Major-league bakers are rolling with the hit of the economy, sluggish sales and soaring commodity prices and somehow see a light at the end of the tunnel oven. The economy has slugged bakery operations in the chest over the last few years because many are institutional and restaurant-based, and several restaurants and other facilities throughout the country have closed. “People are just now starting to go out to restaurants again—finally,” observes Larry Marcucci, president of Chicago-based Alpha Baking Co. “So the economy has definitely had its affect on us. We had to sell to a lot more customers to keep the same level of volume.”
“One of the biggest challenges we are seeing is volatility in commodities,” admits Richard Spencer, director of new products development at Dawn Food Products, Jackson, Mich. “The degree of uncertainty is providing new hurdles for all aspects of the organization, from procurement to product development and production to sales and customer service. From a product development standpoint, we are continuing to look at innovative ways to deliver the great taste and quality that are necessary to drive consumer purchase, but still achieve the financial requirements of the organization. It’s a delicate balance that mandates honest cross-functional dialogue and a willingness to challenge sometimes long-held assumptions or beliefs about a product offering.”
Dorothy Radlicz, director of marketing at artisan bakery Chabaso Bakery in New Haven, Conn., says she believes that the more difficult economic climate may be causing a sensitivity to waste and portion control (some of which is price-point driven). “I believe this will continue to be translated into an increased interest in smaller items. At the same time, people are more inclined to treat themselves to higher quality breads, for example, then maybe some items that are perceived as not so necessary. Bread is more of a daily staple.”
Commodity costs are also a great challenge because they keep on increasing, says Alon Ozery, co-founder of Toronto-based Ozery Bakery. His company is positioned in the commercial bakery segment and also makes private-label products, as well as a recently introduced line of pre-sliced, organic ancient grain buns made of kamut, spelt and whole wheat.
But Ozery says his company is growing and increasing its baking capacity by adding more baking equipment lines to its new facility. Bakers are definitely starting to think outside the “bread box,” as consumers are very nutritionally savvy, more sophisticated and more label-conscious. Thus, new breads are being developed, and bakers are coming up with products that contain better-for-you twists, more whole grains, new inclusions, artisan styles and new shapes, including a recent plethora of rounds.
At Flowers Foods, Thomasville, Ga., the biggest challenges facing companies that compete in the bread aisle category are rising costs of commodities and fuel combined with a slow economy and tough competition in the baking category, says Janice Anderson, vice president of marketing. “This is putting a lot of pressure on wholesale bakers. Our company’s response is to remain focused on continually improving the efficiency and performance of all areas of our business so we can continue to offer baked foods of quality and value to our consumers and long-term return to our shareholders.”