The presidential election is over. The World Series is decided. Low-carb diets are out. All indicators point to a bull market for bread bakers.
Obviously, forecasting where the bread business is headed is not that simple. But, for bakery retailers and specialty wholesalers whose livelihoods are flour, water, yeast and salt, feelings are generally positive.
Coping with continued rising operations costs, such as worker's compensation and health insurance and costly ingredients and gasoline, bread bakery owners are cutting costs where they can and adjusting business to prepare for future growth. If internal pressures weren't tough enough, the sluggish economy and American's latest diet fad also did not help matters for many bread bakers this year.
Artisan bread bakeries, including about 75 percent from a member survey of the Bread Baker's Guild of America, reported that low-carb diets had little affect on their business. Others, like Josh Allen of Companion Baking in St. Louis, said his bread sales fell by about 15 percent.
"We were pretty dramatically affected," Allen says. Companion, which generates 60 percent of its sales from wholesale accounts, did not lose customers during the recent diet fad, but customers were buying less bread, he says.
"The product mix is changing," he says. "People aren't eating as much bread, but somehow a butter-laden puff pastry is OK."
Regardless of how much or how little low-carb diets affected bread sales, most bread bakers Modern Baking spoke with are cautiously optimistic about next year. So, with the woods seemingly behind them, bakery operators share their thoughts on some of the emerging trends in their business.
Whole grains and high fiber
|Whole grain bread sales increasing|
|(percentage of bakery operators reporting sales of whole wheat/whole grain breads)|
|Sales are down 7%|
|Sales are the same 30%|
|Source: Bakery-Net Poll, October 2004|
Beyond any lost bread sales, the resonating effect of low-carb diets is the renewed consumer interest in the healthfulness of fiber in their diets. In an informal Bakery-Net poll conducted last month, 63 percent of respondents reported increased sales of whole wheat breads.
"The [low-carb] diet books weren't all wrong," says Abe Faber, Clear Flour Bread, Brookline, Mass. "They say that it is better to get your carbs in a complex form."
Faber, whose bakery's sales break out to 60 percent retail and 40 percent wholesale, is seeing greater demand for Clear Flour's whole wheat and whole rye products. Where he used to sell about 48 whole grain loaves a week, he now sells about 24 loaves daily. That amount is nowhere near sales of his traditional French baguettes, Faber says, but customer interest is rising.
For Companion Baking, bread sales to grocery stores have clearly shifted towards whole grains. Companion sells its popular multi-grain bread as both crusty hearth loaves and Pullman sandwich loaves.
"Multi-grain bread is the number one selling bread for us in the grocery stores," Allen says. "That was not the case two years ago."
Maria Emmer-Aanes, marketing-director for Dillon, Mont.-based Great Harvest Bread Co., is preparing the bread bakery franchises for the new dietary guidelines to be released early next year. Great Harvest Bread Co., now with 210 bread bakeries in 49 states, has been in the whole grains business for 30 years. While each bakery differs greatly under the Great Harvest franchise system, common threads are breads produced with fresh-milled, whole-wheat flour.
The dietary guidelines are expected to tout the importance of fiber in diets. They recommend diets rich in whole grains and cite whole wheat bread as a primary source for whole grains. "One of the things we're really focused on right now is labeling," Emmer-Aanes says.
Although Great Harvest Bread stores are retail bakeries, generally not required to label products not packaged, Emmer-Aanes feels the positive message nutrition labels, packaging and other printed material can offer will benefit the bakeries. And, the messageñthat whole grain breads are good for youñis a proven claim that bakeries have been promoting for years. Great Harvest and others are simply making it "news" again with the coming guidelines and expected mainstream interest.
"Unlike low-carb or low-fat, where you were taking something out of the product," Emmer-Aanes says. "With whole grains, we're actually moving in the positive, right direction. Whole grains have been healthy and good for you forever. That's the beauty of it."
Breadsmith introduced a new line of sourdough whole grain breads, including cranberry.
Low-carb diets' "net carb" calculations, new trans-fat labeling regulations and debate over what truly qualifies as a whole wheat bread have turned more American consumers into savvy, even habitual, label readers. And, they do not like what they are reading, especially if they can't pronounce the ingredients.
The propensity towards "clean labels" is another winning situation for bakers of fresh product who have long offered breads and other bakery products with whole ingredients. Even butter is making a comeback over trans-fat-laden margarine, Clear Flour's Faber says.
"The trend is that our customers after 20 years finally realize we were right about everything," quips Faber in reference to traditional bakers' promotion of whole grains, fiber, real butter and other quality ingredients.
Bread bakers are tapping into this interest in healthful ingredients by offering more breads with value added ingredients, such as flax, spelt and oats. Breadsmith, a 33-unit bakery chain based in White Fish Bay, Wis., introduced a line of sourdough whole grain breads this year with ingredients like cranberries, pecans and toasted onion.
"Low-carb is out, healthy is in," says Michelle Sherman, Breadsmith's director of marketing.
Great Harvest is adding flax to some of its bread offerings and introduced a new line of fresh-milled mixes for retail sale in its stores. Pancake mixes, granola, oatmeal mixes and a whole grain oatmeal chocolate chip cookie mix are among the new offerings.
Great Harvest, which traditionally has offered soft-crusted breads, also recognizes the continued growth of European-style crusty breads. The company is launching what it calls a Euro-grain hard crusted whole wheat in January.
The artisan bread category is not new. It has been a steady movement in the United States that shows no signs of slowing as consumers develop a palate for crustier, heartier loaves.
For in-store bakery operators, crusty bread sales reached $1.9 billion last year, which is about double their annual sales of $918 million ten years ago, according to Modern Baking's Supermarket Bakery Research.
And, par-baked breads have been a key factor in bringing these types of crusty loaves into the American mainstream. About 41 percent of in-store bakeries produce crusty breads from par-baked doughs, according to Modern Baking's 2004 Supermarket Bakery Research.
While nearly half of instore operators use parbaked breads, restaurants, hotels and other foodservice operations are benefiting from par-baked convenience as well. Being able to bake on demand allows them to offer a wider selection of breads as side offerings, within menus and for specialty sandwiches.
"Par-baked breads give restaurants incredible control over cost because they don't end up with waste," Faber says.
Rachel Reich's Great Harvest bakery in Northbook, Ill., promotes sampling and sells sandwiches.
Par-baked technology has given rise to another trend in bread the sandwich. Certainly, sandwiches have been staples of American diets for years. But, bread as a focus of the sandwich is a more recent phenomenon.
"People don't want to deliver a square sandwich to the table any more," says Companion Baking's Allen. Companion sells more specialty sandwich buns and rolls to its wholesale customers than it has in the past. And, the company's cafè has grown considerably since it opened three years ago, according to Allen.
The growth of bakery cafè chains, such as Panera Bread and Corner Bakery, helped make focaccia and ciabatta household terms. Bagel chains are expanding their menus with sandwiches served on challah, French bread and other specialty breads beyond bagels. Even sandwich chains, such as Quizno's and Subway, tout their sandwiches made with "fresh-baked" breads.
Full-line retail bakery operators, who have traditionally stayed away from foodservice, have been adding sandwich and deli offerings to increase customer traffic throughout the day and increase their dollar sales per customer. Forty five percent of full-line retail bakeries offer sandwiches, according to Modern Baking's 2003 Retail Bakery Research.
Finding new bread business
Sandwiches and their unlimited complementary breads are among the many avenues bread bakers are taking to develop new business.
"We need to be willing to be pliable," says Craig Ponsford, Artisan Bakers, Sonoma, Calif. Ponsford has been finding success with new custom-made breads and products that offer a longer shelf life on supermarket shelves, such as bread crumbs, granola and crostini. The wholesale bakery also produces potato rosemary bread, pumpkin bread, jalapeno corn bread and bread bowls for Boudin Bakery Cafès in California.
At Clear Flour Bread, customers' increased interest in whole grain breads has encouraged Faber to experiment with whole grains beyond whole wheat. His whole rye breads, such as Miller's bread and Vollkornbrot, are showing a resurgence, he says.
"For me, the interest lies in saying, 'what else is there,'" Faber says. "French and Italian breads have been pretty well covered."
Even flat breads, such as pitas and tortillas, are gaining sales. Benefiting from low-carb diets and the continued popularity of "wrap sandwiches," tortillas have nearly overtaken white bread as the most popular bread product in the United States. White bread has 34 percent of total market share, compared to 32 percent for tortillas, according to APEX Research and the Tortilla Industry Association.
"This takes away business from traditional bread bakers if you don't make that type of product," says Companion's Allen.
But, whatever the trend in bread, Allen feels confident bakers of fresh product are well suited to adjust to and even influence evolving consumer tastes.
"It feels like we're on the edge of a turn around," Allen says. "We're all very well positioned when people come back to bread."