What is in this article?:
- 2013 Baking Industry Forecast: New year, same refrain
- Defining value
The past year looked a lot like 2011, with economic and political uncertainty abroad and anemic growth at home as businesses remained stingy and consumers climbed out of debt. While bakers expect much of the same in 2013, consumers’ desire to reward themselves with small luxuries has kept the bakery industry viable and optimistic about growth opportunities.
When money is tight, customers are more likely to shop around for a good deal, although recent years have also seen a surge in demand for handcrafted, scratch baked products. Because these products often take longer and cost more to produce, value perception is shifting toward the care put into creating a quality product rather than monetary cost.
Bakeries have a distinct advantage in value perception because of the nostalgia that’s intrinsic to many of their products. “Value in the baking industry is in the eye of the beholder,” Deising says. “If we as bakers continue to provide those comfort foods or those foods that remind customers of their childhood or heritage, we will find the niche for value.”
“It’s a quality proposition for us,” Seppi says. “Our business model is not a low-cost leader. We are a higher end, higher quality producer and our product isn’t inexpensive. The consumer has a desire for a higher quality product, but you have to tie in the service component as well. It’s one thing to produce quality product; it’s another to produce and provide the level of service and knowledge to go with it that makes the customer experience valuable. Our employees have to be knowledgeable about the product.”
Krueger also says that customer and employee education are essential to value perception. “We have a lot of long-term customers. With our loyalty card, we have high penetration with customers, but we can’t take it for granted. We have to show our value proposition, whether through promotions or just our pricing,” he says. “The other part that we are going to increase this year is educating the customers, letting them know what it is about Buehler’s that is better. Our bakeries aren’t as open with the production area, so customers come to the counter and don’t necessarily see that we’re making product from scratch, mixing it and slicing it on premise. Unless we educate them with trained staff at the counter, they won’t know what’s going on back there.”
Consumers continue to seek competitive pricing, although they’re placing more emphasis than ever on quality product.
For Baker, value perception is tied to reliability and competitive pricing, especially in the in-store bakery. “I think the number one thing that’s never changed and what a consumer thinks of value in baked goods in consistency,” he says. “It’s the number one commandment of baked goods. People want to be able to rely on you, they want to know what they can get. Obviously, when people are watching pennies, cost versus value is very important as well.”
Social media usage and users have seen significant growth in the past year, with the total amount of time spent on social media sites growing 37 percent to 121 billion minutes in July 2012, compared to 88 billion minutes in July 2011, according to Nielsen. In addition, unique social networking users increased to 171.8 million in July 2012 from 163.6 million a year earlier and consumers spend more time on social media sites than any other type of sites, Nielsen found. Beyond establishing a presence on social media, bakery owners are now harnessing its power to drive traffic to their businesses.
“Social media is by far the biggest single factor in growing our business in the last two years,” Deising says. “Using this wonderful tool to promote our business is now part of our everyday activity. It allows us to communicate directly with our existing customers and really let them know what we are doing in our store.”
For an in-store bakery that does frequent sampling and demonstrations like Buehler’s, Facebook helps notify customers of events coming up in the store. “Facebook is definitely the best way to reach out to the community. When we have sampling events in the store, we’ll post it on Facebook to let people know. It’s helpful too because we might not have the same demonstration at each store.”
In addition, the speed with which news travels via social media allows business owners to respond quickly and ensure customers are happy. “The beauty of social media is that you get to know very quickly whether they like it or not. They also let their friends know when they see something they like,” Deising says. Furthermore, the main cost to bakery owners is the time investment. “You can now target specific people and not waste big advertising dollars on people who may not ever become your customer,” he adds.
“It’s a good opportunity for feedback from customers–both positive and negative,” Baker notes. “I encourage customers to give us feedback so we can rectify problems right away.”
All about the labels
The definition of good health is no longer simply about low-fat, low-calorie products. For a growing number of consumers, it is more about a holistic approach to eating, which means incorporating more all-natural, organic foods.
According to the Huffington Post, the anti-GMO movement will gain visibility in 2013, thanks to the awareness raised through California’s efforts to pass Proposition 37 for GMO labeling, which was defeated in November.
For Seppi, whose bakery is based in Northern California, GMOs will remain top of mind for consumers in the coming year. “I think the trend for natural, GMO-free products will continue, particularly because California is on the path to clean labeling. Consumers want to know where a product is coming from and how it’s made,” he says. “We often get emails asking, ‘Is this GMO-free?’ ‘Where was this manufactured?’ It’s about how we can continue to improve product and ingredients we’re sourcing to make better, healthier bread and bakery staples.”
Buehler’s has started carrying spelt breads, sprouted grain bread and has even started producing grain and homestyle breads fortified with omega-3s with positive results. “We knew it wouldn’t be a hard sell to put omega-3s in our grain or artisan bread because those customers are already looking for it. We started doing it with our homestyle bread and it’s a steady seller for us.”
“Cupcakes will be hot in 2013. Artisan breads and clean label products will continue their upward trend,” Deising says. But regardless of his predictions, customers always dictate what’s trendy. “We have been around for over 48 years. We would not still be here if we always continued to do the same thing,” he says. “The customer has always dictated our menu. If they want more, they will tell me, whether it be asking me or my staff aside, or just by discontinuing their purchase with us. We react to either situation very quickly by giving them what they want.”