Game on for bread

For the last several years, the bread market in Canada has been
experiencing a decrease in the volume of sales thanks to an aging
population, dietary trends and immigration.

For the last several years, the bread market in Canada has been experiencing a decrease in the volume of sales thanks to an aging population, dietary trends and immigration. And we are not alone. Bread markets in places such as France and Britain have also been struggling. The centuries-old staple of Western diets is slowly losing out to aisle upon aisle of alternatives in grocery stores and feeling the effects of a saturated market.

The average French man today eats about half a baguette per day compared to almost a whole baguette in 1970 and more than three in 1900.

Paul Hetherington, president and CEO of the Baking Association of Canada (BAC), says that the country’s commercial bread segment has seen a steady one to two per cent decline in volume over the last couple of years. It’s a trend that is being seen in developed nations around the world. According to a research report issued in June by Global Industry Analysts (GIA) titled Bread: A Global Strategic Business Report, volume sales of bread are under huge pressure worldwide, particularly in Western markets. The report notes that “higher penetration and increasing popularity of alternative breakfast options is leading declines in volume consumption of bread in these markets.”

In a recent New York Times article, Elaine Sciolino reports that the average French man eats about half a baguette per day compared to almost a whole baguette in 1970 and more than three in 1900. She says women in France eat about a third less than men, and young people are consuming close to 30 per cent less than they did 10 years ago when it comes to bread.

Last December in Britain, The Telegraph ran a story reporting that U.K. bread makers were feeling the strain from two fronts: supermarkets were pressuring suppliers for cheaper products due to shoppers’ reluctance to purchase and grain prices skyrocketed following a less than stellar wheat harvest caused by wet weather, which followed already high grain prices after the U.S. drought and a heat wave in Russia. 

Here in Canada, Hetherington explains that the bread industry has been stalling for several reasons. “We have an aging population – the proverbial empty-nesters – and as a result their overall food purchases in a week are going down because they don’t have two extra mouths to feed. We also have an immigrant population coming in where bread is not the natural carbohydrate of choice,” he says.

Another major threat to Canada’s bread industry may be coming from an unassuming source: the gluten-free movement. “Less than 10 per cent of the population has a reason to avoid gluten for therapeutic purposes because they have a health concern. I recently saw a study that suggested some 30 per cent of the population was either eliminating gluten or looking to reduce gluten from their diet. That means we have about 20 per cent of the population avoiding gluten based on reasons other than therapeutic reasons.”

“These individuals obviously believe that gluten and gluten-based products are negative towards their health. Of course, I think the research is quite evident that this is incorrect, but it’s been embraced by a certain percentage of the population,” Hetherington explains.

The Healthy Grains Institute was launched to educate consumers on the benefits of including grains in their diet.

In November 2012, Canada’s bread industry responded by establishing the Healthy Grains Institute (HGI) to help dispel myths and educate consumers on the health benefits of grains as part of one’s daily diet. The HGI is an industry-funded, not-for-profit organization that is guided by independent and multidisciplinary Scientific Advisory Council comprising plant science and nutritional experts from across the country. “The objective of the HGI really is to provide a science-based response in information to help professionals, as well as consumers, chip away some of the pseudo-science,” Hetherington notes.

The “pseudo-science” that he refers to includes claims that wheat is genetically modified and contains a dramatically higher concentration of gluten than it did decades ago. In fact, neither of these claims is accurate, in Canada at least. Genetically modified wheat is not approved in Canada. Secondly, according to a Globe and Mail article by Adriana Barton, data from the Canadian Grain Commission showed no increase in the protein content of Western Canadian wheat from 1927 to 2009. In reality, the concentration of gluten was actually shown to be higher in 1940 than it is today.

“I think our challenge collectively at the association level, at the corporate level and at the retail baker level is education of our customers . . . part of our challenge as an industry is that for some time we haven’t been responding and these messages have been out there. We’ve tended not to engage them because for a significant part of the time we felt that it was just noise going on and we ignored it. So our challenge is responding and educating our customers on the value of grain-based products,” Hetherington advises.

Interestingly, despite the consumption of bread declining over the years in terms of volume, the overall dollar sales have grown and are expected to continue growing globally, including in Canada. The GIA report estimates that the Canadian bread market will reach US $2.72 billion in sales in 2013 with projected sales of US $3.1 billion by 2018. The value growth of Canada’s bread market can be attributed mostly to the increasing cost of raw materials, which has in turn forced manufacturers to increase the cost of a loaf in order to maintain profits. Higher price points for artisanal and multigrain breads, which continue to rise in demand, are also contributing to higher dollar sales.

Looking to the future, bread makers must diversify in order to increase volume and grow the market. The GIA report suggests that bakers and bread manufacturers must focus on new product development in order to revive the market. “The success of multigrain and wholegrain loaves, organic breads, and breads fortified with healthy additives such as omega-3, demonstrates the power of innovation in a mature market,” the report says.

In contrast to Western markets, bread markets in developing countries are expected to increase dramatically over the coming years as standards of living rise along with economic growth. The GIA report found that Asia-pacific is expected to emerge as the fastest growing market with dollar sales projected to grow at a compounded annual rate of 5.4 per cent over the analysis period. China, Hong Kong, India and Malaysia are also expected to become lucrative markets in the global bread industry. By 2018, the report projects, the global market for bread will reach US$192.2 billion driven by growing consumer preference for convenience food, launching of healthy bread products, improving standards of living and Westernization of lifestyles in developing countries.

For Canadian bread makers, there are important steps that must be taken to ensure a robust market and increased bread consumption, including educating consumers and innovating products. Helping to dispel myths that have plagued the industry will be crucial to increasing volume sales, while innovation – particularly in niche areas such as artisan breads and products geared toward the ever increasing health-conscious consumer – will be key to the industry’s future success.

Julie Fitz-Gerald is a freelance writer based in Uxbridge, Ont., and a regular contributor to Bakers Journal.