Three factors that will shape the bakery of the future

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Three factors that will shape the bakery of the future

15 Sep 2021

Joanie Spencer

Since 2008, Joanie Spencer has covered the retail and wholesale sides of the baking industry.
Serving associations such as the American Society of Baking (ASB) and BEMA, Joanie is also in demand as an industry presenter on bakery operations and trends. She holds a bachelor’s degree in communication from Rockhurst University and a master’s degree in journalism from the University of Missouri.

When she’s not running or playing soccer, Joanie spends her time with her husband and 11-year-old son.

WASHINGTON, DC — By now it’s safe to say that “new normal” has reached ubiquity. So, what does “normal” look like now, and what does it mean for the baking industry?

During the American Bakers Association (ABA)’s NextGen Baker Virtual Leadership Forum, being held Sept. 14 and 16, Cyrille Filott, global strategist for consumer food at Rabobank, and JP Frossard, Rabobank VP and consumer foods analyst, unpacked some of the biggest consumer shopping trends and their implications for commercial bakers.

“The bakery of 2022 will not be the bakery of 2019,” Filott said.

The pandemic created major shifts in lifestyle and consumption habits, many of which have staying power, regardless of the pandemic’s outcome.

Rabobank outlined the shifts into three categories: people, products and places.

People referred to changing consumer behavior such as a more permanent work-at-home schedule, at least a day or two a week. And with increased work flexibility, many people have chosen to relocate from cities to suburbs or into larger living spaces.

“This is important because the change has impacted a lot of consumption, such as with lunch,” Filott said.

In 2020, people sought indulgence as a coping mechanism while stuck at home. They also learned to be adventurous in trying new cooking techniques, and that led to increased food sales across the board.

“The longer the virus lingers, the longer we are exposed to new habits and the more transformative — and permanent — those changes will be,” Frossard said.

One big change was that people have been more willing to explore new categories for upgraded food experiences at home.

“The longer the virus lingers, the longer we are exposed to new habits and the more transformative — and permanent — those changes will be,” said JP Frossard, Rabobank VP and consumer foods analyst

Product quality and attributes became a critical factor when consumers who did not suffer financially wanted to upgrade their at-home eating experiences. Frossard attributed this to not only economic stimulus programs and increased job opportunities but also to what he referred to as the “trade-up effect.”

“People paid the extra money to have superior product and try to replicate a restaurant experience,” he said.

Frossard also noted that indulgent items such as birthday cakes were purchased in smaller sizes, but the price point was not necessarily commensurate with the size.

“It didn’t mean that you’d have a cake that was half the size and want to pay half the price,” he said. “People were willing to pay the same or more for something really good.”

Filott noted that these changing habits led to increased sales for bakeries, especially those selling in retail, and it has created momentum that, for many bakery categories, is still going strong in 2021.

“Certain food categories that surged in the heat of the momentum – including pasta and flour — have gone back to 2019 levels,” Frossard added. “But that’s not the case for bakery breads. They’re still part of consumers’ routine.”

Additionally, the pastry/doughnuts category has grown this year even beyond 2021 levels, according to Rabobank data.

Frossard suggested that it could be due to the ease of production in the in-store bakery.

“It doesn’t require that much labor to be sold in the in-store bakery,” he said. “It’s just a thaw-and-serve. It makes life easier on the retail side, and we are at the age of low complexity; that’s a hot offer right now.”

As labor shortages hit nearly every industry, retailers are jumping on products that don’t require a lot of human capital in areas like the supermarket perimeter.

Then again, with people out shopping more, consumers are back in the supermarkets as well as shopping online.

Places people look for products may be experiencing the biggest evolution of all.

“The consumer is back, and they’re shopping not only the bakery center aisle but the frozen area as well,” Frossard said. “Bakeries can take advantage of that.”

But perhaps the most critical shift has been the surge in e-commerce. Despite the fact that online grocery sales declined slightly in Q2 2021 according to Rabobank, the numbers were still significantly ahead of 2019.

Retailers have upped their e-commerce strategy, including Walmart going after Amazon with its Walmart+ concept and Kroger’s recent partnership with Instacart.

Certain consumer behaviors have already begun to stick in the new normal, and online grocery shopping is reaping the benefit.

Filott outlined categories of e-commerce including direct-to-consumer, digital marketplaces such as Amazon, retail delivery or click-and-collect, and quick commerce delivery services.

“We are thinking a lot about if we are witnessing a change in the way consumers approach grocery shopping,” Filott said, “whether we are seeing a shift away from planned shopping or weekly shopping to express and 10-minute delivery service. It has an impact on the bakery sector.”

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