Several bakery retailers discuss dietary trends and how they are formulating and marketing those products for the most profit.
In the wake of trans fat regulation and consumers' demand for “cleaner,” more natural products, bakers are looking for ways to reformulate products while maintaining product quality. The trends influencing bakery products include whole grains, natural sweeteners and preservatives, and sourcing ingredients locally. However, the challenges of these products do not stop at formulation.
How to market the new ingredients and products to customers can be just as difficult as the formulation process, but may be even more important. Customers won't know what you are doing unless you tell them, and several baking industry leaders, from retail to foodservice to specialty wholesale operators, talked about formulating, marketing and other trends during a recent roundtable discussion moderated by Modern Baking. The National Honey Board sponsored the event and excerpts from the conversation follow.
MB: How are dietary concerns affecting your product line?
Dale Schurman: We've noticed a big change on the whole grain side. We were making hamburger buns and different dinner buns out of our cracked wheat bread, and we have switched to a 50/50 whole wheat bun. It's been about a year now, and we've noticed that they are picking up in sales.
Cynthia Daube: Everyone wants a five-grain bread or how ever many grains you need. We had already been making 100 percent whole wheat flax bread. And I had pretty good sales. So, we tried a five-grain bread; it is 2-to-1 in sales — outsells everything. It's a half-wheat/half-white bread with grains added. It has a seltzer and a sour. It's easy to make, and it has taken off. We're making it twice a week, and we may need to add one more day.
MB: What about trans fats? Have you reformulated your products?
Daube: My whole bakery is no trans fat, but I had very few customer requests for no trans fat. I did it anyway because I thought it was the right thing to do. I'm not using palm oil — my muffins have always been oil based. The reason I did it is I thought when people buy a muffin, they think they're buying something better or more healthful than a Danish. If they're buying a Danish, they know they've got a big number of calories and a high-fat item. But we happen to use butter. Recently, I switched to using some lard and the line for pineapple fritters was out the door.
Dan “Klecko” McGleno: We chose to switch over because it was the provocative issue in early 2008. I was getting cubes of trans fat-free shortenings for only an additional $5. We didn't even pass the cost on. We used it, we advertised, the whole deal. Customers wanted us to do it because they wanted to be hip and trendy. But, eight months later when flour prices quadrupled, it was the last thing on anyone's mind. After the commodity scare, the trans fat issue lost some luster.
Ramon Zayas: We ran a trans fat-free chocolate cake for six months — everything I introduce, I run it for six months to give it a fair shot. The majority of my customers were like, “No, we will settle for trans fat-made products. We don't want the non-trans fat.” The chocolate cake dried out so much faster. We switched back.
MB: What about customer demand for natural products? What are customers asking for and how are you addressing it?
Daube: Customers are asking for unbleached flour. Many of my customers ask what is in my multi-grain breads. If we can't rattle it right off, we have a book that we can refer to. But customers are asking.
Zayas: We've taken anything that we use corn syrup in and we've switched to honey because honey is natural. It made our customers feel good that we weren't using corn syrup in our formulas. All of our cookies have a little bit of honey in them to give them longer life shelf and make them chewy. We used to use corn syrup because it was cheaper, but customers were so conscientious about corn syrup that we changed our formula. We did have to cut back our sugar content to account for the honey. I do think that people are conscientious and they want to know what is in products.
Klecko: Sweetening agents also have been big talk in our community because a couple of years ago when the honey prices doubled, there was no warning. Bakers started cutting their honey with glucose and they were going to a 50/50 mix. Other bakers were going full out to glucose. And it also happened with molasses. But bakeries in my area are committed to not cutting any sweetening agents, and the sales numbers are going through the roof. Our whole wheat bread is never whole wheat anymore. Now we call it honey whole wheat. I mean, if you're going to pay the money for honey, it gets front billing.
MB: Are customers demanding clean labels?
Klecko: I'm in wholesale, and the restaurant and hotel clientele want labels. So, if you're using preservatives, they want nothing to do with them. I've lost customers over it. We had switched to [an all natural whey mold inhibitor] because it was cleaner, but it was more expensive than [the chemical preservative].
MB: Do you market your natural or whole grain products differently?
Zayas: You have to let customers know you use natural ingredients. If we market that we're buying natural products and paying the price, we need to charge the price.
Klecko: I pick out buzzwords, like for whole wheat the buzzwords are fiber and calcium. So, I draw stick people and use slogans like “When was the last time you had fiber and calcium?” I'm not making any health claims. I'm not giving any percentages.
MB: Do consumers want you to use locally sourced ingredients?
Daube: People are thinking healthy and they are thinking local. I have a restaurant, so we buy a lot of foods locally. Sometimes it costs a whole lot more.
Zayas: We buy local. I'm very adamant about that. You really want to keep your community as vibrant as you can. Really, the only way to do that is to buy local. I may be paying a little bit more for it, but I'm keeping somebody in my community in business so that I can have a business. Because those people I'm buying from, I know that their families are all coming to my shop and buying from me.
MB: Are you able to pass on the added expense of natural or locally sourced ingredients? Or is there a limit to how much of the expense you are able to pass along?
Zayas: I think there is a limit on everything. But, in the same token, don't undersell yourself either, because customers are willing to pay it. We're probably one of the most expensive bakeries in our area, but we sell quality products. And people are willing to pay for it. They are willing to buy that organic bread, and they're willing to pay that extra buck for it.
Klecko: People aren't willing in our community to purchase high quality every day. So, there is a difference in giving people what they want or ask for and what they're going to buy. In my business, I have to sell product every day. I can't sell once a week. I need to get people in every day. The point is people like to talk more than they like to spend. For the most part, if you're going to make a business and take dollars out of the same people's pockets every day, it's easier to do it with good product than with high-end product because in my community, they are just not going to open their wallets every day.
Schurman: That's the same with us. They'll treat themselves, but when it comes to the everyday sales, we have to keep things in a very reasonable price range.
MB: With customers watching expenditures, what are you experiencing with product sizes?
Daube: When the economy changed, people didn't want to stop coming to bakeries, but they were very, very careful with their money. So, we increased small items. We make 3-in. round cakes and 3 1/2- in. to 4-in. tarts. Small is really in.
Klecko: The pastry chefs I work with, their philosophy is if there is more than a second bite, the client is forced into finishing the product. Give them just two bites because after that they're being forced. Let them eat two or three different things if they want to, but each piece should only be two or three bites.
Schurman: Serving sizes have been down on the dessert side. But it seems like our hamburger buns sales are still for the big ones.
Klecko: We're in the opposite direction. We are selling more dollar rolls than we have ever in the 30-year history of the bakery. Two years ago, 25 percent of all of our bun sales were 4-oz. jumbo buns. That's been completely eliminated and replaced with the small plate or tapas theory. The thing is people are still eating just as much — they're just eating five little ones as opposed to the big one.
MB: How have the smaller sizes affected your pricing?
Zayas: I sell 8-in. cakes for $15. But now I offer 4-in. cakes that we make in a muffin tin. For that little 4-in. cake — just one single layer cake either dipped in ganache or iced — I get $2.50. But the thing is that customers come in and buy two. That's $5. They save money even though they know the price is a little high for the amount of cake. But they didn't spend $15 on an 8-in. cake that they're going to throw half of away. They spent $5 on cake that they're going to eat all of. You may say you lost $10 in sales, but not really because I probably have 20 more people buying that $2.50 cake than I did buying the $15 cake.
MB: What other trends are influencing your business?
Klecko: The thing I've been noticing is the women between 20 and 40 are shying away from the sweets more than they used to. I talked to some pastry chefs, and they said you just have to make it savory. When we're looking at that demographic and how they spend their dollars, I'm finding that they feel they have to give themselves permission to eat something sweet. If it's just sweet, they won't buy it, but if it is sweet and savory, they will. I make rustic pastries, and when I made them savory — my definition is I egg wash them and sprinkle Parmesan cheese on top — 100 of them were off the rack in less than three minutes. The concept of blending savory with sweet, it's crazy how it makes people feel they have permission.