Bakery and tortilla sales to rise 5% in 2023: FCC report

Regina – FCC Food and Beverage’s latest report projects sales from bakery and tortilla product manufacturers to increase more than five per cent in 2023 with help from a food-service rebound and bakers providing convenient staples.

According to the report, released March 28, high consumer inflation seems to have had little impact on bakery sales. Industry sales are expected to be the strongest in the second quarter as cost increases withheld during the retailer holiday cost blackout period between November and January start getting rolled out.

“We expect increases in input costs and pressures to increase selling prices to stabilize in the year’s second half,” the report said. “Gross margins as a share of sales are forecasted to decline slightly in 2023 after seeing a sizeable decrease in
2022. We expect to see margin improvements later in the year as material costs have stabilized or come down modestly.”

“Baked goods had some of the highest consumer inflation in 2022, which did not detract from growing sales volumes as their relatively low price per calorie made them attractive to customers. According to data from Nielsen IQ, grocery store bakery departments were the only departments with positive volume growth in 2022.”

Industry margins fell because of significantly higher raw material costs and labour costs, FCC reported. Bakeries saw some of the strongest wage growth across food industries, with weekly employee earnings rising over 13 per cent. This growth resulted
from higher overtime costs as hours worked per employee increased. High cost increases were difficult to pass on to retail customers in a single step and many bakeries had to absorb some of the higher costs.

The report concluded that a food-service rebound and bakers providing convenient staples will contribute to a solid performance for the baking industry in 2023 and suggested bakeries can set themselves apart by providing healthy and locally produced goods.

Read the full report.