Health, wellness and value drive innovation among baked products.
Growth in consumer demand for products that are “inherently good” continues, according to Mintel International Group Ltd., Chicago, a company that provides market research into consumer behavior, product innovation and market strategies. Consumers' philosophy of that which is inherently good goes well beyond health and wellness to include products and processes that affect long-term sustainability and the environment.
Value is a key component of consumer buying behavior, particularly during tough economic times. And value isn't only measured in terms of price, but also quality, consideration for the environment and healthful benefits, among other criteria. Bakers also are concerned with value, and often measure it by leveraging brand identity. In many cases, product lines that are oversaturated are being consolidated to ease the financial burden during the economic downturn.
In spite of the difficult economic situation, demand remains high for baked products. And plenty of opportunities exist for new product introductions, given the growing interest in the health and wellness category.
Baking Management presents 10 of the biggest trends affecting the baking industry.
Whole grain mania continues as consumers become more knowledgeable about the healthful benefits associated with their consumption. Whole grains deliver more protein, fiber, phytonutrients, vitamins and minerals than traditional white flour. But interest in whole grains goes beyond their nutritional contribution. Baked products made with multigrains, such as breads, muffins and pizza crust, provide new and interesting flavor profiles, as well as textural and visual interest.
As such, the use of multigrain blends has fueled a whole new niche category of products containing a variety of interesting and nontraditional grains in addition to or in place of traditional wheat flours. More bakers are turning to ancient grains, such a quinoa, teff, amaranth, millet and sorghum, as a means of product differentiation.
Even product name changes suggest that versatility in grain use gives bakers a means of separating themselves from the pack. For instance, Naked Pizza recently moved from multigrain crust to “ancestral” crust, which contains more than 10 seeds and grains, including buckwheat.
Various ancient grains have distinctive properties and bring their own unique properties to a formulation. For example, flavor nuances range from a slight lactic flavor profile from amaranth, a slight fava bean flavor from quinoa, nuttiness from millet, “chocolate or espresso scents” from darkly baked teff and sweetness from sorghum, notes Safa Hamzé, a San Francisco Baking Institute baking and pastry instructor.
Bakers need to communicate the flavor, texture, structure and nutritional profile they're trying to achieve when sourcing ancient grains.
The gluten-free market, which includes the gluten-intolerant and their family members, is about $1.6 billion today and is expected to grow to $2.6 billion by 2012, with an average market growth rate of 29 percent since 2004, according to research provided by Penford Food Ingredients Co., Centennial, Colo. The market for gluten-free products is expanding, in part because of a growing awareness of gluten intolerance or celiac disease, and also because a growing number of people are being diagnosed with these illnesses.
But U.S. consumers also are purchasing gluten-free products for well-being, digestive health, weight loss and nutritional value, according to The Hartman Group's “Gluten-Free: Context, Insights and Predictions,” as reported by Tate & Lyle's 2010 Food & Beverage trends.
Tesco-owned Fresh & Easy Neighborhood Market, which operates 136 stores in California, Arizona and Nevada, claims gluten-free is the number one dietary request from its customers. The store is introducing new gluten-free products and adding special shelf labels in response to its customers' demands.
Although production of gluten-free products poses some challenges, the opportunity to develop gluten-free cakes, breads, cookies, muffins or pizza dough that meet this market's needs is a huge incentive for bakers looking to expand their product lines.
Consumers' growing interest in products made with natural, non chemical-sounding ingredients has been fueled in part by the availability of and easy access to a vast amount of information from mainstream media and the internet, whether accurate or not. As such, consumers are reading more labels and examining the types of ingredients used in producing the foods they eat.
Since no standard of identity exists for what constitutes a natural product, much of the interpretation is left up to the consumer. And what consumers classify as natural are those ingredients that are not synthetic and minimally processed. Consumers perceive natural products as being more healthful and better for the environment.
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While many food industry leaders agree on aspects defining the term “natural,” many other facets remain in question, according to “What is Natural” (Food Technology, Nov. 2008). One prime example of a conflict concerning natural status involves high fructose corn syrup (HFCS). In June 2008, the FDA “informally” responded to a request about a natural claim for HFCS. Inititally, the FDA said HFCS should not be considered natural because a synthetic fixative in the active enzyme is used to produce the product. On July 3, 2008, the FDA issued a letter of clarification to the Corn Refiners Association after new information revealed the synthetic fixative for the active enzyme is not “added to or included in” HFCS under certain production methods. Under these conditions, the FDA would not object to the use of a natural claim for HFCS, according to Food Technology.
Still, the damage was effectively done. Many consumers now avoid products containing HFCS. This decrease in demand has forced many food manufacturers to replace HFCS in their products.
The lesson seemingly learned from the HFCS controversy is that consumers are going back to basics, or the simplicity and purity of ingredients, according to Foodnavigator-usa.com.
During the past several years, much press has been devoted to the link between the typical American diet and rising incidences of chronic health-related issues, including cardiovascular disease, diabetes and obesity. In fact, First Lady Michelle Obama recently launched a national initiative to fight childhood obesity. This national debate has launched a rapidly rising, multi-billion dollar industry of products with nutritionally value-added ingredients that promote health and wellness.
Bakers have responded to consumers' demands for more healthful products by including more whole grains, fiber, prebiotics and probiotics, as well as ingredients with high antioxidant value. Consumers' growing interest in foods that help create and maintain energy also exists, as well as those that enhance satiety, or the feeling of fullness. This growing demand gives bakers added opportunities to develop products containing functional ingredients.
Ingredient suppliers continually keep the pipeline of new, value-added ingredients full and use their resources to support the baking industry. For instance, Lallemand Inc., Montreal, petitioned the FDA to allow increased levels of vitamin D in yeast-raised baked products. The current allowable limit is 90 IU vitamin D per 100g of yeast-raised baked goods. Lallemand has requested a safe limit of 400 IU vitamin D per 100g serving in response increasing concerns about vitamin D deficiencies.
Bakers producing products containing functional ingredients have the ability to better inform consumers about the value-added benefits their products offer via labeling. For instance, a product containing calcium and vitamin D can include a structure/function claim about optimizing bone health.
The penny-pinching habits consumers adopted during the recession have continued even as the economy has improved, manifesting themselves in a variety of areas. One noticeable effect has been a significant shift away from national brands, with more consumers opting for private label products instead. Stores have been quick to capitalize, increasing marketing and adding label claims. Private label items now make up nearly 40 percent of all products with preservative claims, 25 percent of organic product sales and almost 20 percent of all products bearing natural and fat claims, according to the Nielsen Co.
What's more, consumers seem reluctant to ditch their newly frugal habits. BrandSpark's 2010 American Shopper Study discovered that 37 percent of consumers surveyed intend to continue purchasing private label goods even after the country's economic condition is back on track. “Private label's strength is holding,” said Robert Levy, president of the brand strategy firm. “It's not just about price. People have a very strong sense of agreement that they provide good value for the money.”
A recent survey by management consultants Booz & Co. echoes BrandSpark's findings, reporting that 65 percent of consumers surveyed said they consider saving more important than spending and that they frequently use coupons. Matt Egol, a partner at Booz & Co., says the reluctance to switch back to national brands isn't limited to consumers.
“Retailers are unlikely to give brands back the shelf space that private label has taken, given their dependence on private label for profits,” Egol predicts. “In addition, consumers are reporting generally positive experiences when trying private labels, so for some consumers they are becoming preferred brands.”
Booz & Co. identifies several areas manufacturers can focus on to recapture consumer loyalty.
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Signs indicate that the eco-conscious movement that took off in early 2008 remains active, albeit in a more subdued manner. With eco-friendliness being increasingly tied to healthfulness and high quality, products and companies with green claims may find themselves well rewarded by customers.
In February, 1-800-Recycling.com, a green living website owned by Electronic Recyclers International (ERI), Fresno, Calif., saluted several food manufacturers, including Kettle Foods and Frito-Lay, for their efforts to reduce carbon output and increase sustainability in their facilities.
“Our blog is designed to provide useful and practical information about green lifestyle choices. Every trip [shoppers] take to the grocery store is no exception, “explains John S. Sherigan, chairman and C.E.O. of ERI. “After [they read] this article, I think our readers will have an easier time deciding which brand to select if it's a choice between two and one is actively making an environmental difference.”
Both manufacturers and retailers are working on building more sustainable companies. Safeway Inc., Pleasanton, Calif., recently became the first U.S.-based grocery chain to join The Sustainability Consortium, a science-based group of companies working to develop a more sustainable global food supply chain. The consortium includes such supply giants as General Mills, PepsiCo and Procter & Gamble.
“We believe [the consortium's] mission is a good fit with Safeway's efforts to provide its customers with a larger selection of sustainable products and services,” explained Larree Renda, EVP, chief strategist and administrative officer for Safeway. “The company is committed to becoming the premier retailer in the grocery sector with an unrivaled reputation for pursuing growth through leadership in environmental, socially responsible and ethical business practices.”
Packaging company LINDAR in Baxter, Minn., also is making strides in sustainability. In 2009, it kick-started an initiative to eliminate all OPS from its facility and recently began a push to reduce office supplies by 90 percent by embracing a paperless workplace. Its bio-based plastics line is one of the most extensive in the industry, offering PET-, PLA- and Ingeo-based containers.
The company's attitude about its green tendencies is that it is just doing what makes sense.
“I do not think [eco-friendliness] is anything new — it's something that has just received a lot of press and attention over the past five years,” says Dave Fosse, director of marketing. “ Strong industry leaders have been restoring, reusing, reducing and recycling for years — it makes good business sense.”
2009 proved a bumpy year for many companies, with the results clearly evident on grocery store shelves. According to market research firm Mintel, food and drink product launches declined nearly 30 percent from 2008.
“In the last decade, Mintel has only tracked occasional, small declines in new product introductions for the US market, never a decline as strong as this,” says Lynn Dornblaser, new product expert at Mintel. “We see that a number of small companies, which typically introduce a wide range of products, have been stopping or slowing their introductions due to the economy.” Dornblaser added that oversaturation in certain product categories also contributed to a decrease in SKUs.
Melissa Dunning, marketing director for Aunt Millie's Bakeries, Fort Wayne, Ind., agrees that both the economy and oversaturation have played a part in the way companies approach new products.
“In the current climate we have to rationalize every SKU,” she explains. While Aunt Millie's hasn't delayed any new product launches, “we have changed our product launch methods to be more considered and more strategic,” Dunning says.
Public health organizations' amplified warnings and continued efforts from consumer advocacy groups are impacting consumer awareness of the importance of moderate sodium intake. According to Mintel, a consumer research firm, food producers are introducing more products with a low-, no- or reduced-sodium claim. Between 2005 and 2008, the number increased by more than 100 percent.
This trend is largely driven by recent scientific evidence linking high-sodium diets with a variety of health conditions, including stomach cancer and osteoporosis. While baked products aren't major contributors to sodium in the American diet, marketable sodium reductions can be made. Even a small change can improve a product's health profile and perception in a sodium-aware consumer culture. But for the baker, even a small change is no easy task.
Since salt (sodium chloride) is an obvious source of sodium, it is often considered a potential place for sodium reduction. But it can be difficult to reduce salt in a formulation because of the significant role it plays, according to Janice Johnston, Ph.D., salt applications leader, Cargill Salt, Minneapolis. Salt impacts the development of gluten protein in fermented products such as bread, helps control yeast activity, enhances flavor and helps control water activity, which is important in minimizing microbial growth. Ingredient manufacturers are currently unveiling products that allow for reduced sodium without sacrificing funtion or flavor.
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“Salt is usually added to food products to help with flavor qualities; however, it has other functional attributes. For example, in bread, salt can affect the leavening action of the yeast. As a baker takes out salt in bread formulas, the yeast usage levels may need to be adjusted,” says Greg Strauss, vice president of sales and marketing, AB Mauri Fleischmann's, Chesterfield, Mo. “At the same time, the entire formula needs to be evaluated. Flavor does not need to be sacrificed when taking out sodium if a baker can bring out the natural fermentation flavors of yeast. Using clean-label technical ingredients, such as dough improver systems and yeast extracts or autolysates, which are naturally high in 5-nucleotides, from the AB Mauri Bakery Ingredients line at AB Mauri Fleischmann's can help bakers adjust their formulas when taking out sodium levels.”
Bakers need to be aware that sodium intake is a growing concern, and they may want to consider ways to reduce sodium in their products. “The food industry is currently interested in cleaner labels and is more focused on the overall health and wellness of today's consumer,” Strauss says. “The bakeries that we work with on a daily basis are no different and have asked us to help them offer solutions that fit these needs.” Producing finished baked product that has significantly reduced levels of sodium can be a definite competitive advantage for bakers industry-wide, not just those operating in the healthful baking niche.
Customers have always sought good values, but recent economic factors have magnified the importance of value in the bread aisle and beyond.
“There is always going to be a role for value; people always want a good deal. I think in the short term, value is the number one thing on a customer's mind, but how do people define value?” asks Ed Frechette, senior vice president of marketing at Boston-based Au Bon Pain, a foodservice bakery café. “The out-of-pocket cost doesn't necessarily define value. People will spend more money if they perceive an item to be a better deal.”
Bakery cafés have a unique perspective on how the consumer views bread and baked products. Despite the recession, the bakery café model has boomed, due to the perceived value of its offerings compared to fast food and high-end dining establishments. Au Bon Pain rolled out demi sandwiches, which are larger than half sandwiches but not as large as the full-size sandwich, in order to target value-seeking customers. The sandwich bread is a demi baguette, affording the impression of a complete sandwich, but at $3.99, the price is lower than the magical “$5 foot-long” number.
Frechette has noticed that the value proposition rests more heavily on price as it relates to quality than price as it relates to quantity. Though common sense dictates that the larger the amount purchased the better the deal, small or modified-size items are a hot ticket at Au Bon Pain.
“An item that's doing particularly well is what we call a Tulip, a cross between a muffin and a cake wrapped in paper that looks like a flower,” he says. The chain charges a premium, even though it's smaller. People want indulgence, but they also want to stay healthy. Perceptions of health and quality are more important factors in a value proposition than sheer volume for the dollar.
When the National Restaurant Association recently surveyed 1,600 American Culinary Federation chefs to determine the latest menu trends, locally grown produce and grain appeared as a top priority. The concept of ‘Locavore’ eating has taken off across the country, and foodservice is using it as a point of differentiation.
“I think locality is first on the list of trends around here,” Josh Allen, owner of Companion, St. Louis, said. “We are certainly seeing an interest in who is baking people's bread and where it is produced, who is roasting their coffee beans and where they are roasting it. Really, it's a well-educated clientele trying to understand where their food is coming from.”
A locavore will argue that fewer resources, especially fossil fuels, are expended when packaging and transporting food locally. Buying locally supports the immediate economy, keeping more money in the community. Health also comes into play in the locavore ethic, as processing and preservatives are less important since the food doesn't have to travel so far.
Foodservice can use these ideas of locally produced, locally sourced items as a means of differentiation. Pies made with Michigan cherries or Door County, Wisc., apples, for instance, are able to root themselves in a specific region, but can backfire for a locavore on one of the coasts. The key is to tailor ingredients to a specific region in order to better appeal to socially conscious consumers.