Although wheat may be making a strong comeback, so far in 2024, sales of grain-based foods have not been exceptional.
The U.S. Department of Agriculture predicts that the amount of wheat used in food this year will be the lowest in half a decade. Similarly, in the fourth quarter, millers produced the smallest amount of flour during this period in 10 years.
Sales of biscuits and crackers fell 3.4% year-on-year in February and sales of bread on grocery shelves fell 2%, according to data from consumer intelligence firm NIQ.
But overall, the bakery holds its place within the grocery store and certain products, including specialty bread, are rising in the category.
Bread continues to be among the top five in the bakery section, and artisan and sliced ​​bread are leading the way, according to Noah Smith, grocery merchant at PCC Community Markets.
PCC Community Markets is based in Seattle, Washington, where there is a strong bread scene attributable to several factors: Washington State grows a ton of wheat (it was the third highest wheat-producing state in the U.S. in 2023) and a research institute called Breadlab – a collaboration between wheat growers, mills and Washington State University – sits in its backyard.
“We’ve seen increases every year (for bread),” Smith said. “The trend we are seeing is that our customers are moving a little more towards this artisanal segment.”
Rick Stein, vice president of fresh foods for FMI – The Food Industry Association, agrees. He said bread holds up, even in a post-pandemic world.
“We’ve seen that loaves and rolls continue to do very well,” he said. “Many customers still eat at home and use store-bought bread.
“The other thing we’ve found is that the bakery section, especially in what we call functional items like sandwich bread and rolls, has a lot of messages about health and wellness .
Consumers know they need whole grains and breads in their diet and are no longer afraid of all the carbs, Stein added. The quality of bread has also improved, hence the increase in sales of artisan bread.
Integrate data
According to data released by Chicago-based marketing research firm Circana, dollar sales for bakeries totaled $3.7 billion in February, an increase of 0.5% year over year. other, but unit sales continue to decline: 0.9% compared to February 2023.
However, the center store bakery outperformed the perimeter bakery in February in dollar terms (0.9% year-over-year increase versus a 0.1% decrease). On the other hand, the scope performed better in terms of units (loss of 0.6% over one year compared to a loss of 1.1%).
Some subcategories also saw strong unit sales. In February, croissants (10.1% increase in units year over year), muffins (4.3% increase), donuts (3% increase), bagels/bialys (0 .2%) and rolls and rolls (0.2%) were the main drivers of the increase. bakery from the center store. Perimeter recorded stable performance in specialty desserts (units increased 6.4% year over year), breads (4.3%), muffins (2.2%) %), rolls and rolls (0.5%) and biscuits (0.1%).
In contrast, year-over-year unit sales of central store flatbreads and snack cakes fell 9.3% and 7.6%, respectively, while pies (-5.5 %) and pastries, Danish pastries and coffee cakes (-4.3%) fell in scope. .
Market experts Supermarket News spoke to touted how the peripheral bakery has outperformed the central store and that breads play a huge role.
Melissa Altobelli, senior vice president of Client Insights, Dairy and Bakery Vertical at Circana, said perimeter breads showed the strongest unit sales growth during the first quarter. In fact, units increased 6.6% year over year, primarily driven by store brands.
“Bread growth or being the main driver of growth in the first quarter is different from what we saw in 2023,” she said. “These are sandwich loaves.”
A surprise purchase in the bread family are tortillas, which are not classified in the bakery section because they are found in the bread section. Altobelli said tortillas grew 2% in unit sales in 2023 and are experiencing a shelf life of purchases thanks to low-carb and no-carb diet trends.
“I also think the multifunctionality of tortillas continues to appeal to consumers on a budget,” she said. “You can really do a lot with them. »
One of the main factors behind the success of the peripheral bakery is the trend towards eating more meals at home. Altobelli said many shoppers are trying to replicate restaurant-style dishes at home and the Perimeter is where shoppers will find high-quality, upscale items.
Variety was also king. Donuts are an item that has evolved particularly well in recent months and stores are offering more variety packs rather than smaller sizes.
Single-serve desserts also continue to perform well, as do specialty desserts. Single-serve desserts began appearing during the pandemic and have produced strong results in 2023, and shoppers are still buying them from bakeries.
What is the plan?
Grocers continue to use tried-and-true baking marketing methods, but Stein said the biggest change is messages that focus on both health and, conversely, indulgence.
“From this point of view, I noticed a little change in the decorations of the shelves and in their messages at the points of sale,” he said.
In-store cross-merchandising also remains an effective strategy.
Whitney Atkins, vice president of marketing for the International Dairy Deli Bakery Association (IDDBA), said grocers must stay ahead of flavor trends and must offer varieties, which they consists of a number of different types of individually wrapped items like cakes or different types of donuts in packs of 12.
Capitalizing on special occasions and nostalgia also remain strongholds for retailers.
Bakery continues to be a reliable category for retailers, who have capitalized on shoppers’ need for specialty, premium and private label breads in the peripheral section. Inflation continues to boost dollar sales, but unit sales continue to make a slow and gradual return.
