The bakery industry can expect a turbulent ride as it ushers in 2009
amid a storm of economic uncertainty, commodity price hikes and
increased consumer expectations.
Despite the recession, experts say the industry is poised to enjoy some growth in the new year
The bakery industry can expect a turbulent ride as it ushers in 2009 amid a storm of economic uncertainty, commodity price hikes and increased consumer expectations. Sans crystal balls, but armed with a wealth of collective knowledge and experience, industry specialists share insights into major challenges, opportunities, trends, and exciting innovations facing the trade in the coming year.
The general consensus is that the industry can expect continued growth as consumers maintain purchases of staple bread and baked goods with an eye toward health and nutrition. Changes in lifestyle and demographics and anticipation of a weakening economy will affect the bakery sector but will also serve as a platform for adaptable and innovative companies to grow and thrive.
In anticipation of the challenging economy ahead, most industry experts say it will be crucial for companies to find the delicate balance between efficiency, budgetary constraints, business savvy and innovative breakthroughs that will allow them to meet or exceed customer expectations and secure their place in a competitive market.
Baking Association of Canada (BAC) president and CEO Paul Hetherington expects the baking industry to fare better than food service, which will be affected by fewer people dining out. Consumer spending trends in the bakery sector will shift to “focus more on lower-end products at the price point perspective,” he says. “Artisan products and higher-end premium priced breads will be under more pressure as consumers try to economize.”
Hetherington maintains that key industry initiatives will be focused on satisfying consumer expectations for healthier products containing alternative whole grains, removing trans-fats and reducing sodium. Additional concerns will centre on environmental and packaging initiatives, food safety and allergens, emission and waste issues and the “patchwork compliance” regulations that result from an upsurge in municipal and provincial activism in a traditionally federally mandated regulatory process.
Frank Safian, president of the Ontario BAC chapter, identified several major challenges facing the industry. These include lowering sodium levels in breads, the struggle to find alternative solutions and cost-effective replacements to trans-fatty acids (TFAs), the unyielding pressure to reduce packaging for baked goods, and concerns regarding toxins such as ethanol that are released into the environment during the baking process.
He says ongoing consumer health interest will see an influx of flatbreads, tortillas and wraps, as well as the promotion of more grains, ancient grains and dietary fibre in bakery products as a means of reducing dietary tract cancers and related health issues.
Despite the resurgence of white bread in the market (notably because of repositioning, advertising and packaging changes that appeal to kids and seniors) Puratos marketing manager Oxana Sergeeva thinks that “bread trends will not show any significant growth” because of universal penetration, no significant population growth and an aging population eating less.
Sergeeva anticipates the health-conscious consumer will embrace a lineup of whole-wheat-based, reduced-fat and reduced-sugar pastries that will launch in the coming years, and she believes there will be a significant rise in volume in the niche market of organic, flavoured products.
George Brown College Chef School chairman Keith Muller is happy to report an emerging trend with “unprecedented interest from students in the baking area, especially in specialty breads and pastry. Enrolment to these programs has doubled over the last year, likely due to Food Network programs.”
He assumes the artisanal bread and green packaging trends will continue with consumers being more concerned about organic products, ancient grains, wheat-free products and quality chocolate products.
As far as the economic downturn affecting the industry goes, Muller thinks “health issues will overrule commodity costs to a point. People will continue to buy good quality products but may just buy fewer.”
Artisano Bakery Café corporate bakery manager Richard Crossman agrees with Muller’s impression of an emerging educational trend. “The Food Network and other television shows have given consumers a wonderful insight into the baking and pastry trade, and as a result, we’ll see a demand for higher quality and good value,” he says.
Crossman adds that while it is difficult to predict what trends lay ahead – “who could have foreseen the boom in cupcakes 10 years ago?” – the likelihood is there will be development toward flavoured breads with fruits, nuts, spices and cheeses. “And the move to ‘green’ products will be a driving factor in the months and years ahead,” he said.
The difficult economic times ahead indicates consumers will be searching for good quality at a fair price while business searches for the best value down the supply chain. “As bakers and pastry chefs,” says Crossman, “it’s going to be a difficult line to walk – giving good value and at the same time making sure we are covering our costs and making a living at what we do.”
Crossman and Safian agree that unusual weather patterns that produce shorter seasons, drought or unusually heavy rains affect production yields and, according to Crossman, “could mean much higher prices for some ingredients as we have seen with flour and chocolate over the past few years.” He adds that despite the drop in oil prices it is unlikely that suppliers will eliminate the fuel surcharges imposed at the height of the oil speculations.
Andrea Damon Gibson, president of the wholesale artisan bread company Fred’s Bread, thinks the promotion of local ingredients is an emerging trend that will boost awareness of home-grown farmers and producers. Additionally, Damon Gibson anticipates a comeback of heritage grains and expects more development in making “heritage grain/functional foods trend a winning combo for bakeries.”
As far as consumer spending goes, she suggests that shoppers will continue to expect high value for food money spent. “We expect to see growth in the low-cost bulk area end and, alternatively, in specialty products that really deliver their claims. As usual, the economic downturn presents challenge and opportunity; the challenge is remaining profitable in an environment of slow sales growth and the opportunity is to be innovative in product development and expanding markets by ‘thinking outside the box.’”
According to Canadian Wheat Board (CWB) media relations manager Maureen Fitzhenry, there has been a positive rebound in attitudes about grains since the all-time low in 2004 brought about by the low-carbohydrate diet craze, “with significant consumption increases in whole wheat and wheat grain products to adults with children and to seniors.”
Headway is being made as CWB’s research and development team prod the nutriceutical field, specifically with nutrient-enhanced bran (NovaBran), which offers improved flavour, aroma and mixing strength. The team is also testing a new wheat variety called Snowstar, which produces a snowy white, more aesthetic whole-wheat product.
The U.S. Food and Drug Administration’s recent stamp of approval and health claim promoting the benefits of food with barley has prompted the CWB to seek the same on this side of the border. Fitzhenry said the approval will help spread the word about barley’s health claim of lowering cholesterol and improving blood glucose levels in Type 2 diabetics, thus igniting the Canadian food barley market and encouraging bakers and millers to add this highly nutritious food ingredient to products such as doughnuts, pitas, flatbreads, tortillas, pasta and other products.
Consumption of breads, frozen dough, bakery mixes, and baked goods is estimated to be a $90 billion retail market. As consumer awareness about ingredients, grains and nutrition increases, and as the economy teeters on the brink of recession, there is no doubt the bakery industry will continue to feed the public’s insatiable craving for bread and baked goods while sitting poised to triumph over new opportunities and rise above the many challenges ahead in the new year. / BJ
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