The last year has proven quite profitable for bakeries serving the retail market for fresh bread. Pandemic-minded shoppers returned to bread with revitalized interest, seeking the comfort and assurance of trusted national and regional brands. Now bakeries need to identify strategies to maintain this momentum as American society gradually eases back into pre-pandemic shopping and dietary patterns.
Every category of bread saw growth for the 52 weeks ending December 27, 2020, according to data from IRI, Chicago.
Fresh bread and rolls grew 11.6 percent to $15.1 billion, the strongest showing in recent memory. The fresh bread segment was up 9.6 percent to $10.0 billion, with only private label breads showing decline, down 4.9 percent to $1.7 billion. Grupo Bimbo still leads the segment, up 11.6 percent to $2.7 billion. Flowers Foods gained ground, up 15.6 percent to $2.4 billion. H&S Bakery saw particularly strong growth, up 23.0 percent to $131.5 million, as did Martin’s Famous Pastry Shoppe, up 32.8 percent to $124.4 million.
The hamburger and hot dog buns segment of fresh bread grew 17.5 percent to $2.6 billion, per IRI. Again, only private label saw a decline, dropping 0.4 percent to $794.4 million. Bimbo saw particularly strong growth, up 34.2 percent to $555.1 million, as did Lewis Bakeries, which grew its bun sales by 32.0 percent to $57.6 million.
The all other fresh rolls/buns/croissants segment grew 14.6 percent to $2.4 billion, per IRI. Segment leader King’s Hawaiian Bakery West grew 12.5 percent to $635.7 million. But the standout in the segment was St Pierre Groupe (still listed under its previous corporate title Carr’s Food International by IRI), which grew sales by 71.7 percent to $67.3 million. H&S Bakery also had a standout performance in the segment, up 44.3 percent to $27.8 million.
The pita bread segment of the fresh bread category also saw growth, up 12.5 percent to $128.2 million, per IRI. Particularly strong performances came from Papa Pita Bakery (up 54.2 percent to $16.4 million), Kontos Foods (up 30.9 percent to $3.0 million), and gluten-free bakery BFree Foods (up 46.7 percent to $2.7 million).
The bagels category also had a banner year, up 22.4 percent to $1.2 billion. Bimbo far and away leads the category and saw growth of 21.9 percent to $774.7 million. Private label fared better in this category, with growth of 20.3 percent to $196.1 million. Flowers Foods also brought a strong performance in bagels, up 25.3 percent to $104.1 million. O’Doughs, a Toronto-based baker of gluten-free bread products, saw its bagels grow 49.3 percent to $3.9 million.
English muffins rounds out our coverage, and this category also saw strong sales during 2020, up 14.8 percent to $826.0 million. Bimbo owns the category, with nearly 80 percent market share, and grew 14.3 percent to $657.2 million, per IRI. Every one of the top 10 companies in the category saw growth, but H&S Bakery gained significant ground, growing sales 198.3 percent to $2.3 million.
CAPTURING SHOPPER ATTENTION
The COVID-19 baking craze was a welcome fad during the tumultuous pandemic over the past year. Baking staples like yeast and flour periodically went into short supply as seclusion-induced shoppers stocked up and tested their culinary skills.
The psychological reaction to bake something comforting during a crisis bodes well for the industry—particularly as people grow weary of the efforts required to keep a home kitchen hopping over the long term. Shoppers will inevitably taper-off their homespun baking efforts, perhaps seeking a wider diversity of baked goods at the grocery store instead. And any sustained in-home scratch baking longevity, along with support of bakeries of any size, only serves to cumulatively grow the industry.
“The biggest trend we see in retail breads today is the expansion of the premium bread segment, with a focus on adding more rustic or artisan-style qualities to packaged bread items,” says Michael Gleason, product manager, bakery, Puratos, Pennsauken, NJ. “These attributes include more-complex flavor, more-artisan look and feel, a fresher texture, and the added element of storytelling around the products. Consumers, especially those who rediscovered home baking during quarantine, have a renewed appreciation for these more-craft attributes and are often willing to pay 80 to 100 percent more for these packaged bread items.”
Baked goods with a higher level of difficulty will generally find appeal. Products that are currently trending include items most people don’t want to tackle at home (or have made poorly in the past…) like croissants, brioche, or braided challah—anything just beyond the home cook’s capabilities, but not beyond their appreciation, suggests Nancy Jo Seaton, president, Seaton Food Consultants, Stamford, CT.
Nutritional components will factor into purchase decisions for some demographics. “In an area where a vegan lifestyle and eating for health are in high focus, adding quinoa and other ancient grains could dramatically increase product sales,” says Seaton. “But in an area where consumers are focused on more traditional products, textures, and flavors, substitutions for the sake of health benefits could negatively impact sales. Knowing your consumer is key.” She also notes offering half loaves helps keep customers coming back to the grocery store.
Premium bread consumers are looking for a shorter ingredient lists and are willing to sacrifice shelf life and other attributes to obtain that perceived healthier bread, suggests Nick Ferraro, NAFTA bakery marketing manager, DuPont Nutrition & Biosciences, St. Louis. “We have seen a rise in single-person households over the last year.” This has led to a slight rise in perceived food waste, and consumers increasingly aware of sustainability and the environment are taking notice. “Hence, we have seen the emergence of the ‘half loaf’ to align with this newer consumer trend.” Interestingly, he notes, these half loafs often are priced slightly higher than what we would expect. “As this consumer group becomes more sustainable, they are willing to accept a higher price point to reduce food waste.”
Half loaves and smaller loaves are also attractive to customers with a health and nutrition focus, says Ken Skrzypiec, Eastern VP of sales, Brolite Products, Inc., Bartlett, IL. “It creates less waste for the buyer, and they still get to enjoy the bread they love.”
Also, more people are making breakfast and lunch at home, says Skrzypiec, so breakfast breads are seeing a resurgence.
“According to Catalina Shopper Insights, shopping trips have decreased from 7.5 in August 2019 to 6.7 in August of 2020,” says Ferraro. That’s a reduction of one entire trip per month. “This corresponds to an increase in basket size from roughly $41 to $49 over the same time. Customers are still stocking up. The inside aisles in a store that were recently declining—in particular, the bakery space—have experienced a resurgence due to many factors. The stockpiling and longer shelf life that some of these bread products provide is certainly one of those factors. Also, as many consumers continue to struggle through this pandemic, the non-premium breads, such as low-cost breads, have also seen a small resurgence.” These breads are often priced between $1 and $3, have longer ingredient lists, and can have a longer shelf life while providing healthy nutrients to kids still at home from school.
COVID has spurred more at-home eating, says Matthew Jacobs, director of strategic marketing, Bay State Milling, Quincy, MA, so the humble sandwich has seen a resurgence as a quick, go-to meal. “Because bread has been such a staple food item for many Americans, it stands to reason consumers look to their daily bread to deliver important benefits such as nutrition and indulgence.” More of today’s bread manufacturers offer breads that permit both nutrition and enjoyment in the same loaf.
“Our research suggests consumers care more today about getting better nutrition and improving immunity to proactively manage their health,” says Jacobs. “We see a convergence of those new demands being placed on tried-and-true, routinely consumed foods. Examples include versions that tout lower net carbs, keto, free-from additives, high fiber, high protein, sprouted grains, etc. The common thread here is fewer empty calories. Consumers want to make what they eat count, nutritionally speaking. And, in certain cases, consumers even want their food products to deliver on higher-level purposes, like farmer welfare, environmental stewardship, or social causes.”
Like in the realm of coffee, wine, and chocolate, ingredient origins for breads are starting to make more of a difference in purchase decisions, including how the grains are grown, farmer welfare, impact on natural resources, etc., says Jacobs. “Origin stories are gaining traction, not only to appeal to consumers’ sense of rightness, but also because they offer marketing—and in some cases, sensory—distinctiveness. The bread aisle is also learning from beverage and supplement categories about the value of using exotic ingredient names to differentiate its products—especially leveraging the generally positive associations and health halo of ancient grains and a return to more fundamental diets and sources (think Paleo).”
People increasingly focus on health and wellness benefits across all food and beverage categories, including bread, says Paula LaBine, marketing director, baking, milling, and starch, ADM, Chicago. “Shoppers are searching for products that have nutrition labels packed with health-forward ingredients like whole grains and plant proteins. We anticipate nutrient-dense bread and baked goods with whole ingredients will continue to trend upward as consumers pursue a healthier lifestyle by implementing close-to-nature foods and ingredients into their diets.”
Artisan-inspired is a continuing trend, partially fueled by the sourdough baking boom over the past year, says LaBine. “Even as people have discovered the challenges in maintaining a bread starter, consumer curiosity in artisan breads remains strong.” She says in September 2020, Mintel’s Global New Products Database found sourdough or sourdough-flavored product launches have increased by 42 percent in the last four years.
Consumers are also interested in purchasing products that offer targeted solutions to help meet personalized wellness goals and fit into their individual lifestyles, notes LaBine. According to Nielsen, she says, 46 percent of global consumers say they are willing to pay more for products that have superior function or performance benefits (“Quality and efficacy may beat out price sensitivities amid coronavirus concerns,” March 5, 2020). “They want more from their food and are seeking functional products that provide health benefits like immune function support, weight management, improved digestion, satiety, and sustained energy. Breads featuring these benefits, along with high-quality protein and nutrient fortification, will appeal not just to health-conscious consumers, but also to mainstream shoppers as they continue to search for wellness options.”
Personalized approaches can also come via keto and vegan. “While these spaces are still relatively small, they are fast-growing,” says LaBine.
“With more consumers looking for high-protein and low-carb nutritional panels, the bread industry has needed to embrace the keto and low-carb diets with new and innovative breads, buns, and rolls that work for these specific diets,” says Skrzypiec. He notes keto-friendly formulas are available in many varieties of breads and bagels.
Retail breads present opportunities to play into health and specific diet trends, says Ken Ruud, Sr., director of innovation, Ardent Mills Innovative Bakery Resources, Tualatin, OR. “Keto breads are a great example of this, and something that’s not going away. While it has had varying diet names through the years, consumers have been seeking lower-net-carb items for decades. However, this trend doesn’t come without its formulation challenges. Often, different equipment, varying and complicated ratios of ingredient replacements, and other expenditures can get in the way of making a great lower-net-carb retail bread.” He notes his company offers proprietary lower-net-carb flour blends, keto-certified by the Paleo Foundation, that function as a 1:1 replacement for traditional flour in bakeries.
Innovation in breads stems from consumer desire for wholesome, healthy ingredients, including new nutritional solutions and grains that satisfy wellness needs, suggests LaBine. “Breads, buns, rolls, and bagels formulated with whole grains remain popular, because they’re often perceived as healthier and closer to nature.” She cites ADM Outside Voice research showing 46 percent of consumers look for whole grains on ingredient labels when purchasing bread and bakery products, 43 percent look for multigrain, and 63 percent are trying to add fiber to their diet.
“We recently expanded our whole grain portfolio to include hemp hearts and hemp powders, which deliver nutritional attributes like protein, omega-3 and omega-6 fatty acids, and fiber to baked goods,” says LaBine. Other solutions she recommends include:
- Incorporating prebiotics, probiotics, and postbiotics, for tailored health solutions
- A 90 percent dietary fiber resistant tapioca starch that can replace flour at high inclusion levels in low-net-carb bread, allergen-free, and/or grain-free formulations
- Water-soluble, process-stable prebiotic dietary fiber ingredients
Gleason notes Puratos global research study, Taste Tomorrow, has found consumers perceive whole grains as healthy and a tasty ingredient when found in bread applications. “The challenge is finding a way to incorporate whole grains in a way that will prolong freshness and deliver a superior taste and texture versus dry grains.” He suggests a range of flavorful grains and seeds that are fully hydrated to help keep the bread from drying out during it shelf life. “To take things even further, bread producers can look to incorporate a greater diversity of grains by using ancient grains or even more-unique value-added grains, such as sprouted grains, which have a health halo associated with better digestibility and an improved nutritional profile.”
Colleen Zammer, vice president, research & development, Bay State Milling, Quincy, suggests emphasizing nutritional superiority. “Examples include breads that contain more sprouted grains that impart natural sweetness, which enables reduction in added sugars, and when used as inclusions, provide textural attributes that create a unique sensory experience.” Choosing a high-fiber wheat flour helps provide desirable nutrient levels in bread products, she notes.
“Gluten-free breads have also made the leap from the freezer case into the mainstream bread aisle to appeal to more ‘lifestyle’ consumers using ingredients such as inherently gluten-free ancient grains including millet, amaranth, and quinoa, as well as pulse flours such as chickpeas, which are growing in popularity for their grain-free goodness,” says Zammer. Oat inclusions and toppings have also been popular in traditional breads. New generations of oat ingredients, such hull-less options that deliver 45 percent more protein than traditional oats, can amp-up nutrition in these products, she notes.
“We continue to see gluten-free as a mainstay, using ancient and non-traditional grains, such as sorghum, quinoa, millet, buckwheat, and flax,” says Jennifer Tesch, chief marketing officer, Healthy Food Ingredients, Fargo, ND. “The continued growth of gluten-free has put an even larger focus on the variety and scope of different grains that can be used for bread applications.” She notes her company’s purple corn ingredients have high levels of antioxidants—twice the levels found in blueberries—adding unique visual appeal with a clean label.
Consumers gravitate toward packages that make whole-grain claims, or that have ingredients perceived as having a healthy halo, and ancient grains are part of this momentum, says Ruud. “We’re seeing ingredients such as quinoa, chia, barley, and chickpeas are high on the purchase impact and health perception list for consumers, according to joint research we’ve conducted. On their own or in combination, they bring great variety to developers looking to add whole grain nutrition, plant-based protein, and fiber to their applications.”
Plant-based continues to grow as consumers look for foods that align with personal values related to health and sustainability, says Ruud. “An easy way to incorporate this trend into retail bread is with the use of quinoa. Quinoa is a great source of plant-based protein and has been classified by the National Academy of Sciences as one of the best sources of protein for vegetarians, because it contains all nine essential amino acids. Additionally, it’s gluten-free and is also extremely versatile when it comes to applications.”
Sourdough also continues to attract attention. “Using a sour flavor or cultured flavor also can give a product a more unique taste,” says Skrzypiec. “Many people think that sourdough means that a super-sour bread, but that has changed. Sours are being used in breads to add a different flavor profile that is not expected. Sours are fermented flavors that add a slight tang and change the flavor of the bread to offer more depth.”
Bakery products with great eye appeal that also feature different and unique flavors help bring products into the mainstream, says Skrzypiec. “Using a glaze for shinier exteriors of the product helps catch a consumer’s eye. Using grains on top of the loaf with give texture and color variance can draw in more interest. In the sweeter products, adding chocolate chips, fruits, or other sweet toppings will visually set your product apart from others on the shelf.”
Bakers have a variety of avenues toward raising product awareness and attracting shopper attention. “Shoppers are more likely to reach for ingredients they are familiar with and can easily identify,” says LaBine. “To improve widespread appeal of new bread offerings, we recommend product developers pair recognizable whole grains like wheat, rice, and oats with interesting and emerging ingredients like chia, hemp seeds, sorghum, and millet. Additionally, amaranth, kamut, freekeh, teff, and einkorn are gaining prominence in the baked goods category.”
Creating smaller and more “snackable” forms of bread can also garner more-widespread appeal by tapping into trends related to permissible indulgence through portion control, says LaBine.
Jacobs suggests bakers emphasize the now-possible convergence of good taste with other benefits. “For too long, we’ve asked consumers to make trade-offs when choosing nutrition or enjoyment. It is the responsibility and opportunity for the ingredient manufacturers and brands to educate their consumers that new bread options exist that can deliver on both fronts.”
Because bread is such a familiar category, bakeries will need to provide clear, compelling communications to make consumers take notice of these innovations—especially among consumers who may be jaded about the latest and greatest thing to happen to bread, says Jabobs.
But research shows that there is pent-up demand from consumers who want to get the best of both worlds in the foods they love and are familiar with, says Jacobs. “The companies that are able to convey that compatibility of better nutrition and same taste stand to gain loyal consumers.”
Consumers increasingly seek new varieties to upgrade their eating experience, says Ruud. “We saw similar visual and experience elevating trends with white breads in the past few years as artisan white and brioche varieties skyrocketed. We will now see evolution to artisan whole-grain and seeded baked goods. Leading with appearance is key for succeeding in the artisanal space. Breads that are visually stimulating with colorful grain blends in toppings or enrobings leads to greater purchase frequency in whole-wheat, grain, and seed varieties.” He’s seeing more requests for ancient varieties like quinoa (in a variety of colors) and teff.
Ruud anticipates that consumers will start to “own their health” even more during 2021. “We might see this play out in functional and immune-boosting foods and specialty diets. We’re also seeing a rise in demand for food safety and transparency, personal and planetary health, modern takes on established traditions, and a desire to indulge in comfort foods that have a healthy halo.”
As always, the overall sensory experience of eating the product must remain a top priority. “According to our research, taste remains a top driver influencing bread and bakery product purchases,” says LaBine. “We find that 43 percent of consumers say that taste is the most important factor to consider when purchasing bread and baked goods. Sourdough and rye breads, for example, offer distinct flavor profiles that appeal to consumers. ‘Whole’ and ‘natural’ bread and bakery products also remain popular among consumers, and developers can use these points of interest to create new products that appeal to consumer desires.”