Changing nutrition trends have adversely affected the U.S. bread-production market in the past five years. Popular diets have left some people with a negative image of bread products, and operators have responded with innovations to attract newly health-conscious consumers. The industry has also faced volatile input costs.

According to reports by FoodBev.com, revenues within the bread-production market fell at an annualized rate 1% to $36.9 billion during the five years to 2013, including a 0.8% increase in 2013.

Bread producers have attempted to keep up with America's ever-changing and diverse palate. Operators have eagerly developed products to cater to the low-calorie movement, and created many whole-grain, low-carb products and the latest widespread food trend, gluten-free products. The gluten-free diet and its kin have even turned a small number of Americans away from the flagship products of the bread/baked goods industry altogether.

Frequent promotions to win market share and competition from in-store supermarket bakeries have eaten into the margins of the biggest bakeries. The last decade, in particular, hit it hard, as industry consolidation brought many established bakeries to extend their geographic reach and boost profitability without significantly increasing overhead.

Rising commodity costs haven’t helped either. Skyrocketing costs for wheat and sugar decreased profits for manufacturers unable to pass them onto downstream buyers, such as grocery stores, in the form of higher prices. This was particularly true during the recession, when consumers shifted from brand names to private labels to save money.

The next five years show no weakening of the health-conscious movement. In response, bakers will continue to innovate, with more healthy products that cut back on the amount of carbohydrates per serving, while adding more wholesome ingredients (eg., barley and oats).

Source: www.foodbev.com