Dive Brief:
-
A 2017 consumer confidence report found 85% of survey respondents had a positive outlook for the baking industry in 2017, and 54% said the outlook for this year is better than 2016, according to Baking Business.
-
This optimism isn't entirely surprising, as 51% of companies surveyed said they're gross margins were steady in 2016, and 53% expect margins to hold into 2017. Overall growth of about 2.7% and higher margins in 2017 also were projected by more than 40% of respondents.
-
Company costs for the baking industry rose 3% in 2016, but the average expected 2017 increase fell to 2%. “As an industry, bakers are telling us they anticipate about a 5% balanced revenue increase against costs,” said Marjorie Hellmer, president of Cypress Research Associates.
Dive Insight:
Commercial baking is a fairly mature business, with little significant growth because consumers can only eat so many baked goods. A slightly increasing population boosts consumption from time to time, but bakers are focusing more of their efforts on improving efficiencies than production.
Still, the baking industry is a steady performer. Spending will likely be directed toward creating efficiencies rather than building capacity or building new plants — major innovation isn't expected in this space anytime soon.
Confidence in the baking space could be the result of growing consumer interest in morning eating. Nielsen Fresh found breakfast bakery dollars, including bagels, muffins, donuts, cinnamon rolls and more, rose 2.8% in 2016.
Many bakers are investing in new value-added and free-from product formulations that cater to today's health-conscious consumer. Gluten-free bakery products are one investment, but some companies are also capitalizing on the protein trend. Warburtons Ltd., the U.K.'s largest bakery brand, recently partnered with Canadian researchers to develop dough from pea flour that will look and taste like any other loaf of bread.
Some scientists believe that this innovation could help boost bakery sales. It will be interesting to see if any major American bakers begin to formulate their bread products with pulses other than wheat.