores are planned.
While Krispy Kreme blamed its softening sales growth on the low-carb craze, studies show that consumers are more concerned about other issues. Technomic’s survey shows that 71% of deli shoppers are concerned about total fat, 68% about saturated fat, 64% about total calories, 63% about cholesterol and 61% about sugar. Goldin says carbohydrates were seventh on the list of health concerns.
“Fat is still the culprit in consumers’ minds whenever it comes to health concerns,” he says.
Goldin adds that health concerns are moving targets. “I think these things are going to evolve,” he explains. “I believe next year you will see sugar wars.”
That’s fine with the folks at Nancy’s Pies. The Rock Island, Ill.-based baker is one of the nation’s leading suppliers of sugar-free and no-sugar-added desserts that can fit into today’s low-carb lifestyles, with moderation. That’s because the sweeteners, specifically sugar alcohols, are not metabolized in the same way as sugar.
At the IDDBA show, the company introduced new packaging and the new Hill & Valley brand name. Now, in-store bakery/delis have the opportunity to package Nancy’s products either under their own private label brand or under the Hill & Valley name.
In addition to the pies at the show, Nancy’s featured thaw-and-sell mini- and full-sized quiches, made with a crispy phyllo crust. For the carb conscious, it offered a liquid quiche that could be baked without the crust.
Starr Culinary Delight of Mississauga, Ontario, covered all bases for the sweet-toothed shopper. The upscale dessert producer had a variety of single-serve cakes and desserts for those interested in portion control. It also presented its line of ultra-decadent fruit and chocolate desserts that looked as if they were made by a master pastry chef. Then it had a line of low-carb desserts.
Bob Deal, co-owner of Real Food Marketing in Kansas City, Mo., works with Starr to develop new dessert concepts. One of Deal’s ultimate concepts for the carb watcher is the Carbcart, a kiosk that features 23 different reduced-carb items ranging from breads to sweets.
Despite all of the hullabaloo over health and wellness, Harlan Bakeries has found the dessert business performing quite well over the last year. Apparently, consumers are watching their weight, but are they watching it go up or down or up-and-down, a la Oprah? Harlan’s is rolling out a Key Lime pie and other restaurant-style desserts. Business has been so strong that the company is opening up a 140,000-sq.-ft. plant that will produce desserts and some other yet-to-be-disclosed items.
For lovers of hot donuts, Granny’s Kitchens developed a specially formulated product that allows in-store bakers to serve hot glazed items in less than 30 minutes. Bakers simply take the frozen donut, put it into a proofer for 25 minutes to retain the product’s moisture and then bake it for 1.5 minutes. Typically, thaw-and-serve donuts dry out from the long two-hour ambient thaw period. The proofing keeps Granny’s Kitchens’ products soft and moist, says John Brennan, national sales manager.
The glaze, he adds, is not only on the outside, but also mixed into the old-fashioned sour cream donut to create a product with a uniform taste and unique texture.
Elsewhere, J & J Snack Foods once again proved that it’s the master of portion control. Its booth featured a plethora of snackable and poppable filled soft pretzels, muffins, donuts and other sweet goods. With the acquisition of Country Home Bakers operations, the Pennsauken, N.J.-based company acquired a well-known brand in the in-store bakery/deli channel and expanded its product line with a myriad of gourmet cookie varieties.
Even pizza producers are cranking out lower-carb items. Molinaro’s Fine Italian Foods, for instance, created a line of Carb Lite pizzas with 50% fewer carbs. The 7-in. pizzas come in cheese, pepperoni, meat lovers and chicken varieties, and can be co-packed or produced under the Molinaro name, says Vince Molinaro, president. The Mississauga, Ontario-based company also offers dessert pizza kits that come in homemade apple, strawberry and raspberry flavors.
Over the last three years, some 800 new lower-carbohydrate alternatives have been introduced to the market, according to Naples, N.Y.-based Marketing Intelligence Service, which monitors new products. In the tortilla industry, everyone from category-leader Mission Foods to up-and-comer Tumaro’s Gourmet Tortillas & Snacks of Santa Monica, Calif., has rolled out low-carb alternatives in record numbers. In fact, several suppliers to Subway and sandwich shops note that they are near or at capacity in their ability to produce tortillas with fewer carbs.
Although low-carb wraps have caught on with consumers, bunless burgers tend to be the biggest flop of the year. If Burger King sells two or three bunless Whoppers, they’re having a good day.
Instead of wrapping all-beef patties in lettuce, perhaps bakers and foodservice operators should go gourmet and offer burgers made with the best-made bun possible. Instead of desecrating the image of the burger, they should celebrate the all-American sandwich. What better way to honor the esteemed burger on its 100th Anniversary this year?