In recent years, finding novel ways to present whole wheat bread to consumers offered baking companies a recipe for growth. New bread varieties packing a full day’s whole grains into two slices or whole grain varieties that seemed indistinguishable in taste and texture from white bread are two of the prominent and successful innovations that have energized the bread category. With the strongest wave of innovation in a generation, bakers appear to be satisfying consumers’ still growing appetite to increase whole grains intake.

More recently, though, a marked shift is evident in new product introductions. Rather than treating whole grains as the end point, the principal purpose of a new bread variety, whole grains have become the starting point for varieties that offer specific additional health benefits of interest to consumers.

Tapping into the nutritional credibility that comes with a whole wheat bread, baking companies appear confident that an expanding array of new products will be offered in the years ahead and stand a good chance at success. While in the 1970s, 1980s and 1990s variety bread largely was focused on style or form, products that gave the appearance of being different from white bread, today’s variety bread introductions are powerfully focused on function, substantive health benefits meeting specific consumer needs. These needs begin with whole grains and extend to a host of additional interest — higher fiber, higher protein, organic flour, unusual grains, cholesterol reduction and omega-3 fatty acids are among areas of increasing consumer interest.

This shift in innovation comes at a time of considerable uncertainty for the baking industry and for bread bakers in particular. In addition to the ongoing, though culminating, impact of the bankruptcy of Interstate Bakeries Corp., Kansas City, the industry has continued to struggle with very weak sales trends in its heritage principal product — pan white bread. Additionally, record wheat flour prices have sent jitters through the industry.

Measured in dollar sales, 2007 was a solid year for the bread industry. Sales of $6,091,589,000 were up 2.7% from the year before, according to Information Resources, Inc., Chicago. Sales data include retail outlets other than supercenters. So-called wheat bread sales (whole wheat and certain other variety bread) were up 4.8% while dollar sales of white bread declined 0.39%. While overall dollar sales climbed, unit sales declined 3.3%, with wheat bread sales down 0.5% and white bread sales tumbling 6.1%. Bakers noted, though, that the softness almost certainly was exaggerated because of the absence from the data of outlets such as Wal-Mart Stores, Inc.

Potential shock waves from cost surge

While innovation continues to give marketing executives in the industry confidence in the long-term outlook, the extraordinary strength of commodity markets in recent weeks and months has made bakers nervous.

Pankaj K. Talwar, vice-president of marketing for bread and rolls for George Weston Bakeries, Horsham, Pa., described the commodity inflation facing baking companies as "staggering."

"The pricing actions required of us and other bakers have been unprecedented," Mr. Talwar said. "Everyone from private label to premium branded has had to adjust with the commodity markets."

While demand for branded bread has not yet been adversely affected by rising prices, such a possibility certainly has not been dismissed as impossible.

"There is a scenario, a fear that as we look 6, 12 or 18 months from now, as the cost of gasoline increases, the average cost of the grocery basket escalates, and the housing markets continue to deteriorate that a percentage of the population will be under pressure," Mr. Talwar said. "With a larger part of their monthly spend going to food and gas, branded products will be facing strong headwinds. We do not know whether it will happen and if it does whether it will be six months or two years away. It’s certainly one potential scenario."

George Weston is among the companies that view whole wheat bread as a wide open avenue for product innovation. Under the Arnold brand and Whole Grain Classics sub-brand, 10 stockkeeping units have been introduced. Like other baking companies, Weston has enjoyed considerable success with a Double Fiber 100% Whole Wheat variety, which has been on the market for a year.

More recently, the company introduced under its Arnold and Brownberry brands Double Protein Hearty Multigrain.

"It’s well known that increased fiber intake is a major trend in the consumer packaged goods market, and bread is a great carrier," Mr. Talwar said. "Similarly, there is a segment of the population looking to get more protein in their diets, and we wanted to tap into this market."

Jennifer A. Hartley, business director for Arnold and Brownberry bread, said the focus on protein followed extensive consumer research, evaluating consumer interest in 80 different concepts, many of which were health and wellness/functional in nature.

The company discovered that protein intake ranked third in consumer interest, after whole grains and fiber.

"Based on the quantitative data, we concluded that protein is the next frontier for enhancing consumer well being," Ms. Hartley said. "There is a lot of awareness around the benefits for protein, including its role in maintaining and repairing body tissue, metabolism and satiety. There also is awareness of the importance of getting protein not just from meat sources, which can be high in cholesterol, but from whole grains and legumes. We think there is an opportunity for bread to play in that arena."

While protein captures the "headline" of the Double Protein variety, the bread contains 20 grams of whole grains per slice, equating to 40% of the minimum 48 grams recommended by the U.S. Department of Agriculture.

The 6 grams of protein per slice of the Double Protein mean that a sandwich gives consumers 20% to 25% of the recommended daily intake of protein, to say nothing of whatever protein source consumers may insert between the slices.

The Double Fiber and Double Protein varieties sold under the Whole Grain Classics underscore Weston’s commitment to expanding its whole wheat offerings and also demonstrates the company’s positive view of the "double" concept, Ms. Hartley said.

"We’re all about whole grains," she said. "We have continued to innovate by putting prominently on the label the number of grams per slice, and we continue to update our line so that we are leaders. It is an area of fast growth among consumers, who are becoming more nutritionally aware because of medical nutrition and how whole grains are popularized in the media."

Ms. Hartley said the double concept, as in Double Fiber or Double Protein, appeals to Weston because it offers a substantive health benefit.

"The ‘double’ approach is an effective way of providing enhanced nutrition without getting too technical," she said. "Consumers are health conscious but they don’t want a degree in nutrition to understand what they are buying."

During 2007, the company launched Arnold Country Oatmeal, a variety high in oat content and containing plant sterols to help with cholesterol control.

While confident Weston will be able to address an expanding range of consumer health and wellness priorities through new product development, she noted a number of hurdles that must be cleared and certain challenges unique to baking.

"First of all, it must be a delicious experience," she said. "You can put a lot of things into bread that won’t taste good."

Baking companies need to be selective when it comes to identifying functional benefits to incorporate in bread, a product that takes up considerable shelf space, Ms. Hartley said.

"There are lots of formats to deliver added value," she said. "There will be occasions we won’t be able to compete with a portable bar with a long shelf life. But consumers will continue to eat bread and continue to eat sandwiches. Knowing that they will get these extra benefits in a behavior they already are doing, eating bread, we believe that helps build their brand loyalty."

Health/wellness trend alive and strong

Several years since whole grains emerged as a major trend in the bread category, health and wellness remains a focus behind product innovation in baking, said Janice Anderson, vice-president of marketing for Flowers Foods, Thomasville, Ga.

"Consumers are more aware than ever that bread can deliver healthy attributes," she said. "At one time bread was just a carrier for whatever people were eating in a sandwich. As technology has evolved and bakers have been able to raise the nutritional profile of bread, they have helped people achieve their nutritional goals. Think about toast. In the past it was a slice of white bread. Now, people realize they can add some fiber. More and more moms are feeding children whole wheat bread from the very beginning. We have a generation of children growing up on wheat bread."

The year 2007 was a strong one for bread at Flowers Foods generating optimism going into 2008.

"Bread sales are very robust across all categories," Ms. Anderson said.

The company’s Nature’s Own variety bread brand enjoyed a 12% jump in dollar sales in 2007 and a 7% increase in unit sales. The unit volume growth placed Nature’s Own in the top three for the baking industry with Arnold and La Brea.

One of Flowers’ more recent new product introductions was a Double Fiber Wheat introduced in late summer as a Nature’s Own premium specialty variety. Double Fiber Wheat contains 16 grams of whole grains and 7 grams of fiber per slice.

The Double Fiber concept is not new at Flowers. Within its core Nature’s Own line of 10 soft variety s.k.u.s, a Double Fiber Wheat variety has been on the market for longer than three years. The prebiotic ingredient inulin is the source of added fiber in both double fiber varieties.

Ms. Anderson said the older product "experienced a lot of success."

Earlier this year, Flowers introduced a 7 cereal grains variety under its Nature’s Own premium specialty line.

"The 7 cereal grains contain 21 grams of whole grains per slice," Ms. Anderson said. "The seven grains (wheat, oats, barley, rice, rye, corn and millet) are different from the grains you usually think about in multigrain bread."

Flowers has seen growing interest in organics. Two of the premium specialty varieties — honey wheat and 100% whole wheat — are baked with organic flour. Ms. Anderson said both varieties are in the top third of s.k.u.s in the Nature’s Own premium specialty line.

While the profile of the premium specialty customer traditionally had been upscale, Ms. Anderson said that is changing.

In extending Nature’s Own to the premium/specialty segment, Flowers has decided to shift the focus of its 25-year-old Cobblestone Mill brand. Discontinued varieties under Cobblestone Mill include honey wheat berry, 100% wheat and nine grain, which have been reformulated and reintroduced to the Nature’s Own premium specialty line. Ms. Anderson said Cobblestone Mill brand will be used by Flowers for its special occasion bread and bun category.

Cobblestone Mill varieties currently offered include German pumpernickel, New York style Jewish rye, San Francisco sourdough, potato bread, and sliced French.

Flowers executives have said for many years that the company has the potential to do better in the specialty/premium category, and the shift from Cobblestone appears to be strategically aimed at that objective by building upon the swelling brand equity enjoyed by Nature’s Own.

Other innovations on tap from Flowers are seven new products in the breakfast bread category to be rolled out early this spring under the Nature’s Own brand. The ambitious lineup of English muffins, bagels and swirl bread is part of the company’s commitment to continue building in new ways on its success with the Nature’s Own brand, Ms. Anderson said.

Because of the success the honey wheat variety has enjoyed in both the bread and bun categories, the flavor will feature prominently in the breakfast lineup, Ms. Anderson said. A bagel and English muffin each will be introduced in a honey wheat variety.

The swirl bread will be made with a blend of enriched flour and whole wheat flour, offering 8 grams of whole grains per serving. It will be available in cinnamon raisin and cranberry raisin varieties. The honey wheat bagel, also a blended flour product, will contain 16 grams of whole grains per serving. All items in the line also are good sources of calcium as well as vitamins A, C, D, and E.

100% whole wheat shines at Sara Lee

Standing out in growth for Sara Lee in 2007 was whole grain bread sales, particularly 100% whole wheat, said Tim Zimmer, vice-president of marketing, Sara Lee Fresh Bakery, Downers Grove, Ill. The company also has enjoyed continued growth from its expanding Soft & Smooth Made with Whole Grain White Bread line. Growth in wide pan and the premium segment also has been considerable.

Mr. Zimmer identified bun sales as an area of especially strong performance in 2007. The company has introduced its blended "made with whole grain" products in buns, fueling the growth.

Mr. Zimmer agreed with the idea that for baked foods to reach their potential in the functional foods/health and wellness category, multiple benefits will need to be "bundled" in single products. He said Sara Lee has experience in such bundling in the introduction of the Sara Lee Delightful line several years ago. Among bread lines introduced at the peak of the low-carbohydrate period, Delightful probably has enjoyed the most enduring success.

Rather than tying the product name to low-carbohydrate dieting or the Atkins name, Delightful was selected as a good fit with the Sara Lee name and as a brand that conveyed a positive image, he said.

"Then, we put multiple benefits together," he said. "Three critical benefits people are looking for were carbohydrates, sugar and calorie count. We took all three within Delightful. At the time, carbohydrates were most important, so it received the lead communication on gusset. What we’ve done now is the communication hierarchy, the relative importance of the various attributes. With the message ’45 and delightful,’ calories are what are flagged as most important consistent with consumer priorities."

The need for such bundling represents a fundamental and enduring change in the bread market landscape, Mr. Zimmer said.

"Over the last five years what has changed the most is consumer dynamics," he said. "Consumers are looking for tangible benefits from their breads today, most specifically with whole grains and finding ways to leverage whole grains in their diet. As a result, the types of products bakers offer consumers to meet different needs are changing as well.

"With all these different needs and with bread as such a great vehicle for delivering them, innovation has been strong. To be honest, when we look at our pipeline, there is still tremendous potential."

Mr. Zimmer said this potential also may be seen in what perennially has been the weakest product segment — white bread.

"Demand for traditional white bread has softened, but that screams of the opportunity for innovation," he said. "We had the opportunity to introduce whole grains to consumers of white bread. What a product like Soft & Smooth does is reinvents a category."

Over the past year, Sara Lee has changed the flagship product that helped reinvent the category — Soft & Smooth Made with Whole Grains White Bread. Sara Lee raised the proportion of whole grains in the bread to nearly 40%.

Mr. Zimmer said a number of factors contributed to the company’s decision last October to shift the balance of whole grains in the product, a decision that seemed noteworthy given the company’s initial insistence that too much whole grains would alienate the product’s target audience — white bread eaters.

"As consumers’ palates have changed, we were able to increase the proportion of whole grains," Mr. Zimmer said. "Additionally, there has been more education in the marketplace, so consumers are more aware and accepting. Technology enhancements, reaching our taste and texture objectives with more whole grains, has helped as well."

When Sara Lee Corp. bought The Earthgrains Co. in 2001, it was not immediately clear whether or how the Sara Lee name would be shifted to the newly acquired fresh baked foods business. When a line of bread was introduced under the Sara Lee brand, sales immediately were strong. Several years later, Sara Lee remains a strong brand in the fresh bread category.

"It has been very successful as measured by a sales growth perspective," Mr. Zimmer said. "From an innovation standpoint, is has a record that is second to none. Measured by the I.R.I. New Product Pacesetter awards, Sara Lee bread introductions were included in the top 10 in recent years, going up against brands like Coca-Cola and Frito-Lay. It is a brand with tremendous equity."

New tacks for growth at Roman Meal

With the largest commercial baking companies devoting so much attention to the whole grains market, Roman Meal Co., Tacoma, Wash., a whole wheat bread pioneer, continues to make strategic changes to bolster its business. At first glance, one move the company has made to boost its bread business — moving beyond the bread market with recent new product introductions — could seem counterintuitive.

The company has introduced a line of whole grain and fruit snack bars as well as four varieties of hot cereal marketed under the Elements sub brand. While Gary Jensen, Roman Meal president, expressed confidence that the products will succeed, he emphasized that the ultimate objective is to build the Roman Meal bread business.

"We look at data that indicate only 35% of the population regularly consumes whole grains, but 62% say that want to eat more," Mr. Jensen said. "The question is why aren’t they? The answer is that we haven’t offered whole grains in enough different formats, other categories in which Roman Meal can participate to enhance the brand and make it more relevant. That will put a halo back on the bread business which is and will remain the core of our company."

In addition to the bars and hot cereal, Roman Meal has refreshed its line of bread varieties with the introduction of Roman Whole Grain, which Mr. Jensen said has the same taste as the original Roman Meal bread. Both the name and the multiple loaf size formats are aimed at refreshing the brand while emphasizing the company’s commitment to whole grains. Two slices of Roman Whole Grain contain 50% to 90% of the daily recommendation of whole grain, depending on the loaf size. Roman Whole Grain is being gradually rolled-out from baker to baker, starting with the Southeast and Midwest.

"The notion was that we wanted to increase the amount of whole grains above the original Roman Meal variety," Mr. Jensen said.

Mr. Jensen said Roman Meal is evaluating a variety of ways to satisfy consumers’ ever greater interest in improving their health.

"I think there is an opportunity in reducing sodium, particularly for people who are watching that nutrient for one reason or another," Mr. Jensen said. "A number of bakers have tried low-salt bread that never made the trip from a taste standpoint. We’re looking for ways to reduce sodium and still deliver on texture and taste."