SCOTTSDALE, ARIZ. – While several wholesale regional bakers experienced unprecedented double-digit sales growth by filling a market void during the past year, significant challenges remain for the category, said Howard (Robin) Alton III, president and chief executive officer of Pan-O-Gold Baking Co., St. Cloud, Minn., and now immediate past chairman of the American Bakers Association.
Following the collapse of the old Hostess Brands business in late 2012, many baking companies serving the bread aisle reaped the benefits, Mr. Alton said. Some bakers called it the “wonder year”. Mr. Alton addressed the A.B.A. all membership meeting March 16 kicking off the annual meeting March 16-19 at the Phoenician hotel in Scottsdale.
“I think it masked a lot of issues that are still out there — issues that we had two years ago when I came in as A.B.A. chairman,” Mr. Alton said. “We’re looking at declining consumption by consumers. That declining consumption is still out there — don’t kid yourself.”
Fad diets and “misinformation on the Internet” prompted by such books as “Wheat Belly” and “Grain Brain” continue to dampen the purchase of bread and other grain-based foods, Mr. Alton said.
“These things hit fast and hard, and it takes organizations like A.B.A. and the Grain Foods Foundation to work on our behalf to slow down these bad ideas and combat them,” he said.
He noted the increasing popularity of Chinese, Japanese and other ethnic cuisines where bread generally is not a component of the meal, has negatively affected its overall consumption.
“It’s going to take a lot of work to turn around what I see as a slide in consumption of baked products,” he said.
Mr. Alton’s observations were supported by Nielsen ScanTrack data provided by Todd Hale, senior vice-president of consumer and shopper insights for The Nielsen Co. For the 52 weeks ending Dec. 21, 2013, bread prices rose 2.1% while bun prices increased 1.6%, according to Mr. Hale. However, unit sales of buns declined 1% while bread volume slipped 2% during the same period. Mr. Hale said total bread and baked goods sales rose about 2%, but softness in the bread and bun categories held down the overall category’s performance.
Mr. Alton said some consumers appear to be avoiding grain-based products because they’re watching their carbohydrate intake to lose weight, but others may be lured away from the baked foods category because they are following a gluten-free diet.
“Their belief is it’s a more nutritious way to eat when in fact it is not,” he said.
Those popular ideas are negatively affecting the baking companies today, Mr. Alton said.“You shouldn’t hide what your product is — whether it is good nutritional values or an indulgent treat. We have to be transparent as an industry. We have to embrace some of these challenges, and we have to play our cards face up. That’s what consumers want.”