Maple Leaf exec sees ‘confusion’ around gluten-free

by Eric Schroeder
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TORONTO — Shifting consumer behaviors, including a trend toward stepped-up demand for gluten-free products, has not gone unnoticed at Canada Bread Co., Ltd. In an Aug. 1 conference call with financial analysts to discuss second-quarter earnings, Michael McCain, president and chief executive officer of Maple Leaf Foods, the parent company of Canada Bread, spoke at length on factors affecting the company’s fresh and frozen bakery businesses.

In recent quarterly financial reports, Canada Bread has noted a softer market for bread products, both in North America and abroad. Adjusted operating earnings within Canada Bread’s Fresh Bakery segment during the second quarter of fiscal 2012 ended June 30 fell 8% to C$30,507,000 ($30,295,000) from C$33,211,000, while sales eased 1% to C$279,164,000 ($277,266,000) from C$282,364,000 in the second quarter of fiscal 2011.

Part of the decline has stemmed from consumers turning away from traditional bread products toward more gluten-free items.

Mr. McCain said there is a “high level of confusion as it relates to the role that gluten and carbohydrates play in the diet amongst consumers.” He referred to gluten-free as a “very specific dietary concern,” and one that is “not rooted in science.”

“We think if we deliver the right products with the right support for the category, we can quite manageably change that trend line,” Mr. McCain said. He said that strategy includes highlighting the nutritional value of traditional bread products.

Asked by an analyst whether Canada Bread would ever embrace gluten-free or consider converting an older bakery into a gluten-free bakery, Mr. McCain responded, “We believe that having a gluten-free product in our portfolio is a prudent thing to occur and we’re working toward that, although the solution here is not a gluten-free bread, primarily because the vast majority of people would view gluten-free bread as not meeting the ‘great taste’ condition.

“And I’m not trying to demean all those gluten-free bread products that are on the marketplace, but by and large people don’t think they taste that great. So rather than turning to gluten-free or other nutritional breads of that ilk, consumers who are predisposed to that are tending more to just avoid bread. And that’s what we have to convert.

“We have to find products that both taste great and satisfy the nutritional concerns that they may have and/or provide nutritional benefits that they covet. And we’re confident that we can bring those people even though they may only be representing, say, 3% to 5% of the volume of the category, but it’s a material 3% to 5%.

“We believe that we can satisfactorily bring them back to the family, so to speak. So in short, we believe the gluten-free and similar type products might be or should be part of our portfolio but that’s not really the solution to this problem.”

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