Census finds lackluster growth for commercial bakeries in 2002-07
Census finds lackluster growth for commercial bakeries in 2002-07
BakingBusiness.com, September 22, 2009
by Josh Sosland

Bookmark and Share

WASHINGTON — Limited growth was achieved by the commercial bakeries industry in 2007 versus 2002 according to quinquennial data published by the U.S. Bureau of the Census in the 2007 Economic Census. At the same time, several key baking categories, including bread, enjoyed solid growth during the period.

Total value of shipments from the commercial bakeries industry was $25,642,661,000 in 2007, up 8% from $23,814,681,000 in 2002, equating to a simple average of 1.6% annual growth during the period.

By a number of measures, the pace of growth in the early and mid-2000s was uncharacteristically sluggish. In the previous five Census reports dating back to the early 1980s, five-year growth in value of shipments ranged from a low of 11% to a high of 42%.

The growth from 2002 to 2007 was modest compared to most other major categories in grain-based foods and food processing generally. Within grain-based foods, the value of shipments growth for commercial bakeries at 8% eclipsed only cookies and crackers, at 4%, and dry pasta at 7%. Fastest growing in grain-based foods was tortillas, at 71%.

Despite the slower growth, commercial bakeries remained by far the largest segment of the grain-based foods industry with annual sales of $25.6 billion. At $10.7 billion, cookie and cracker manufacturing was the second largest sector, less than half the size of commercial bakeries. The retail bakeries sector, while enjoying 20% growth from 2002 to 2007, had shipments valued at $3,378,034, a fraction the size of commercial bakeries. (The retail bakeries data are not all encompassing — excluding major outlets such as in-store bakeries and bakery cafes).

The growth of shipments of commercial bakeries also fell shy of levels attained by several of the largest food processing segments. The 8% growth in 2002-07 compared with 50% for cheese manufacturing, 48% for meat processing, 32% for poultry processing and 13% both for fruit/vegetable canning and chocolate confectionery.

Because of this lagging growth, the commercial bakeries sector fell back during the five-year period within the pantheon of leading food categories.

Growing from $23.8 billion to $25.6 billion, commercial bakeries was overtaken as a segment by cheese manufacturing ($22.1 billion to $33.1 billion) and fell far behind other several other categories, including fluid milk ($24.2 billion to $33 billion); meat processing ($25.9 billion to $38.4 billion) and soft drinks ($33.8 billion to $41.7 billion). One processing sector that had been far smaller than commercial bakeries, soybean processing, appeared poised to potentially overtake baking, as measured by value of shipments. Soybean processing shipments grew to $19.4 billion in 2007 from $12.8 billion in 2002.

Against this somber backdrop, there was considerable variation in the performance of various sub-sectors of the commercial bakeries industry.

Shipments of bread in 2007 were $10,140,678,000, up 28% from $7,935,228,000 in 2002. Bread accounted for 43% of the total commercial bakeries shipments in 2007, up from only 37% in 2002 and 39% in 1997.

The value of white pan bread shipments was up 16% from 2002; white hearth bread up 21%; dark wheat bread up 35%; and other variety bread up 84%.

At $5,961,069,000, shipments of rolls in 2007 were up 3% from 2002. While hamburger and wiener rolls were up 20% during the period, "all other rolls," which includes muffins, bagels and croissants, fell 11%.

Shipments of soft cakes were up 6% in 2007 from 2002, while other sweet goods were up 12%.

The Census report was replete with data covering many aspects of the industry beyond value of shipments. Value added by commercial bakeries, traditionally considered by the Census as "the best value measure available for comparing the relative economic importance of manufacturing," was $17,386,664,000 in 2007, up 3.6% from $16,779,460,000 in 2002. Value added equated to 68% of the total value of shipments, down from 70% in 2002.

The commercial bakeries industry remained the most labor intensive of the grain-based foods sector in 2007. The industry operated 342 plants with 100 employees or more, five times the number of the cookies and crackers sector which, at 66 large plants, ranked second.

The employee base of the commercial bakeries industry contracted sharply between 2002 and 2007, declining 10% to 142,510 from 157,916 in the earlier year.

Suggesting a slowdown in the rate of consolidation in the baking industry, the number of companies in the sector was 2,258 in 2007, up 0.5% from 2,247 in 2002. The number of establishments (baking plants) was 2,578 in 2007, down 1% from 2,616 in 2002. At 1,720, establishments with fewer than 20 employees accounted for two thirds of all establishments in commercial bakeries. The figure was little changed from 1,730 in 2002. Similarly, establishments with 20 to 99 employees totaled 516 in 2007, up 1% from 511 in 2002. The largest change occurred in plants with 100 or more employees, which numbered 342 in 2007, down 9% from 2002.

A decline in the workforce in the commercial bakeries industry stood out in the report. At 142,510, the number of employees was down 10% from 157,916 in 2002. Going back to 1982, the decline was by far the steepest for a five-year period. The second largest five-year decline was 5% in 1982 versus 1977.

While the total workforce declined by 10%, the number of production workers actually grew in 2007 to 84,338, up 2% from 82,676 in 2002. Baking industry sources suggested the likely disparity was because of the sale of sales routes to independent driver salesmen and administrative cuts associated with industry consolidation and general cost cutting.

The cost of materials expended by commercial bakeries totaled $8,288,945,000 in 2007, up 14% from $7,247,028,000 in 2002.

The cost of materials increased more modestly than was the case for most of the other leading food processing and grain-based foods categories, including breakfast cereal, up 33%; fruit/vegetable canning, up 26%; fluid milk manufacturing, up 39%; cheese manufacturing, up 59%; meat processed from carcasses, up 52%; poultry processing, up 32%; cookie and cracker manufacturing, up 21%; and soft drink manufacturing, up 30%.

Capital expenditures by the commercial bakeries industry were $731,411,000, up $65,111,000, or 10%, from $666,300,000 in 2002. While representing a healthy increase, the baseline year of 2002 was considered a particularly poor one for the baking industry and U.S. industry generally, coming amid the economic contraction that followed the 9/11 terrorists attack. The increase from 2002 was smaller than capital expenditure jumps from other major grain-based foods categories.

At $731,411,000, capital expenditures in 2007 were almost identical to the $725 million expended in 1997.

Capital expenditures by commercial bakeries equated to 7% of the value of assets in 2007, a figure in line with other grain-based foods categories — 5% for breakfast cereal manufacturing; 6% for cookie and cracker manufacturing; 8% for frozen cakes, pies and other pastries manufacturing and retail bakeries; 9% for flour mixes and dough manufacturing from purchased flour; and 11% for flour milling.

This article can also be found in the digital edition of Milling and Baking News, September 22, 2009, starting on Page 1. Click here to search that archive.

Bookmark and Share
Add a Comment
We welcome your thoughtful comments. Please comply with our Community rules.
Email Address:
The views expressed in the comments section of BakingBusiness.com do not reflect those of BakingBusiness.com or its parent company, Sosland Publishing Co., Kansas City, Mo. Concern regarding a specific comment may be registered with the Editor by clicking the Report Abuse link.
Enter code as it is shown (required):