US Bakery Industry

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US Bakery Industry Trends

The three main trends that are driving the US bakery industry are the increasing numbers of health-conscious consumers who are looking for healthier ingredients in baked goods, the changing tastes of consumers who are looking for more exotic and novel products, and the growth in demand for more sustainable and greener products. Below is an overview of our findings.

US Bakery Industry: Overview

  • United States' sales of baked good products segment amounted to $58.6 billion in 2017. The market is expected to grow at a CAGR of 2.9% from 2018 to 2022.
  • Bakery products make up 2.1% of the gross domestic product of the United States, accounting for about $311.0 billion in total economic output. "The average spending on bakery products for a U.S. household is expected to increase to $383.75 by 2021. Most of this spending will be on bread, with the second-most being cakes and cupcakes. "
  • 65% of all bakeries have less than ten employees, 44% have one to four employees, and most small retailers only have one facility.
  • "The baking industry is poised for continued growth, especially for those that capitalize on health, sales and marketing, and flavor trends. Retail bakeries that offer fresh products with high-quality ingredients, affordable pricing, a clean and uncluttered store, enticing display cases, short wait times, and excellent customer service will be most successful over the next few years.
  • According to Mintel's Global New Products Database (GNPD), from January 2013 to May 2018, there were 7,846 new product launches within the baked goods' category. The baking ingredients and mixes had 3,367 launches, followed by cakes and pastry with 2,372 launches and bread products with 2,107 products launches.

Trend #1: Health Conscious Customers

  • The most significant trend in the US bakery industry is an increasingly health-conscious consumer. Baked goods with ancient and whole grains, all-natural ingredients, and no added preservatives are driving the industry.
  • Over 60 million Americans experience some type of digestive health issue, and the number of Americans following a gluten-free diet has tripled since 2013. As consumers increasingly shift toward healthier lifestyles, almost 30% purchase foods labeled as gluten-free. Gluten-free sales are expected to grow at an average annual rate of about 14.0% per year through 2021.
  • Manufacturers have successfully incorporated grains and more fiber in baked goods. Many are experimenting with the inclusion of other healthy ingredients, such as Omega-3 and 6-fatty acids, protein, vitamins, minerals, prebiotics, and probiotics. Probiotics are live cultures that exist naturally in the digestive system and are useful for healthy digestive functions.
  • Within the bread category, sales have been challenged, particularly for packaged varieties, by the increasing health consciousness among consumers and a growing aversion to artificial ingredients and flavors. This has led many to limit purchases or opt for healthier bread brands that avoid the use of artificial ingredients and present health attributes like high fiber content or grains.
  • Tortillas, pita, and flatbread now enjoy a boost from the healthy perception they have. These bread varieties complement ethnic dishes Americans are seeking out and carry a healthy claim of having fewer carbs and calories than conventional sandwich bread.
  • Manufacturers are seeking to combine the demand for portability and convenience with the increasing health consciousness of consumers.
  • 'The State of the Industry' — a presentation published by the American Bakers Association in 2018 indicates that holistic health is an important macro trend in the US baking industry and that it influences purchasing decisions made by consumers.

Trend #2: Changing Consumer Palates

  • Consumers’ palates are changing, and they are looking for bolder, more intense flavors. They are willing to pay more for an original, high-quality product. Bakeries are trying out limited edition and seasonal flavors to satisfy this need and increase sales.
  • Through 2021, sales of cakes and cupcakes in retail bakeries are expected to increase by an average of 7.2% per year, totaling $754.8 million in 2021. Sales will be driven by smaller sized cakes and creative, indulgent cupcakes that use innovative and unique flavors.
  • American consumers are looking for authenticity and "real" ingredients in their food, including sweet ingredients like real sugar and real butter. While they are shopping for better ingredients in their baked goods, they are not willing to sacrifice flavor.
  • Improvements in the taste and texture of gluten-free foods have helped expand the diversity of gluten-free product offerings. The same is true with whole grain bread that mimics the taste and texture of traditional white bread but offers eight grams of whole grains per serving.
  • Unusual pairings of popular flavors, such as savory and sweet combinations, with new ethnic-inspired flavors and ingredients, especially from the Latin, Middle Eastern, Asian, and the Mediterranean cultures are driving the US bakery industry. Many consumers are still willing to pay more for an upscale baked good because it is seen as a value-added, high-quality product that is an affordable luxury.
  • Blissful Indulgence” is one way to describe this trend — people are looking for opportunities to disconnect and reduce stress and anxiety through personalized, highly indulgent sweet goods or desserts that provide a “momentary escape” from reality.
  • As consumers increasingly opt to follow a healthy lifestyle, manufacturers are focusing on reformulating their existing dessert sections with healthier ingredients, which also have new flavor combinations to keep up with changing consumer tastes.
  • Crackers that come in ethnic flavors and flavor combinations like the Mediterranean, Middle Eastern flavors and Thai flavors are popular. Examples include Mondelēz Triscuit in Fig & Honey and Ginger & Lemongrass, as well as Kellogg Town House Focaccia Crackers in Rosemary & Olive Oil.

Trend #3: Sustainable/Greener Practices and Products

  • The consumer demand for green products is creating more awareness among bakery companies, as they can attract more customers by reducing their carbon footprint and being more environment-friendly.
  • The sales of organic bread and grains grew by an estimated 8.4% to $4.34 billion in 2016. Companies that offer locally sourced organic products from sustainable farm programs are seeing more success. The same applies to retail bakeries that set themselves apart by offering a variety of organic products, particularly those that are locally sourced from sustainable farms.
  • Many commercial bakeries are implementing greener practices by using alternative sources of power and packaging materials, sourcing local and sustainable ingredients, and building structures based on standards set by the LEED (Leadership in Energy and Environmental Design) program of the U.S. Green Building Council (USGBC) and the Green Restaurant Association (GRA).
  • While only a modest percentage of consumers are willing to pay more for a green product, this figure is growing, particularly among Millennials. When the price of green products is similar to that of conventional options, environmental concerns often provide the tiebreaker that leads consumers to go green.
  • Pepperidge Farm has invested in sustainability with the installation of fuel cell energy for its bakery in Bloomfield, Connecticut. The bakery utilizes a 1,400-kilowat fuel cell for the on-site generation of electricity that has a near-zero pollutant profile. Based on its success, the company is adding a second fuel cell to go along with its one-megawatt solar installation that will provide all the facility’s required energy.
  • 'The State of the Industry' — a presentation published by the American Bakers Association in 2018 indicates that sustainable packaging is a top priority for socially conscious Millennials. It also indicates that this generation hasn't been well-tapped by the bakery industry.
  • Apart from organic, non-GMO, and sustainable palm oil certifications, sustainability has come to include livestock practices perceived as more humane. Minimizing or upcycling food waste has gained a lot of media attention recently.

Research Strategy:

To address this request, we have chosen to include a source that is a little over 24 months old. This source is the 'State of the Industry: Commercial Bakeries in the U.S. ' Although it was published April 2017, it has relevant information which we have corroborated as credible and valid using other, more recent sources, such as the American Bakers, Baking Business, Bakery and Snacks, and Watson Inc.
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US Bakery Industry Competitive Landscape

Grupo Bimbo is the largest baking product manufacturer in the world. The company's primary products are Bread, Cookies, and Pastries. Flowers Foods is one of the largest producers of packaged bakery foods in the United States. Pepperidge Farm products line are manufactured at "eight manufacturing facilities spread across the United States."

GRUPO BIMBO

Company Overview and Location

  • Grupo Bimbo was founded in 1943 and is headquartered in Mexico City, Mexico.
  • The company "operates the largest bakeries in the United States, Mexico, Canada, Chile, Peru, Colombia, and Spain."
  • Grupo Bimbo has over 100 company brands. Some of these brands include Bimbo, Marinela, Barcel, Sara Lee, among others.
  • The company operates 199 baking plants globally.
  • The company also operates in 32 countries spread across Latin America, Europe, Asia, and Africa.
  • In the U.S, Grupo Bimbo started production in the country in 1994.

Company products

Company Revenue

  • Grupo Bimbo operation in the U.S has over $100 million in revenue.

FLOWER FOODS

Company Overview and Location

  • The company opened its first bakery in 1919.
  • Flowers Foods has grown to become a publicly-traded company and one of the "largest producers of packaged bakery foods in the United States."
  • The company operates about "47 highly efficient bakeries that produce bread, buns, rolls, snack cakes, and pastries for retail and food service customers in the U.S."
  • Flower Foods operate some 17 prominent brands. Some of the top brands include European Bakers, Butternut, Mi Casa, Bunny Bread, Nature's Own, Canyon Bakehouse, among others.
  • The company operates in over 45 different locations in the United States. Some of these locations include Birmingham, AL, Lenexa, KS, Modesto, CA, Goldsboro, NC, among others.

Company products

  • Flowers Foods products are bread, snack cakes, and sweet pastries.
  • Flower Foods operates in two segments, namely, "the direct-store-delivery Segment (DSD Segment) and the warehouse delivery segment (Warehouse Segment)."
  • The DSD segment focuses on the production of "fresh bread, buns, rolls, tortillas, and snack cakes." These products are sold directly to "independent distributors to retail and food service customers in the areas of the United States."
  • These products are shipped in both frozen and fresh states to "national retail, food service, vending, and co-pack customers through their warehouse channels."
  • The Warehouse Segment is also responsible for the supplies to "national and regional restaurants, institutions and food service distributors, and retail in-store bakeries with bread and rolls."

Company Revenue

PEPPERIDGE FARM

Company Overview and Locations

Company Products

  • Some of the company's products include Goldfish Crackers, Cookies, Breads Buns & Rolls, Desserts and Puff Pastry, and Crackers.
  • The company also bakes "English muffins, bagels, Farmhouse, and Natural Whole Grain bread." The company's bakery line produces 50 different varieties of freshly baked bread.

Company Revenue


Sources
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