Despite flat growth in recent years, bakery opportunities arise as new artisan products meet consumer demand for health and variety.
Grocery’s health and wellness trends are heating up, and the in-store bakery has certainly been feeling the burn. Shoppers have become more attentive to food labels, choosing products with recognizable, easy-to-pronounce ingredients and no artificial flavors or colorings. Bread, in particular, has been stigmatized as a “guilty” food as carb-conscious consumers lean toward nutritious alternatives like cauliflower crusts, portobello mushroom buns and lettuce wraps.
The category’s growth has struggled in recent years, and the past year has been no exception. According to Chicago-based market research company IRI, the fresh bread and rolls category was valued at $13.4 billion for the 52 weeks ending March 19, 2017, up 0.34 percent from the year prior, and fresh bread alone accounted for $9.1 billion, up 0.15 in dollar sales. Though growth has remained mostly flat, bread is the largest segment within the in-store bakery, and retailers ought to get a slice of the action.
A Taste for Authenticity
The artisan and specialty bread segment is bursting with new product development as manufacturers offer new, innovative items that meet consumers’ health and wellness needs. While organic and non-GMO labels have been the leaders of the clean-label movement, trending features like gluten-free, ancient grains and artisan quality are becoming staples in the bread category.
Artisan bakery St. Pierre produces authentic French and Belgian breads, including brioche rolls, buns, sliders and loaves. “Consumers desire to expand their selections to more of a specialty-type of product offering,” says Kurt Burmeister, SVP of national sales and importing at Lipari Foods, KLT Global, U.S. importer of Manchester, U.K.-based St. Pierre. “More and more people are traveling. They are experiencing the world and when they get home, they want some of that to come with them.”
Sales of specialty breads like flatbreads and naan have spiked as exposure to authentic and ethnic cuisines continues to rise. Average dollar sales of naan have increased 21 percent over the last year, according to consumer research firm Nielsen Fresh, despite its average price of more than $3. The desire for authentic, high-quality breads tends to overcome the steeper price point these products typically carry.
Adapting to New Standards
Gluten-free also falls into the premium price point, yet it has become a category standard. “We’re seeing consumers set a higher standard for gluten-free products, especially when it comes to a staple like bread. And not just gluten free, but the entire ‘free-from’ category,” says Kevin Brouillette, SVP of sales and marketing at the gluten-free baking company, Canyon Bakehouse. “They want healthier bakery options, like whole grains and no-GMOs, free from major allergens.”
Loveland, Colo.-based Canyon Bakehouse offers everything from sliced breads and bagels to burger buns. The challenge, Brouillette says, is producing a product that meets consumers’ demand for healthy attributes, yet still offers the same texture, taste and quality from wheat-based breads that consumers have come to expect.
“Our focus is finding the right balance between what consumers want in a product—the health benefits, allergen-free, transparency and taste—and combining those to create a high-quality product that fits into their lives,” he adds.
Canyon Bakehouse’s 7-Grain and Mountain White breads remain its best sellers and annually exceed growth expectations, but Brouillette says he has seen increased interest in its bagels as consumers can indulge without feeling guilty about over-processed, unhealthy ingredients.
Grain diversity is also catching speed in the category, with grains like chia, flax and teff slowly finding their way into specialty breads. “Thinking about the ingredients that go into it, we’re seeing more ancient grains like quinoa,” says Matt Lally, associate client director at Nielsen Fresh, based in New York. “So there is certainly an opportunity to move into that space.”
Farm to Market Bread Co., based in Kansas City, Mo., offers its Grains Galore bread variety, which has been a growth leader year over year, featuring nine grains and five different seeds. The company also has a new sprouted grain bread currently in development.
Purposefully Pair the Products
Retailers should also thoughtfully pair bread with other products across the store. According to a recent Nielsen study that was commissioned by IDDBA, partnering healthy items like salmon or value-added vegetables provides the shopper with a quick and easy meal solution, and can also enhance the shopper’s perception of bread by offering signage that calls out the nutritional value or low-calorie count.
“We offer [our retail customers] a full merchandising plan with fixtures, coupons, POS materials and a year-long calendar of promotions for planning purposes,” says Burmeister. “This can be as simple as introducing an item that is not in their everyday product mix,” he adds, noting that shoppers respond well to “limited-time only” offers.
Sampling and smaller portion sizes are great ways to introduce consumers to new products, especially those of a higher price point and quality. “We have seen some retailers implement programs where they offer either rolls or half loaves of bread next to their deli counters, so when shoppers go in and get some deli soup or salad bar, they can add the little bit of bread or rolls to the purchase there,” affirms Lally.