Sweet goods are having a moment. Due to the COVID-19 crisis, people want comfort food, and that includes bakery products like pastries, doughnuts, muffins, and more. And demand was already strong before the pandemic hit U.S. shores, with all three key segments of the sweet goods category showing growth over the past year.


State of the Industry: Bakery Report
Overview | Bread | Tortillas | Sweet Goods | Snack Cakes | Pizza | Desserts | Cookies | Buns & Rolls | Bars | Breakfast Products

Market data

According to data from IRI, Chicago, for the past 52 weeks ending April 19, 2020, the pastry and doughnuts category was up 3.3 percent, with total sales of $5.3 billion.

In pastries, Danishes, and coffee cakes—which overall saw $2.0 billion in sales with a 3.1 percent increase, private label led the way, with $447.0 million in sales and a slight decrease of 0.3 percent. McKee Foods had $329.1 million in sales with a healthy 5.8 percent increase, and Bon Appetit Danish Inc. had $271.1 million in sales with an increase of 7.7 percent. Hostess Brands had an increase of 15.1 percent in sales to $204 million.

The doughnuts segment was up 1.6 percent, with total sales of $2.0 billion. Private label again led the pack, with $440.9 million in sales—but branded products are gaining an edge. While private label saw an overall decrease of 2.8 percent, Hostess Brands had an 8.2 percent increase to $425.2 million in sales, and Grupo Bimbo grew 7.1 percent to $348.0 million. Bon Appetit had a notable jump of 25.7 percent in sales to $21.3 million.

The muffins segment had another good year, up 6.3 percent, with total sales of $1.3 billion. Grupo Bimbo is outpacing private label in the segment. Bimbo had a 15.5 percent increase in sales to $473.9 million in sales overall, and private label muffin sales decreased 0.8 percent to $410 million. Flowers Foods jumped into the top 10 companies in muffins with $8.1 million in sales for the year.


Looking back

“Prior to the outbreak of COVID-19, there was a consumer-driven push for greater transparency in foods with ‘free-from’ claims, such as no artificial colors/preservatives, no additives, gluten-free, and sugar-free,” says Kathy Sargent, director of global market strategy, Corbion, Lenexa, KS. She cites Euromonitor data of 49 percent of consumers buying products with gluten-free claims, and 57 percent perceive them to be a healthier option. “These free-from formulations are especially popular with younger consumers, like Gen Zers and millennials, who look for more-natural and less-processed items that they perceive to be less harmful. In response to these trends, many bakeries have expanded their product lines to include non-GMO, organic, gluten-free, low-carb, or alternative flour varieties.”

Sargent also refers to the Innova Market Insights research from fall 2019 demonstrating an increased demand for vegan and gluten-free formulations, as well as those with reduced sugar. “Regional delicacies trended upward, as well, and hybridization and the incorporation of more savory and spicy flavors showed promising growth.”

Bill Hanes, vice president, marketing and strategy, Lesaffre, Milwaukee, WI, says he’s heard a lot about “permissible indulgence” over the past year. “Despite a growing understanding of nutrition and an increased focus on health and well-being, consumers still crave the foods they believe they shouldn’t have.” So they might like to see some better-for-you ingredients in the mix. “An example may be a nutritionally fortified sweet good.” The company’s Accent technology can fortify baked goods with calcium to add “permissible appeal,” he says.

Increased interest in sourdough is also impacting the sweet goods category, notes Hanes, with products like doughnuts and other baked goods embracing the trend. Mordor Intelligence has predicted a CAGR of 7.2 percent growth from 2020–2025 for the global sourdough market, he notes. “The fermentation process naturally provides a clean label and contributes health benefits to sourdough bread,” he says. Lesaffre offers Livendo sourdough starters for fresh, par-baked, and frozen doughs.

Tom Sanders, global applications manager, ASR Group, Domino Foods, Inc., West Palm Beach, FL, says that the most-important ongoing trends are a desire for minimally processed ingredients and continued interest in organic ingredients. “This was validated when we asked a large pool of Americans for their future purchase plans. They told us they intend to eat more products containing raw cane sugar and organic sugar, but fewer products containing white sugar and other sweeteners.”

In the same study, most consumers reported that it’s not just the amount of sugar/sweetener that is important to them, but also the type, notes Sanders. In virtually every category, he says, the “taste” and “naturalness” of a sweetener trumps zero-calorie. “It’s about balance and finding what’s right for your category.”

Paula LaBine, marketing director, milling and starch, ADM Carbohydrate Solutions, Chicago, says that sweet goods are not exempt from the widespread shift toward better-for-you products and permissible indulgences. “To meet consumer desires, developers are shifting their focus to product formulations that deliver a clean, nutrient-dense label without sacrificing on taste or texture.” Shorter, more-recognizable ingredient lists featuring familiar, whole-food, closer-to-nature ingredients with minimal processing are on-trend. “This is impacting every aspect of the formulation, from flour and sweetener selection to flavors and colors,” she says.

LaBine suggests that items such as muffins that offer a more-complete nutrition profiles fulfill the notion of a permissible indulgence. “Nutrients such as vitamins, minerals, and protein are top-of-mind for consumers, creating an opportunity for product developers to deliver better-for-you baked goods enhanced with dietary fiber, whole and ancient grains, and plant-based protein.”

Sugar reduction and sweetener selection is another area of focus, notes LaBine. “Consumers are becoming increasingly savvy about the type and amount of sugar in sweet goods. ADM OutsideVoice research found that nearly 70 of consumers are ‘very’ or ‘somewhat’ concerned about the sugars and sweeteners in the products they purchase.”

In general, consumers are more forgiving about the amount of sugar in indulgences, but the type of sweetener used is important, adds LaBine. “Since labels require ‘added sugars’ to be listed, formulators can increase the consumer appeal of products by selecting naturally sourced sweeteners like honey, agave, raw sugar, and natural sweetness from fruit.”

Smokey Waters, director of culinary innovation, Pecan Deluxe, Dallas, says that with the surge in dairy-free products, they have found it necessary to produce a whole library of vegan-friendly and non-GMO products. He notes that these traits also translate into the notion of a permissible indulgence.

“More and more restaurants have recognized the need for vegetarian and vegan options, and if you’ve spent any time strolling grocery aisles, you’ve noticed plant-based, dairy-free alternatives in almost every category,” says Tara Gonzales, marketing manager, Pecan Deluxe. “These ‘free-from’ products oftentimes give consumers the guilt-free permission to indulge.” One new product is a brownie brittle that can be used as a topping, such as on muffins.

Kami R. Smith, director of culinary showcasing, Pecan Deluxe, notes that color has always played a huge part in food. “What we have learned this past year is the manipulation of natural colors—the ability to incorporate the sheen, the shine, and the glitz,” she says. “We have witnessed the disco, unicorn, llama with no drama (but with all the fun), rainbow, and many more.” She notes that Pecan Deluxe teams help guide and form what were once crazy ideas into a delightful, tasty ones.


Looking forward

Dawn Foods, Jackson, MI, regularly refreshes its consumer trends report, and partners with customers to help them meet evolving demands, says Samuel Jones, category market manager. Based on new global research with analysis of more than 100 data sources and 85 marketplace products and services, Dawn uncovered 8 new consumer trends for 2020, including:

  • Enlightened Eating—pure, simple products free from artificial ingredients and loaded with nutrients
  • Blissful Indulgence—opportunities to disconnect, and reduce stress and anxiety, with an indulgent sweet

#Eatertainment—the experiential aspect of food that goes beyond mere sustenance and is often shared socially

My Food ID—food as an expression of who we are

  • Transparency 360—choosing brands that offer meaning, big-picture values, supporting communities, sustainable practices, and environmental impact
  • Mashup Adventure—cross-cultural flavors with surprising combinations
  • Just For Me—one size does not fit all
  • Twenty-Five 7—convenient, easy, efficient experiences that don’t compromise quality


The COVID-19 situation will significantly impact the market over the coming year, says David Moline, vice president, sales and marketing, Moline Machinery, Duluth, MN. “One obvious shift was toward retail products and away from foodservice due to government-mandated shutdowns. We expect foodservice to come back in a strong way, but also expect retail products to remain strong. During the COVID-19 crisis, frozen retail items and individually packaged items were in high demand, and we see that trend continuing.”

COVID-19 could also impact the demand for extended-shelf-life (ESL) products. Many consumers have turned back toward baked goods that use traditional ingredients like preservatives, which are known to provide freshness and extended shelf life, says Sargent. “Consumers are now shopping in the center aisles more so than the perimeter of the store.”

Sargent also notes that many bakeries are experiencing the pain of reduced hours and staffing due to the pandemic. This challenges them to create a greater number of items with less help on hand, giving rise to the proliferation of easy-to-use mixes and blends intended to aid in making a wide variety of products without the need for costly additional ingredients, she says.

Sargent suggests that packaging claims for sweet goods in the coming year will likely include positive references to protein, fiber, and sugar-free. “Further, with a heavier focus on the strength and safety of packaging due to the coronavirus, we expect to see additional advancements in packaging innovations that can help bakers maintain taste, texture, quality, consistency, and freshness.”

Available production equipment and technology can also help bakers create better products that meet current market opportunities and operational needs. “Flexibility and sanitary design are key,” says Moline. “Quick tooling changeovers that allow bakers to move from one SKU to another while minimizing downtime is especially important. On a related note, sanitary design is always a focus—most importantly for food safety, but also for minimizing downtime.”

Flavors will continue to factor strongly into sweet goods trends. “Going forward, we believe we’ll see bolder flavors, cultural delicacies, and more creative twists,” says Sargent. “With consumers searching for foods that invoke their sense of nostalgia, the time will be ripe for unique seasonal varieties and combinations with flavors that trigger seasonal and holiday memories.” Flavors like pumpkin spice and key lime often incite fond emotions from childhood and are popular in limited-time offers (LTOs).

“Indulgent, sugary flavors like cereal milk, s’mores, birthday cake, and cookie dough are especially popular, because they are visually appealing and let consumers reminiscence,” says Sargent. “Baking is at an all-time high with consumers, who are taking part in the activity to relieve boredom or stress. However, once people head back to work and shopping habits return to some form of normalcy, it’s likely that consumers won’t have as much time to bake.” So they might instead seek the traditional, nostalgic, or cultural favorites they were previously baking at home away from home.

“Nostalgic and globally inspired flavors, especially when leveraged in products positioned as a ‘twist on the familiar,’ are on the rise in this space,” says LaBine. “Botanicals are another area of opportunity for flavor innovation and positive nutrition positioning. Lavender, açaí, ginger, green tea, hibiscus, cardamom, peppermint, black pepper, and cumin enable globally inspired and on-trend taste sensations in sweet goods, especially when paired with mainstream flavors.”

LaBine notes the connection between permissible indulgences and stress reduction. “As consumers seek to balance their emotional and mental health, they are granting themselves more permission to shop for comfort foods, often in the form of sweet snacks and baked good.” She says that 74 percent of consumers cite “treating oneself” as the main driver for this type of purchase. “Formulators can add functional benefits and optimize nutrient density of these products to boost consumer appeal.”

Consumer desire for clean and clear labels is growing, says LaBine. “We anticipate consumer expectations for clean-label products will expand to include transparency around the entire product lifecycle—production, processing, sourcing, and business practices.”

Growing consumer desire for wholesome, nutritious foods will continue to fuel formulations with nutrient-dense ingredients such as plant-based proteins, whole and ancient grains, as well as ingredients that offer functional benefits like increased energy or improved gut health, LaBine says. “We also anticipate interest in new and unique blends of whole grains to grow as developers look to add nutrients to baked sweet goods.” ADM OutsideVoice research shows 46 percent of consumers report looking for whole grains on the ingredient label when purchasing bread and bakery products, she adds.

“Consumers are particularly drawn to products with real, visible, whole-food ingredients, such as nuts and seeds, because they are often perceived as less processed and more nutritious,” says LaBine. “Combining familiar whole grains such as whole-wheat flour with emerging ancient grain ingredients like hemp, chia, and farro enables new and unique formulation possibilities in terms of flavor, texture, and nutrition.” Sweet baked goods formulated with ingredients such as legumes and ancient grains, blended with other plant-based proteins, she says, offer well-rounded nutritional profiles with the taste, texture, and flavor consumers crave.

Hanes says that this summer, Lesaffre will launch Artisan Fleurage Flavor Toppings to improve the flavor and appeal of baked goods. “These semolina and seed toppings are proprietary blends of fermentation and cereal products that deliver unique flavors that enhance the taste and aromatics of baked products.”

Sanders says the emergence of better-tasting ingredients, such as Sweet Essence M (sugarcane reb M), along with rare sugars (Sweet Essence tagatose and allulose), can help bakers develop reduced- and no-sugar products. “Sugar alternatives have typically had some negative attributes, such as GMO, artificial, off-taste, or causing digestive issues.” He notes that ASR Group’s new range of ingredients addresses these issues to enable great-tasting, reduced- or sugar-free products in bakery categories where such claims were previously hard to attain.

“An important criteria is the ‘origin’ story—GMO has been a topic for a long time, but now more than ever, consumers are wanting to understand the foods they eat,” says Sanders. “We expect deeper interrogation and transparency of not just the ingredients themselves, but the feedstock used to make them.”

In celebration of Dawn’s 100th anniversary in 2020, the company released a first-of-its-kind sourdough doughnut mix, as well as birthday cake and salted caramel old-fashioned doughnut mixes, says Jones. “Across the industry, innovation of sweet goods has been driven primarily by adding toppings, fillings, and inclusions to existing products. Dawn’s new sourdough mix brings the focus back to the doughnut and gives bakers a creative, new concept.”

The sourdough doughnut, created by Executive Pastry Chef Mathew Rice during Dawn’s Donut Co-Creation Competition, is a mashup of sourdough bread and a yeast-raised doughnut that creates a buttery sourdough flavor with a soft, light, airy texture for a unique doughnut experience.

Dawn’s birthday cake doughnut was created as a result of high customer demand for the nostalgic flavor. It was formulated with rainbow inclusions specifically designed to hold up during frying so they remain intact in the inner crumb of the doughnut, says Jones. “The result is a scrumptious doughnut with a light-colored crumb encasing extremely well-defined colorful inclusions—all with a delicious vanilla flavor.”

Dawn’s new salted caramel old-fashioned doughnut is the ultimate sweet and salty combination and one of the fastest growing dessert flavors, says Jones. “According to Datassential, salted caramel has grown 74 percent on menus since 2015. Pairing the on-trend salted caramel flavor with the popular old-fashioned doughnut texture has been a winning combination for Dawn’s customers.”

State of the Industry: Bakery Report
Overview | Bread | Tortillas | Sweet Goods | Snack Cakes | Pizza | Desserts | Cookies | Buns & Rolls | Bars | Breakfast Products