SAN DIEGO, CA — Kerwin Brown, BEMA president and CEO, hosted the BEMA and American Bakers Association (ABA) board chairs for a “fireside chat” style conversation to identify areas where their respective associations can turn immense challenges into opportunities in the baking industry.
Tim Cook, president and CEO of Linxis Group and 2022-23 BEMA board chair, joined Cordia Harrington, CEO and founder of Crown Bakeries and ABA board chair, for a candid discussion on the state of the industry during BEMA’s annual convention that took place June 22-25 in San Diego.
As the industry fights to overcome one disruption after another, Cook and Harrington can see silver linings for the industry through collaboration and cooperation.
While inflation is at an all-time high, consumer demand for certain bakery products hasn’t yet declined much. Meanwhile, backlogs for many equipment suppliers are still higher than ever. In fact, Cook noted that data from BEMA Intel indicated that positivity in the industry had consistently increased for five straight quarters, with it only slightly decreasing in the most recent report, where 86% of equipment suppliers remaining positive about the outlook in coming months.
He attributed that positivity to the industry’s inflation resilience and the purpose baked goods can serve during stressful times.
From the baker’s perspective, Harrington concurred.
“There have been some price increases for certain baked goods due to inflation, but if you look at the price increases for proteins and dairy, baked goods are still a lower-cost item that’s fulfilling and that people enjoy,” she said. “I believe we will remain strong, but it just might mean a shift in product mix for some companies.”
“We used to call it ‘just in time, but now it’s more like ‘just in case.’” —Cordia Harrington | CEO and founder, Crown Bakeries | ABA board chair
It’s true that overall bakery sales have been relatively flat to slightly down in the years prior to COVID-19, the pandemic created massive swings in consumption habits that have greatly impacted business for many bakeries and their suppliers.
With inflation and supply chain disruption causing significantly longer lead times for equipment manufacturers — not to mention shortages on the ingredients side — bakers and suppliers must work together to find viable workarounds to keep baked goods on store shelves.
“We used to call it ‘just in time,’” Harrington said. “But now it’s more like ‘just in case.’”
Cook described the complexity of capital projects today as someone of a jigsaw puzzle.
“You may be missing one piece, but if you work with a customer to continue manufacturing or even installation with other parts of the line where you’re not supply-challenged, then you can try to maintain the overall project schedule,” he said. “But it requires a lot of cooperation and a lot of communication between the baker and supplier.”
It also requires cooperation among suppliers, as well, because bakers are going to be looking at a more diverse group of allieds to keep their projects — or sometimes the operations themselves — going.
“We’re really encouraged at this time to look at several suppliers, rather than single suppliers because one may be able to get access to something that another might not,” Harrington suggested.
Cook even suggested that supplier-to-supplier cooperation is happening more than at any other time, where companies are helping one another find missing parts to get projects completed for a customer.
“We’re all here to serve the customer,” Harrington said. “We may be competitors in some instances, but we really are all in this together.”
