Paying for Premium Bread
As consumers raise their standards for this staple, bakers cash in on quality.
BakingBusiness.com, April 1, 2012
by Charlotte Atchley

Located somewhere between white bread and artisan varieties, premium breads boast higher-quality ingredients than conventional soft sandwich breads and less rigidity in process than artisan styles. Many of these breads come in wide-pan forms sold by companies such as Pepperidge Farm, Norwalk, CT; Franz Family Bakeries, Portland, OR; and Bimbo Bakeries USA, Horsham, PA, just to name a few. Their products include everything from Pepperidge Farm’s Goldfish bread to Bimbo-branded items such as Arnold’s Health-full breads. There are also myriad rolls, buns, sliced breads and breads with indulgent inclusions.

As the market has evolved, however, the status of premium has been slowly redefined. With the increase in commodity prices and changing consumer purchasing patterns, sandwich bread has experienced a decline, according to Chicago, IL-based Symphony/IRI data. In fact, units — a most critical proponent of profitability — have dropped off more severely as wholesale bakers strived with retailers’ cooperation to maintain margins. This is especially important in the most competitive bread aisle, where pricing has trumped innovation during the past year. More innovation is found the food service channel or in other sections of the supermarket such as the in-store bakery deli where companies like King’s Hawaiian, Torrance, CA, have found success. 

Regardless of being somewhere in the middle of the bread category, premium breads face the same opportunities and challenges as the entire category: a push toward health in the form of whole grains, high fiber and all natural. That said, many on the higher-priced end of the market — mainly artisan breads — are now playing in the slightly lower premium category. Many of these bakeries have become more efficient in production, and they are providing products that are considered mainstream such as soft, non-crusty ciabatta rolls.

Companies such as La Brea Bakery, Van Nuys, CA, blur the lines by positioning their products as both artisan and sandwich breads. On the other hand, Franz rolled out a Classic Artisan-Style bread line last year that is crafted in small batches and uses slow-milled premium wheat to capture a robust hearty flavor.

Consumers are either more comfortable with their bank accounts or their need for peace of mind about their food is growing stronger. As a result, quality is gaining on price as a deciding factor in bread purchasing decisions. Quality is implied in the category name, so sales growth seems in the bag for premium bread bakers as consumers get more confident in spending and more concerned about their food.

A premium on health

Whole wheat, whole grains and high fiber — health buzzwords — are what consumers say matter most to them when it comes to buying bread. Between a well-publicized obesity epidemic, the 2010 Dietary Guidelines for Americans and the various organizations promoting whole grains, it is no wonder that consumers have whole grains on the brain when perusing the bread aisle.

According to the research firm Mintel, Chicago, IL, more than 60% of consumers surveyed in August 2011 said that whole wheat, whole grain or high fiber were important attributes when shopping for bread. All natural (no artificial preservatives, additives, colors or sweeteners) was important to 49% of survey participants. No doubt health is on people’s mind, and premium bread bakers see this reflected in their market as well.

“When I go to visit bakeries, I see a lot of different grains I hadn’t seen during the last 25 years: sprouted grains, spelt and many others that I hadn’t seen,” said James Rath, vice-president/general manager at Tom Cat Bakery, Long Island City, NY. “Now every time I go to a store that may have a section for some healthier options, I see those things. I’m finding a lot more stores that normally wouldn’t have carried that healthier option, and even normal supermarkets have more whole-grain products.”

Tom Cat Bakery’s customers want more whole grains. Mr. Rath said the company has responded by formulating about 75% of its new products with some whole grains — whether made mostly with whole grains or just as an inclusion. 

“All natural” is another buzzword directing product development by the premium bread industry. Although not legally regulated like the term “organic,” all natural is widely accepted to mean no artificial preservatives, additives, colors or sweeteners. According to Mintel’s 2011 consumer survey, nearly half of respondents said all natural mattered when it came to buying a loaf of bread.

That’s enough consumer interest to draw the attention even of commercial bread companies that have started putting their own all-natural products in the bread aisle, said Jeff Getzkin, vice-president of sales, New French Bakery, Minneapolis, MN.

In response to the all-natural trend, New French Bakery started working on a new line of all-natural breads and rolls to draw in these consumers. According to Mr. Getzkin, the goal is to create a line of all-natural premium breads that is better than commercial buns or rolls. Mr. Getzkin hoped that consumers will be drawn to the label that reads “all natural” on New French Bakery’s bread bags.

New French Bakery also plans to add a line of all-natural sliced breads to its product offerings.

A premium on quality

When hearing the term “premium bread,” quality seems like a no-brainer. Although quality has always set premium bread apart, consumers haven’t always had it on their radar — especially with the tight economic times these past few years. However, an August 2011 Mintel survey showed that more than half of the respondents have bought better-quality bread than in the past. Now consumers seem to be shifting their priorities from value to quality in the bread aisle, and premium breads are waiting on the shelf to fill that need.

Hard economic times often favor lower-priced goods, but this hasn’t been the case lately. “You’d think in a recession, private label and value products would thrive, but we saw our growth during 2011 come through premium products,” said Robin Alton, president and CEO, Pan-O-Gold Baking Co., St. Cloud, MN. He described operating conditions as part of a panel discussion held during the American Society of Baking’s BakingTech 2012 in Chicago.

Mr. Rath attributed the shift to premium to people encountering better-quality bread and, thus, changing the way they buy bread. Consumers experience better bread because bakeries are stepping up and improving
product quality.

“Even the large industrial bakeries are very keen on improving their quality,” Mr. Rath said. Larger bakeries are turning out a much higher-quality product to distribute to a mass audience.

Restaurant owners also are looking for ways to improve the quality of their dishes, and often they turn to premium breads to bring some class to a meal. Farm to Market Bread Co., Kansas City, MO, is seeing the most sales growth in its business from restaurants ordering the bakery’s premium hamburger buns.

“Over the past three years, burgers have become pretty popular, so more restaurants are spicing them up a bit and making them more gourmet,” said Lindsay Borum, director of sales at Farm to Market Bread Co. “A good way to do that is to have a better bun.”

People notice the higher standard at restaurants — not just in burger buns but in sliced sandwich breads at delis and dinner rolls at white tablecloth restaurants. In its November 2011 report on bread sales, Mintel predicted that consumers might want to replicate these restaurant-quality meals at home. New French Bakery has already tapped into this trend with its line of Take & Bake breads sold through in-store bakeries.

“Consumers want to bake at home and have the experience of serving restaurant-quality products at their table,” Mr. Getzkin said. “If you walk into the supermarket now, you can get salmon or prepared beef, and it’s like going to a restaurant. Why not have the artisan bread at home too?”

According to Rita Rangel, director of retail sales for New French Bakery, this product line has continually grown. If consumers have an eye out for quality, they are likely to pay the extra dollar or two for the superior flavor from any premium bread, not just a take-and-bake line of products.

“When consumers buy an item promoted as high-quality and they enjoy the taste and they enjoy the experience, it is a repeat sale,” Ms. Rangel said.