Bagel segment shake-up

by Charlotte Atchley
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Flavor and ingredient innovations and new eating occasions give bagels the opportunity to break out of basic breakfast categories.

KANSAS CITY — The bagel category is nothing if not consistent. According to the I.R.I. Group, annual sales for bagels in the 52 weeks ending Jan. 1, 2016, were only down 0.3%. Research by Experian showed that consumption of bagels in U.S. households from 2011-15 remained relatively unchanged. In 2011, consumption sat at 58% of U.S. households, and after some minor ups and downs throughout the year, that number settled to 60.9% in 2015.

These consistent numbers, however, do not mean that bagel producers should rest on the belief that innovation is unnecessary. Mintel’s September 2014 report on Bread and Bread Products revealed that more than half of survey respondents claim to be purchasing the same amount of bagels in the previous six months, but 23% of them said they are eating bagels less often while only 13% said they were consuming them more often.

Much of this can be attributed to consumers shying away from calories and reading more labels. Also, the way people eat breakfast and traditional breakfast foods is changing. Bakers can see these trends and shifts as either challenges or opportunities.

Nutritious and delicious

When consumer trend winds blow in the direction of nutrition, bread products tend to get blown right off consumers’ plates. Misinformation has people believing that bread, including bagels, carry too many calories with not enough nutritional bang.

“The category overall has suffered a bit from (bagels) being too heavy, too many carbs, too many calories, and I think it’s not necessarily a fair depiction,” said Ted Swain, senior brand manager of Thomas’ Bagels, a brand of Bimbo Bakeries USA. “If you don’t have enough (at breakfast), you’re forced to have more to eat. And bagels are a good enough breakfast that keeps you going all morning.”

That’s the positioning Thomas’ Bagels uses in marketing to its main demographic, households with children.

“Bagels are a great fuel for growing kids, and we look at active households with a lot going on,” Mr. Swain said. “It’s a great breakfast to keep you going all morning. We’ve been working on and trying to figure out the right message to tell consumers, and that’s a great one for us.”

Despite this messaging of carbs and their satiety power, the belief persists that fewer carbs and calories pave the way to a thinner waistline, and for those consumers, thin bagels continue to dominate as an alternative to the hearty boiled bread.

Thomas’ Bagels launched thin bagels about five years ago.

“A few years back, thin bagels started cropping up,” said Jerry Chizick, vice-president and general manager of Handi Foods. “They have grown exponentially and eaten into a large part of the market. Over the past five years, there’s been a real change with the introduction of the thin bagel.”

Mr. Swain echoed that idea with Thomas’ own bagel market breakdown.

“It’s a strong piece of our business,” he said. “I’d say the traditional-sized bagel is about 70% of our total business, and mini bagels and bagel thins are each about the same size market at 15% of the total. It’s a strong piece of business for us, for sure.”

Thomas’ Bagels launched thin bagels about five years ago. The product weighs in at 110 calories and targets women and younger consumers.

“It’s our answer for health and wellness,” Mr. Swain said.

Bagel thins aren’t the only way to appeal to the health and wellness crowd, however. Bagel bakers are starting to take advantage of another trend sweeping the bakery category: ancient and sprouted grains.

“Every product you look at, sprouted and ancient grains are hot,” Mr. Chizick said.

National Choice Bakery, based in St. Paul, Minn., is currently developing an ancient/sprouted grains bagel to take advantage of this market shift. According to Gerri Krenner, the bakery's sales manager, the goal is to combine great taste and wholesome qualities into one bagel.

Consumer preferences for sprouted and ancient grains also align well with other trends that guide National Choice Bakery’s product development. Ms. Krenner said the bakery produces a line of whole grain bagels and continues to source ingredients that will result in a cleaner label and appeal to consumers who prioritize that formulating style.

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