SAN ANTONIO — Although growth in the baking industry might be slow the past few years, it’s important to note that’s not the case in terms of the pace of change, said Todd Hale, principal, Todd Hale Associates, L.L.C. Giving an update on the state of the industry for the cookie and cracker categories at the A.B.A. Technical Conference, being held Oct. 22-25 in San Antonio, Mr. Hale identified some contributing factors to slow growth and rapid change.
“It’s incredible how rapidly things are changing in stores across many categories,” Mr. Hale noted.
Mr. Hale cautioned that the baking industry will fare better to focus energy on looking forward by leveraging historical data to predict the future.
“If you’re going to win in the marketplace today, you have to look forward and think about where you’re going and how you’re going to get there.”
Although economic indicators such as low unemployment show prosperity, there are still some hinderances to sales growth, including slow population growth.
“A lot of millennials out there are not having babies,” Mr. Hale observed. “Why? Because it costs a lot of money.”
Additionally, deflation is a key contributing factor to flat sales, he said.
Conversely, change abounds in areas such as retail, where cookie growth is happening in store perimeters.
“Winning is happening in the perimeter,” Mr. Hale noted. “The fresh bakery, deli and produce is where retailers are putting a lot of their focus.” He termed it “walking the gauntlet” of the store perimeter, suggesting that consumers are more likely to purchase their baked goods easily in the in-store bakery rather than venturing all the way to center-store.
Mr. Hale suggested that the “big guys” aren’t the ones who are innovating right now; in fact, the top 20 manufacturers are basically down in sales, he said. The small and medium-size manufacturers are bringing most of the innovation and thus, sales growth. Those producers are going after more niche consumers who are demanding diversity in their products.
“Just because you’re in a retail channel that might be growing, that doesn’t mean you’re growing right along with everyone else,” Mr. Hale said. “If you’re not diversifying your flavors and innovation, you’re probably not maximizing your growth.”
Today, change is inevitable … possibly more so than growth. Cookie and cracker manufacturers must think in terms of innovation in order for the growth to follow.