NEW YORK — While major acquisitions have generated excitement in the baking industry in recent years, overall trends for the sector have been and remain sluggish, said Nicholas Fereday, executive director and senior analyst with Food & Agribusiness Research and Advisory, Rabobank, N.Y. While concerned about a number of challenges facing baking, Mr. Fereday said one closely-watched drag on the baking industry — gluten-free dieting — appeared poised to lose momentum before long.

Mr. Fereday offered an investment and commercial overview of the baking industry in a September report titled, “Breaking bread, cooking up success in U.S. bakery.” Even though the industry is “struggling with many of today’s trends,” Mr. Fereday said “the sector has a bright future.”

Principal among challenges facing baking has been sluggish demand, Mr. Fereday said, citing Euromonitor data.

“Retail sales of baked goods have underperformed, growing on average by a modest 2% per annum since the start of the century, compared to 3% for the entire packaged food sector, just slightly ahead of the inflation rate,” he said.

What little growth the sector has generated has been centered, over the past three years, in the $28 billion cakes and pastries sector, up 4.1%, from the $22 billion bread market, growing only at 1.1%.

Mr. Fereday views the market for artisanal style products as especially promising for baking, partly because the segment has enjoyed success in the recent past.

“Artisanal/unpackaged cakes and pastries grew by 4.8% per annum between 2010 and 2013, compared to 2.7% for industrial cakes and pastries,” he said. “Similarly, packaged bread sales grew at 0.7% per annum compared to 1.8% for unpackaged/artisanal bread over the same period.”

Most alarming, Mr. Fereday said, has been a decline in average retail volume of baked foods since 2000, down 1.3% per year overall, nearly 2% for retail bread sales.

The baking industry’s situation mirrors trends in per capita flour consumption, Mr. Fereday said. While the U.S. population has increased by about 12% since 2000, flour production in total has risen only 3%. Additionally, bakers have been buffeted by wide swings in ingredient costs, he said, noting that wheat flour, shortening and sweeteners account for about half a baking company’s cost of goods. Consumer indifference has been a factor too, he said.

“Toast at breakfast or a sandwich at lunch now compete with many more alternatives, often prepared and eaten outside the home,” Mr. Fereday said. “The rise in purchasing power of the rather fickle millennials who are more comfortable experimenting with ethnic cuisines in which bread has less of a role as an accompaniment, has not helped either. Our relentless pursuit of convenience is also a factor.”

Describing food trends as “more fickle than the fashion industry,” Mr. Fereday called the gluten-free trend emblematic of the “randomness of food trends.” He cited data indicating the gluten-free sector has quadrupled to over $4 billion in a very short period. Roughly 5% of consumers now buy gluten-free products, he said.

While health and wellness is a long-term trend, Mr. Fereday said he does not see a fit over time for gluten-free because of a lack of data showing its healthful benefits for most individuals.

“In our view, the gluten-free trend may be approaching its sell-by date, but it has opened consumers’ eyes to a world of alternate grains and pulses, and that will be its lasting impact,” he said.

Citing data from the National Association of Wheat Growers, Mr. Fereday said 75% of all grain products made in the United States are made from wheat flour.

In North America, the largest market for gluten-free products is in snacks.

He noted efforts by flour milling companies, including Bay State Milling and ConAgra Mills (now Ardent) to “offer up a range of ancient grains and whole wheat flours, including amaranth, buckwheat, chia, quinoa, sorghum, millet, flax, rye, spelt, and teff.

“Bakers take note,” he said. “It is time to embrace a broader portfolio of flours beyond wheat.”

Blaming large baking companies for the industry’s difficulties is a “non-starter,” Mr. Fereday said, pointing out the largest baking companies from a decade ago are “long gone.” The two leading companies in 2014 — Flowers Foods, Inc. and Bimbo Bakeries USA — “were largely unheard of a decade ago.” Other major players in baking he identified are Aryzta and Pepperidge Farm, Inc.

Predicting further industry consolidation, Mr. Fereday also said several promising avenues exist for growth for baking beyond the interest in more diverse ingredients, triggered by the popularity of gluten-free dieting. He expanded on the potential for artisan bread as a particularly promising opportunity for the commercial baking industry. He said the growth of unpackaged baked foods from Panera and Starbucks as well as in-store bakeries “has counterintuitively increased demand for their large-scale commercial production — hence the rise of industrial-artisanal production.”

Rather than the baking aisle, the most likely outlets for these products will be restaurants and the supermarket perimeter.

“For existing players, it will also require investment in supplying these new types of products and in formats (from basic dough to semi-finished and finished products) as well as new cold chain transportation systems that can cope with chilled or frozen goods,” Mr. Fereday said.

Another positive for baking has been the absence of biotechnology in wheat, Mr. Fereday said. He traced recent momentum gained by those seeking mandatory labeling of bioengineered foods and the decision by Whole Foods to require labeling in coming years.

He told bakers, “Non-G.M.O. wheat may soon become your greatest selling point.”