Two years into the pandemic and a year after “supply chain” has become a household term, there’s good news for commercial bakeries: Consumers aren’t changing their purchasing habits for baked goods. But there’s also bad news: Consumers aren’t changing their purchasing habits.

As bakery manufacturers and their suppliers scramble to increase capacity and get products onto store shelves and affordably into consumers’ hands, inflation and scarcity are met with mixed reactions.

Increased demand at the pandemic’s onset certainly played a pivotal role in the supply chain disruption that followed, and as the subsequent inflation occurs, consumers are noticing … in some areas more than others. According to a December consumer survey from IRI, 94% of consumers said they saw an increase in their overall grocery bill compared with the same time last year.


That said, though, when looking at the price of specific items, baked goods didn’t show up on the list until about 10 items down, and that was where about 40% said they noticed an increase in the price of bread.

Jonna Parker“No other baked goods showed up on that list among 25 grocery products,” said Jonna Parker, team lead for IRI Fresh. “What did score much higher were those meal-making items like meat, produce, milk and eggs. Fully finished baked goods, which were part of that list, were not necessarily top-of-mind for consumers.”

On one hand, people aren’t feeling the pinch from price increases; that’s great for business. On the other, business isn’t slowing down while commercial bakeries scramble to keep their heads above water. It’s a vicious cycle.

So, what can bakers expect from their end-users as they create ripples in the chain?

PMMI, the association for packaging and processing, conducts regular research on consumer behavior and its impact on food manufacturing. Its studies have revealed some specific caveats that have surfaced during the past 24 months.

Purchases are based on three criteria, according to PMMI research: availability, convenience and value.

Changing shopper habits for retail channels will impact end-of-line equipment needs. Case/tray handling machinery represents 36.7% of end-of-line equipment needs, per PMMI data.


Consumers have, for the most part, eased up on the hoarding from the pandemic’s onset, but as many have shifted to more eating at home, stocking up has become a habit, and that’s causing changes in what’s available — where — and at what cost.

Jorge Izquierdo“I would say in the past month, many people are going to different stores and buying in different channels,” said Jorge Izquierdo, VP of market development for PMMI. “They’re relying more on things like e-commerce for access to specific products that are harder for them to find. In some cases, they have to replace brands they’re used to with other brands because of availability.”

Parker noted that as many consumers have settled into a work-from-home lifestyle, consumption of products like breakfast muffins have moved from the coffee shops to the kitchen table. That has triggered increased sales in club and big-box retailers, with a few implications in terms of the perceptions surrounding price and availability.

“The main motivator in the super center or club channels is that when you buy something like baked goods, there’s a perception of saving money just by walking in the door,” Parker said. It also provides an opportunity for stocking up, she added.

This is reminiscent of the Great Recession, especially in terms of how consumers are willing to accommodate for inflation and why they may not even notice elevated prices on certain items. If they’re used to picking up a muffin at the coffee shop, and now they’re picking up a bulk pack from the club store to enjoy at home, it’s a cost savings, even if those prices went up at the store. Not to mention, it’s an indulgence worth spending for.

Robert Berg“In the Great Recession, lower-cost discretionary spends that gave a feeling of happiness increased,” said Robert Berg, founding member of Iridescent Data. “When you have a small amount of money — a two- or three-dollar difference — you can treat yourself.”

With a perceived savings baked in, club stores obviously experienced growth during the height of the pandemic, and with price and availability so top of mind in the supply chain crisis, that momentum is apt to continue.

While longer lead times are forcing commercial bakeries to wait for raw material resources and equipment installations, consumers who are used to omnichannel-style instant gratification may not be as patient.

That said, NielsenIQ sales data isn’t reflecting much of a backlash, with products like muffins and dessert bars showing double-digit growth (16.2% and 12.8% respectively) in dollar sales for the 52 weeks ending Jan. 1, 2022, and the overall sweet snacks category experiencing 5.5% growth for the same time period.

When consumers have time to react quickly while bakery and snack manufacturers scramble to keep up, brand loyalty shifts may not be as conspicuous … for now.


“The ways consumers have been forced to react is having an impact on brand loyalty, but companies might not be feeling it as much right now because consumption is relatively high,” Izquierdo said. “As consumption levels off and competition increases, those consequences of losing brand loyalty will become significant.”

Izquierdo also pointed to omnichannel and the options available to consumers that will create even more shifts in loyalty-driven behavior. Product size, style and brand choices are now paired with a variety of channel options, ranging from brick-and-mortar to click-and-collect, home delivery and online. It’s a multi-layered marketplace that will further complicate the situation for food manufacturers.

“These two forces — on one side the brand loyalty, and on the other side the channel competition — are going to create a very different dynamic for manufacturers,” he said. “Many will be forced to jump into different channels, while others will have the luxury of just staying in a single distribution channel. But I think they’re all going to be forced to work with different channels in some way, and they’re going to find their operations will need much more flexibility.”

According to PMMI’s 2021 State of the Industry Report, end-of-line machinery represents one of the largest equipment categories, with case/tray handling machinery with 36.7% of the category, and labeling, decorating and coding machinery snagging 30.8%. From 2015 to 2020, end-of-line equipment experienced a 6.5% CAGR before contending with the supply chain disruption. As consumers create these new needs for flexibility at the end of the line, that growth could intensify in the coming years.

All things considered in the grand scheme of this disruption, the demand-side of the supply chain is still healthy. That might not feel like good news to the bakers who are struggling to keep up, but in looking at the overall health of the industry and thinking about where to go from here, it’s certainly the better-case scenario.

This story has been adapted from the February | Q1 2022 issue of Commercial Baking. Read the full story in the digital edition.