Final Proof: Baking sector challenges and optimism

In September, I attended the International Baking Industry Expo 2022. With nearly 1,000 global exhibitors, it was the first international baking show in North America since 2019. It has been an unsettled three years for the baking industry. From the sourdough craze in home baking to the supply-chain disruptions, the industry has weathered the global pandemic and remains resilient as we continue in complex times. 

Nithya Caleb, editor, Food in Canada, describes results from their 2022 Business Outlook survey: “The food industry has concerns. Many businesses are still significantly impacted by the pandemic and the 2022 Russian-Ukraine War. Supply-chain disruption is the biggest hurdle for processors. Skilled labour shortages are hampering business growth. Despite these concerns, 65 per cent of the respondents are ‘cautiously optimistic’ about the market conditions next year.” 

Data from the Food in Canada 2022 Food Industry Report identifies that, in 2021, the baked goods sector imported $2.3 billion, a one per cent increase from 2020. It, however, exported $4.8 billion in 2021, an 11 per cent increase from 2020, leading to a positive trade balance of $2.5 billion in 2021, an increase of 22 per cent from the previous year. Most of Canada’s baked goods continue to be traded with the United States, remaining at 97 per cent of 2021 exports and 68 per cent of imports. 

According to Farm Credit Canada, in 2021, domestically, the bakery category in total did not perform as well as in 2020 in terms of sales and as a per cent of grocery sales. Top-performing categories were pizza crust/dough with a seven per cent increase in sales compared to 2020, while tortilla wraps increased by three per cent. Home cooking and comfort foods remained a popular item into 2021 amid hybrid working-from-home arrangements.

Consumers gravitate toward indulgence, convenience and health. The health trend has been a constant since March 2020. Uncertainty, inflation and changes in habits have all led to people feeling the stress impact on their everyday lives. As food dollars are budgeted, consumers will focus on foods with proven health benefits. And that sourdough craze? It’s not going away anytime soon. Baked goods in 2021 saw increased demand for supporting immunity (a pandemic-drive factor), and greater gut health and support in digestion (Food in Canada). At IBIE 2022, Puratos fermentation expert Karl De Smedt agreed: “The consumer demand and interest in fermented and sprouted bread formats is only increasing. And what is fascinating is no two sourdough starters are the same.”

Consumer demand for natural, clean labels continues to dominate trends for 2022 (Food in Canada). Along with the need for greater personal health and the use of natural ingredients, sustainability increased in relevance in 2021. Addressing planetary health is a must for all food sectors. Reducing food waste continues to drive private and public policies across the entire food value chain. Similarly, in an industry that has been slow to automate, the use of technology to create more sustainable, energy-efficient products is a welcomed implementation.

I asked Martin Barnett, executive director of the Baking Association of Canada, to weigh in on the state of the industry: “The Canadian baking industry has grown in leaps and bounds over the last few years,” Barnett said. “Not long ago we were touting an $8-billion industry. Now, according to Government of Canada statistics our trade is worth upwards of $13 billion! Regular predictors and reporters like Food in Canada and Euromonitor are showing extremely strong growth in all bakery sectors in 2020 and 2021. This was an anomaly brough on by the pandemic with a lot of people eating at home, purchasing retail baked goods and not visiting restaurants. Although, with the reopening of these outlets and people returning to work, there has been significant dropoff in the growth. However, dollar-wise, the sector is growing even with the volumes currently down where they were in 2019. This reflects increases in cost inputs but also some profit maximizing as well. Volume production is showing steady growth right through to 2027.”

“Looking forward to the future, we see continued growth especially in the artisan and specialty markets as well as increased exports. Stalling any growth will be continued supply-chain issues caused by international conflict, climate change or labour market challenges.”

Despite the challenges facing the industry, it’s encouraging to see manufacturing investment in Canada. Barry Callebaut, the world’s leading manufacturer of high-quality chocolate and cocoa products, plans to build its first North American plant since 2008 in Brantford, Ont. The factory will have an initial annual production capacity of over 50,000 tonnes with potential to increase capacity significantly over the next 10 years. Total investment volume over that period is projected to amount to 104 million US.

Barry Callebaut Americas’ president Steve Woolley says: “We are looking at Canada to expand our footprint. Initially, the plant will be focused on sugar-free, high-protein, and other specialty chocolate products. The consumer shift toward health and wellness is behaviour we have monitored. There is a wider wellness market wanting better-for-you, not just people who have disease and diet concerns. As the industry leader in better-for-you, we have and continue to invest in innovation to deliver tastier solutions. Partnering with our customers has resulted in more appealing better-for-you products, producing taste profiles many people enjoy. We’re expected to be operational in spring of 2024, adding 200 jobs to the Brantford community.” / BJ

Jane Dummer, RD, known as the Pod to Plate Food Consultant, collaborates and partners with the food and nutrition industry across North America. janedummer.com