ROCKVILLE, MD. — Retail dollar sales in the U.S. fresh bread market are forecast to reach $16.8 billion by 2023, up from $16.3 billion in 2018, according to Packaged Facts. Volume, meanwhile, is likely to continue to decline, as headwinds continue to intensify.

In its report “U.S. Food & Beverage Market Outlook 2019,” the Rockville-based market research firm said market gains in the fresh bread category are likely to be driven by healthier, more nutritious products with clean labels and natural ingredients. Packaged Facts said the premium prices the healthier products demand are expected to spur an increase in dollar sales.

“Virtually all American consumers eat some form of bread, but many are doing so less frequently and are consuming a lower quantity,” said David Sprinkle, research director for Packaged Facts. “Health and diet concerns, changing eating patterns and ethnic influences on food have notably impacted the market. Yet there remain opportunities for growth. Expect next-generation bread products to further expand current trends, including clean label, better-for-you, grain diversity, and crafted, artisan quality.”

Packaged Facts pointed to five potential areas for future growth in the fresh bread category.

  • Farm to table. According to Packaged Facts, local farms and bakeries are creating more unique products. The market research firm said there has been a noticeable focus on authenticity and craftmanship in the category.
  • New ways to deliver better health and nutrition claims. Packaged Facts said the opportunity is there for bakers to incorporate more fruits, vegetables, probiotics and other healthy ingredients into baked foods.
  • Grain free. The market for products that don’t contain grain is growing.
  • Moving out from center store. Companies that are able to shift their packaged bread options away from the center of the store and closer to in-house bakeries or delis stand a better chance of increasing sales because of the consumer perception of freshness and quality, Packaged Facts said. An example of a company incorporating this strategy is King’s Hawaiian, which delivers fresh packaged products to sell primarily in the deli section and in-store bakery. Packaged Facts said store placement reinforces King’s Hawaiian’s strategy of promoting its products as specialty items.
  • Merchandising in fast-growing perimeter departments. Packaged Facts said additional sales opportunities are available to companies that are able to finds ways to merchandise around other departments, such as produce and meat.

Packaged Facts noted in its report that innovation opportunities in the fresh bread category are set to come in new ways and from new players. While Bimbo Bakeries USA and Flowers Foods, Inc. aren’t likely to be unseated anytime soon as category leaders, and white, whole wheat and multigrain remain the key varieties, the market research firm said other companies and brands will continue to challenge for consumer attention.

 “Innovation is being driven by consumer desire for healthier and more nutritious breads, rolls and buns, but also those that deliver ever more unique and delicious eating experiences — flat breads; specialty buns and rolls (brioche, Hawaiian-style sweet, pretzel, ciabatta, and potato); breads infused with seeds, nuts, vegetables and fruits for greater flavor and texture; organic and artisanal loaves,” Packaged Facts said.

The market research firm pointed to Alvarado Street Bakery and Daily Kneads as examples of small companies and start-ups that are “disrupting the market with new forms and benefits.”

Alvarado Street Bakery is a co-op that bakes sprouted whole grain, organic baked foods. Daily Kneads makes whole grain vegetable bread, flatbread and buns that contain a serving of vegetables.