The bottom line

With the sale of Canada Bread underway, 2014 is already shaping up to be one interesting year in baking.

With the sale of Canada Bread underway, 2014 is already shaping up to be one interesting year in baking. As we approach Bakery Showcase, Paul Hetherington, president and CEO of Baking Association of Canada (BAC), took some time to chat with Bakers Journal about the important issues facing the industry in 2014.

Retailers will need to focus on making their bakery an inviting destination with interesting products that give customers a reason to make a special trip to their store.

Q: Paul, what do you think will be the biggest issues affecting bakers this year?
I think we’re going to continue to struggle with the whole issue of gluten-free. I think that’s a reality and it’s not going away very soon. As a matter of fact we continue to see the growth of the gluten-free market, particularly as a result of those that are going gluten-free for non-therapeutic reasons. In other words, they’re not celiac, they’re not gluten-sensitive; they believe a gluten-free diet is a healthier option. So the challenge for the industry is reformulating to produce healthy gluten-free products. I think this is one area where the industry’s going to have to continue to focus its efforts.

An area on the regulatory side is dealing with the new Safe Food for Canadians Act. Regulatory modernization is going to put a whole host of new responsibilities on the food industry in general, whether you’re a baker or an industry supplier. Conforming to those new regulations will be important. As an example, every company that sells across provincial borders – we think internet orders will be included in this – are going to have to have a licence. We’re supposed to see drafts of the regulations this spring. One of the main requirements will be for companies to have preventative control plans and that means making sure that you’ve got HACCP traceability one step up, one step back. For some companies this may be a whole new experience. We’re not certain what the rest of the rules are until we see the draft regulations, but it’s going to be a major challenge for the industry moving forward.

Another big issue is dealing with social media. We’ve historically relied on a science-based approach when developing our products and ingredients, but a prime example of the new reality for us is what’s happened with azodicarbonamide (ADA). That was the recent Subway announcement. Here’s an ingredient that’s been used since the mid-1960s. Both Health Canada and the U.S. Food and Drug Administration have validated it as safe for consumption and use, but it also has other purposes. We had a situation where a blogger in the U.S., for a variety of reasons, started an online petition, and next thing you know, Subway
announced it was dropping the ingredient, causing a cascade effect. Now others in the industry must decide how to respond. We’ve gone from a science-based approach that we’ve historically used to one where social media is having a significant influence rather than the science. These things happen instantaneously. While industry is preparing very logical, science-based responses to these concerns, it’s already too late because it’s gone viral. I see this being a long-term concern that everyone in the food industry has to deal with.

Q: What do you anticipate to be the biggest industry trends for 2014?
The number one trend in the food industry is health and wellness products and the industry is looking at how best to address those consumer concerns. Looking at nutraceutical values like the addition of flax is an example. Some companies are going back to basics. They’re trying to produce their products with the simplest ingredients available. Other companies are looking at trying to go vertical, for example growing their own grain. They’re looking to produce a quality of product that they can ensure is produced in the fashion they want it to be. This is an example of where the industry is taking some unique steps.

Q: Is there a way the industry can be proactive towards increased consumer demand for healthier products?
I think we’re already starting to see that. Many of the offerings coming out now are designed to provide more of a functional value to consumers; more attributes that have a more nutritious nature. Two areas I’d like to talk about are the removal of trans-fats and sodium reduction. I think it’s fair to say the industry responded very quickly and positively to removing trans-fats from the food supply. We know that it hasn’t been completely universal, but we have pretty much eliminated trans-fats from the food supply, so that’s positive for the industry and positive for the government. With regards to sodium reduction, the industry has responded very positively to that as well. Our own studies show that with pantry breads, for example, the average sodium value has dropped by 13 to 14 per cent. That’s a huge contribution and a significant change by industry, considering salt is such a functional ingredient in the baking process. These are really positive examples of where the industry has acknowledged that we can do some things better. We can look at our existing product lines and improve the nutritional value of them. We can also look at new introductions and offer new alternatives or new products with the intent of making them healthier.

Q: What does the market look like for independent bakers and commercial bakeries?
It’s still going to be a challenging market. I think because of the gluten-free trend, traditional breads will continue to be under pressure; I don’t expect that to change in any dramatic fashion. However, I think there are deep pockets of opportunity, but you have to have a niche product. Who would have thought a couple years ago that you’d be paying four or five dollars for a cupcake? It’s a bit of a divergence from traditional baking, which is more volume-based. I think realistically, industry’s going to have to look at smaller runs for more niche-related products.

Particularly with retail bakers, they have to remember their destination stores. The consumer has to make a special trip to visit that store. They can buy bread in grocery stores, gas stations, just about anywhere, but why would the consumer make a special trip to their establishment?

That’s what I think fundamentally retailers have to keep in mind, whether it’s with regards to product offerings or the decor of their facility and how their staff operates. Is it sufficient to have consumers make that special trip to visit me? Do I have that unique or quality product line that’s going to entice consumers? Is my store appealing and welcoming? These are the questions retailers need to ask.

One other issue I want to touch on is biotech wheat. There’s no biotech wheat currently in Canada, but from an industry perspective, again more in the long term, industry’s going to have to address this issue in the next three to five years. Individual bakers are going to have to respond to biotech wheat being introduced and to balance that off with consumer concerns about genetically modified ingredients. When you look at what’s happening in the U.S., there’s been a variety of initiatives to require labelling of genetically modified (GM) products. We see companies making statements about non-GM and we have the potential for others to make similar statements about their willingness to sell GM or not to sell GM. So it’s going to be a significant issue for industry. From what we’re experiencing currently with gluten-free, it could be to the same magnitude. I think industry’s going to be more involved with the GM debate over the next five years and we will need to respond.

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