Despite the headwinds of 2021, positivity persists in the baking industry. It’s hard not to be hopeful with consumer demand for bakery products showing little sign of slowing, even a full two years after the coronavirus (COVID-19) pandemic sent people home and changed their eating and shopping habits.
In Baking & Snack’s 2021-22 Commercial Baking Industry Capital Spending Study, conducted by Cypress Research and sponsored by BEMA, bakers reported positive outlooks for retail, foodservice and distributor channels, with some markets seeing significant upward movement. When asked in 2020 for 2021 channel projections, only 56% of bakers reported having a positive outlook for the foodservice channel. In the most recent study, when projecting ahead to 2022, that number jumped to 92%, reflecting the recovery that channel has experienced in the wake of vaccination programs and many pandemic restrictions being lifted.
Some economic recovery has tempered enthusiasm for the retail channel — 60% of bakers reported a very positive outlook for this channel in 2021 vs. 47% when looking ahead to 2022. However, a full 93% of bakers indicated that they are somewhat to very positive about their prospects on store shelves for 2022. Despite some equalizing, retail consumers still want their baked goods.
“The demand for baked goods drives the industry in everything it does,” said Kerwin Brown, president of BEMA. “The better the economic outlook, the more consumers can continue to purchase the baked goods that they love.”
The headwinds may be real, but it’s hard to feel down when the sun is beaming. The overwhelming confidence bakers have for business — and even the challenges they are facing — are whetting appetites for investment in 2022 as this industry study reveals.
It’s fair to say that the past two years have been blustery for all. But since 2020, bakers have maintained a positive outlook for their companies and the industry.
That’s reflected in trends for the past three study years. Eighty-five percent of bakers reported a somewhat to very positive 2020 outlook for the US baking industry, which then jumped to 93% in 2021. For 2022, that number has held fairly steady at 90%.
“In spite of ongoing supply chain challenges tied to the pandemic, through this benchmarking study, bakers are telling us that they do have sustained positivity when it comes to the outlook for their companies and for the commercial baking industry both here in the US and globally,” said Marjorie Hellmer, president of Cypress Research.
This level of optimism has also been reflected in BEMA Intel’s member pulse surveys, which take the temperature of bakery equipment suppliers’ outlook every quarter.
“We’re happy to see a continued level of positivity throughout the industry overall,” said Tim Cook, BEMA chairman and chief executive officer of Linxis Group. “BEMA Intel quarterly numbers show the same 90%-plus positive sentiment. Drilling down to the company level in the Capital Spending Study, there’s a slightly higher optimistic outlook concerning one’s own company in comparison to the overall industry. This slight variance could be attributed to supply chain concerns and labor force issues.”
Positivity isn’t a new thing for the baking industry. Bakers have always been an optimistic group, Ms. Hellmer pointed out.
“Looking back at industry outlook trends from this capital spending benchmarking study, even in 2012, 93% of baking professionals reported a positive outlook for the commercial baking industry,” she said.
This optimism isn’t blind, however. Digging deeper into the data, it’s clear that the challenges bakers are facing — supply chain and labor issues — are having an impact. Only 22% of bakery manufacturers reported feeling very positive about the industry’s 2022 outlook, down from 37% in 2021. For the global baking industry, optimism still reigns with 85% reporting feeling somewhat or very positive about the industry, but again, digging deeper into that number, only 12% reported feeling very positive for 2022 compared to 25% in 2021.
“This is presumably due to concerns related to labor, supply chain disruptions and high raw material costs, and the industry is also going to peak at some point,” Ms. Hellmer said. “2021 was just such an overwhelmingly positive year for the baking industry, it’s going to have to correct a bit, and I think we’re seeing that in some of these sentiments. But it’s still overall incredibly positive.”
This article is an excerpt from the February 2022 issue of Baking & Snack. To read the entire feature on Capital Spending Survey, click here.