Everywhere they turn, wholesale bakers who supply food service and in-store bakery accounts are experiencing an evolution of trends. Walter Robb, co-CEO, Whole Foods Market, Austin, TX, illustrated the point from a retailer perspective when he addressed the International Dairy-Deli-Bakery Association (IDDBA) in June at its seminar and expo, held in Atlanta. “There’s an amazing rumble rip going through the food industry that we’re participating in right now,” he said. “There’s a lot of innovation, lots of change. There’s a revolution in food service and bakery — you can walk down any street and see new ideas happening.”
Truly, there is little question as to where the change is coming from. “These trends are relevant whether you’re talking about food service or retail because so much of it is coming from the consumer perspective,” said Wade Hanson, principal, research and consulting services, Technomic, Chicago, when he spoke at the Biscuit & Cracker Manufacturers’ Association’s annual technical conference, held in May at Tampa, FL.
New terms emerge like “omnichannel” — the concept of merging every facet of the consumer experience, especially in a digital world — are becoming part of the in-store lexicon, according to Mike Eardley, IDDBA president and CEO. “Omnichannel is a new way for consumers to shop and retailers to communicate. It’s about taking care of customers on their terms,” he explained.
When considering change in the marketplace, Chris Herr, national sales manager, Orange Bakery, Inc., Irvine, CA, offered one bit of advice. “You have to manage change before change manages you,” he said.
So, exactly what trends are consumers pulling the strings on?
The rise of food service
If a picture is worth 1,000 words, a snapshot of food service menu items must be priceless. “Taco Bell has opened up to offer breakfast, and Dunkin’ Donuts, which has always been a breakfast place, now serves lunch. “Restaurants are starting to have more available options throughout the day,” said Sally Lyons Wyatt, executive vice-president and practice leader, client insights for Chicago-based IRI Information Resources, Inc., at Sosland Publishing’s annual Purchasing Seminar, held in Kansas City, MO, last May.
What’s more, Ms. Wyatt explained, is that for the past two years, total food service — which encompasses food trucks, vending, restaurants and hotels — has actually outpaced retail.
This kind of growth was a long, slow road, according to Mr. Hanson, who noted that between 2001 and 2007, food service experienced terrific growth — 13.3%, in fact. “But then the recession hit, and we lost nearly all those gains in the next couple of years,” he explained. Since then, the market has slowly crept back up, but he indicated it could be 2021 before food service returns to the same point as 2007. “It will take nearly 15 years to get back to where we were,” he said. “Food service is going to experience a period of rebuilding and reinvention.”
After years of tightening their belts, consumers once again have money in their pockets to spend, and when they eat out, they want to see what they’ve been missing. “Consumers have gotten a little bored with what they’ve been consistently buying the past seven or eight years, and they want to know if there’s been any innovation,” Mr. Hanson said.
For a baker, that could mean simple, straight-forward changes such as putting a new spin on a current product. Diversifying into other products for food service accounts has been a successful strategy for H&S Bakery, Baltimore. “It’s all about customization, R&D, transparency, and reliable resources toward health related attributes that draws new customer’s interest,” said JR Paterakis, H&S vice-president, sales and marketing, who also indicated that spices and bold flavors are gaining popularity with the bakery’s food service accounts.
From the operator’s perspective, manpower — its cost and scarcity — is an area of growing concern. “The industry is migrating toward labor-saving product formats, and food service operators are identifying the bakery category as one that’s relevant to them,” Mr. Hanson said, pinpointing a need for par-baked and thaw-and-serve formats in food service kitchens. “We’re hearing the quality of products in the labor-saving formats is outstanding today. It’s consistent, high-quality, saves time and has less waste.”
The challenge that comes with so many bakers consistently turning out superior product is that there’s eventually a lack of differentiation, followed by concern about how food service operators and retailers can set themselves apart. In that respect, bakers are relying on authenticity — of their products and their brands — to carve out a niche for their customers.
When it comes to the Philly cheesesteak sandwich, Philadelphia-based Amoroso’s Baking Co. built its brand around this specialty. “We are known for our hearth-baked rolls and cheesesteak sandwiches,” said Jesse Amoroso, vice-president. “We make products for many applications, but the institution of the Philly cheesesteak builds a lot of momentum for us,” he said.
The loyalty of the bakery’s food service customers in turn feeds the love consumers have for the signature sandwich. “We’re playing on the romance of the Philly cheesesteak, and that’s what makes us so recognizable. In fact, many out-of-state steak shops want to wear Amoroso’s t-shirts to show they use an authentic Philadelphia product.”
Damascus Bakery, Brooklyn, NY, also plays on the love affair people have with its Brooklyn Bred Bistro line of products, which include naturally fermented pizza crusts, flatbreads, buns and breadsticks. According to David Mafoud, principal, the bakery formulates for authenticity, always keeping consumers — and their palates — in mind. “We’re not making bread for everyone,” Mr. Mafoud indicated. “We’re making it for people who love to eat bread.”
Brooklyn Bred products take aim at foodie consumers, such as those who create upscale foods for family and social gatherings. “It’s our crust and their imagination — we’re the crust maker, but the consumer’s the pizza maker,” Mr. Mafoud said, adding. “Our customers are always on the hunt for something different. It’s how they mark themselves as foodies.”
To successfully differentiate itself, a bakery must take authenticity beyond the product and into the brand. For example, Eli’s Cheesecake Co., Chicago, uses its size as a point of differentiation. “It used to be that being a smaller company was a disadvantage, but that’s not the case anymore,” said Marc Schulman, president.
When it comes to leveraging brand innovation, French Gourmet, Sparks, NV, also uses its size to its advantage. “We don’t want to be a big company; that’s not what it’s about for us. We want to be known for our innovation, not our size,” said John Cooper, president. “The thing with being the size that we are is that we can take a new and innovative idea for a customer and turn it around in a short period of time,” added Jake Bush, the company’s marketing manager.
Then again, relationships can go far — perhaps even farther — than size. “My father, Eli Schulman, taught me that one asset you can’t undervalue is good will. Our customers say, ‘We want to deal with your company, your people, your philosophy,’ ” Mr. Schulman said.
The importance of relationships might not be any more apparent than with family-owned businesses, such as H&S Bakery. “It’s an old-school thought, but it’s business with a handshake, and as a family business, it all comes down to relationships,” said Ryan Paterakis, growth channel sales manager.
Shawn Paterakis, marketing merchandiser, Schmidt Baking Co., a division of H&S Bakery, echoed that sentiment and also pointed out the vital role end-users play, now more than ever in a digital age. “Consumers are more educated and tech-savvy, so our customers want to have an open relationship with them,” he said. And as consumers continue to ask where their food is coming from, wholesale bakers are no longer behind the curtain. “There’s more opportunity than ever for us to engage with consumers on a very personal level,” Shawn Paterakis continued. “It’s a new way of building public relations; it’s proactive instead of reactive,” he added, emphasizing that social media is only one small piece of a digital puzzle when it comes to new marketing opportunities.
A fresh perception
Whether talking about people or products, the truth is perception is the reality, especially when it comes to fresh. It’s why the perimeter of the store sees so much more traffic than the inner aisles. According to Ms. Wyatt, refrigerated products — now often located on the perimeter — are winning with consumers. “There are studies on how consumers walk the store and avoid going down the inner aisles,” she said. “Refrigerated is where the growth has been because it delivers healthy, fresh and transparent.”
In fact, Mr. Hanson suggested supermarket food service is considered the new powerhouse. “Virtually every supermarket views it as its No. 1 strategic priority,” he noted. “The perimeter is expanding in terms of square footage, developments and innovation.”
One particular segment that best serves the fresh perception is bakery. “To consumers, it means something that’s fresher than something that’s been sitting on the shelf,” Ms. Wyatt said.
For example, Cake Boss cupcakes from Dawn Foods, Jackson, MI, are sold refrigerated in 2- or 4-count packages. “Premium offerings in smaller counts appeal to consumers who are searching for affordable indulgences,” said Ben Chilson, brand manager at Dawn Foods. “Our 2-count Cake Boss cupcakes are a great way to introduce consumers to the Cake Boss taste and iconic designs and lead to a full-size purchase in the future.”
While many baked foods are typically considered indulgences, they foster the perception of fresh among consumers who focus on healthier options, whether through the portion control that comes with a short-term purchase or the idea of the ingredients that might be associated with a better-for-you choice.
That healthy glow
There is a phenomenon with American consumers: They demand “healthy” items, but when it’s time to make the purchase, they just haven’t been putting their money where their mouth is. After all, according to Technomic, the cookie category grew 3.4% annually in recession years, and since coming out of the recession, it has grown 5.1% annually in the past four years.
“Regardless of the category, consumers define ‘health and wellness’ very differently today,” Mr. Hanson said.
The era of the fad diet, it would seem, has passed. “It isn’t about dieting anymore,” Ms. Wyatt said. “It revolves around how you feel, whether you exercise or consume fresher foods. The value of wellness is different for different consumers, but it’s all contributing to the attitudes people have toward food.”
Rather than seeking out diet versions of the same foods, consumers gravitate toward products that use wholesome ingredients, list clean labels or carry ingredients that boost a nutritional profile. “There’s potential to add ingredients such as fiber, calcium or probiotics, and consumers are asking, ‘What are you putting in your products that’s good for me to have in my body?’ ” Mr. Hanson explained.
Just look at the new 647 Bread from Schmidt Baking Co. It’s a healthier bread alternative that appeals to health-conscious consumers by containing 6 net carbs, 40 Cal and 7 g fiber. “We named it 647 because it can appeal to such a wide variety of consumers with specific dietary needs who still want to enjoy bread,” Shawn Paterakis said. (See “Magic Bullet Bread” on Page 178.)
The bottom line is today consumers seem to base their decisions less on diets and more on overall lifestyle, and they ask more questions before making a baked food purchase. When asked if certain characteristics would have great or moderate influence on future purchasing decisions, Mr. Hanson reported that 89% of Technomic survey respondents indicated health and wellness as their influencer.
The value upgrade
Remember when butter was in … but then it was out? Breaking news: Butter is back. It’s all part of the demand for real, clean ingredients and a new definition of value. During recession years, when people hesitated to part with their hard-earned dollar, consumers were more likely to downgrade or not purchase at all.
But as the economy picks back up, and millennials step up to the next rung on the corporate ladder, it’s not so much about spending less anymore as it is getting the most for what that dollar buys. And sometimes that even means paying more for high-quality products that use high-quality, premium ingredients.
Having roots in hotel food service, French Gourmet historically focused on making upscale products, which now attract wider consumer interest. “There’s a huge craft movement going on,” Mr. Cooper said. “It’s happening in a lot of different areas. It’s that difference of someone putting thought into the level of detail. When people buy our products, I want them to say, ‘Someone’s put thought into that.’ ”
Food service is also taking a cue from the craft movement by creating a perfect partner for craft beer. Lantmannen Unibake, St. Petersburg, FL, helps operators diversify their hamburger menus through its new True Burgers line of gourmet burger buns under the Euro-Bake brand. The line was developed for food service chefs looking to upgrade their signature burgers. The company partnered with a number of food bloggers and developed a “burger architecture” campaign to help chefs redesign their burger menus.
True Burger bun varieties include brioche, pretzel and jalapeño-cheddar (which started as a demi loaf and was converted to a burger bun).
Speaking of butter, Orange Bakery hangs its hat on the quality of its croissant ingredients, including salted butter with 83% butterfat. “Orange was built on quality, and we won’t compromise. We won’t change the quality to get to a lower price point,” Mr. Herr said.
Damascus follows a similar philosophy, and Mr. Mafoud noted that consumers who purchase his company’s products aren’t willing to overpay, but they are willing to expand their spending limit for higher quality or more versatile breads. “The product — and its value — are the cause for the re-buy,” he said.
Yes, change is happening across the food service and in-store landscapes, and wholesale bakers must be on board to stay competitive; that includes understanding the trends and who’s driving them. Quality matters, and as Mr. Robb pointed out to IDDBA attendees, bakery and food service suppliers must be willing to participate in the dialogue. “There’s tremendous change, tremendous innovation, tremendous movement. And if you sit still, you’re going to get run over.”