Shortly after IBIE 2019 took place, the nation was dealt a punch in the gut by the coronavirus (COVID-19). The grain-based foods industry would go on to experience varying degrees of demand over the next several years. Bread and tortillas, for example, often were hard to find on shelves as consumers stocked up for more at-home eating. In the case of bread, many bakers cut back on stock-keeping units (SKUs) to focus only on the easiest and most affordable options. Innovation, in many cases, was put on hold.

Other categories, such as cookies, found slightly tougher sledding at the onset of the pandemic, as consumers shied away from indulgence. But as the pandemic continued on, cookies regained their footing as a comfort food for consumers looking for a treat.

As IBIE 2022 approaches, most grain-based foods categories have a firmer grasp on what works for their business models. Inefficient SKUs have been eliminated while innovation has returned in the form of clearer focus on delivering on emerging health and wellness trends.

Health and wellness stands out in bread

Even as bread sales retreated following a pandemic fueled surge in 2020-21, new product introductions stepped up significantly over the past year. While approaches have differed widely in innovation strategies, health and wellness and indulgence stood out as significant themes.

Flowers Foods, Thomasville, Ga., the nation’s second largest baking company, has been steadily stepping up innovation in recent years. Products introduced by Flowers just before the pandemic and during 2020 have performed well, said Brent Bradshaw, senior vice president of core brands. Nature’s Own Perfectly Crafted Brioche Style was unveiled in 2019.

“It is doing very well and continuing to grow year after year,” he said. “Following the loaf’s success, we expanded the Nature’s Own Perfectly Crafted Brioche Style line to include buns, which have exceeded our initial expectations and continue to do so. These achievements are in large part the result of consumer insights and consumer-led innovation.”

Flowers in 2020 launched Dave’s Killer Bread (DKB) hamburger buns. Don Letchinger, senior vice president, growth brands at Flowers, called the hamburger bun introduction “the most successful product launch under the DKB brand since its inception in 2005.”

“In some ways, the COVID circumstance has been a positive relative to new product introductions,” A. Ryals McMullian, president and chief executive officer of Flowers, said in a November 2021 conference call with financial analysts. “Because what we have seen in the mix shift is somewhat of a shift away from traditional loaf to buns and rolls and to breakfast items. And so as we’ve introduced new items in those categories, from that standpoint, it’s actually been a positive rather than a neutral.”

Health and wellness also appeared to be a driver for new product introductions over the past year at Bimbo Bakeries USA (BBU), Horsham, Pa. In March 2021, Bimbo Bakeries USA introduced a Small Slice line under its Arnold, Brownberry and Oroweat brands. The company described the products as “ideal for health-minded consumers seeking fewer calories.” Each slice of bread in the Small Slice line contains 70 to 80 calories. 

“With consumers focusing on health and nutrition more than ever before, we saw an opportunity to bring a new offering that would meet our fans’ demand for the same taste and quality they love, but in a smaller size,” said Jessica Grane, marketing director of premium brands at Bimbo Bakeries USA. “We’re thrilled to introduce this smaller portion line that not only fulfills a market need but utilizes nutritious ingredients and supports consumers on their individual wellness journeys.”

In January 2021, BBU launched Sara Lee Delightful White Made with Whole Grain. The company described the new product as keto-friendly and said it contains 6 grams of net carbs per slice and 12 grams of net carbs per two-slice serving. Ten months later, BBU launched Soft & Smooth wheat bread under its Sara Lee Delightful variety line. The bread is baked with whole grains and contains no added sugar. 

The focus on health products extended to other BBU brands. In June 2021, the company introduced a Healthy Habits line for its Nature’s Harvest bread brand. Healthy Habits contains 40 to 45 calories per slice and features the brand’s first keto-friendly variety — Healthy Habits White made with Whole Grain. 

Renewed interest in RTE cereal

Ready-to-eat cereal was another category that found success early in the pandemic. Consumers who had been shifting to grab-and-go options at convenience stores were reintroduced to the pantry staple as a breakfast mainstay. To hold onto those gains, RTE cereal manufacturers like Kellogg Company and General Mills, Inc. have remained at the forefront of innovation efforts.

Minneapolis-based General Mills recently announced a slew of new RTE cereal options on tap for 2022, including honey vanilla and banana caramel varieties of Cheerios. Responding to the popular keto diet, General Mills has introduced :ratio keto-friendly granola cereal in two new varieties: cinnamon cranberry almond crunch and maple almond crunch.

Jonathon Nudi, group president, North American Retail, at General Mills, in December 2021 detailed what he termed a “multi-year success story in US cereal.”

“To be clear, our performance is not driven by short-term competitive supply chain dislocations,” he said. “It’s the result of consistently bringing compelling consumer ideas, relevant innovation, strong levels of investment and excellent execution to the best brands in the category.”

The journey for Battle Creek, Mich.-based Kellogg Company has been more difficult, though, with a 12-week strike in 2021 limiting the company’s ability to distribute product. The company’s cereal sales were down 14% in 2021, and the two-year CAGR was a minus 4%, meaning that sales were below pre-pandemic levels.

“The result of not being able to ship enough product and the related reduction in commercial support for these products was a sharp year-on-year decline in net sales,” he said.

Despite the struggles with the strike, Kellogg continued to forge ahead with innovation. New products include the launch of a brown sugar cinnamon variety to its Special K line. The new variety provides 100% of the daily value of 10 vitamins and minerals: zinc, vitamin B6, vitamin B12, vitamin E, iron, thiamine, riboflavin, pantothenic acid, niacin and folate. The cereal also contains 16 grams of whole grain per serving. By comparison, regular Special K cereal generally contains about 10% to 20% of the daily value of the same 10 vitamins and minerals.

Changes coming to cookies

Big news in the cookie category emerged in May with Mondelez International, Inc.’s announcement that it is prioritizing doubling down on its core categories of chocolate and biscuits. Dirk Van de Put, CEO of the Chicago-based company, said Mondelez has established a long-term vision to generate 90% of revenue through these two key categories, up from about 60% a decade ago.

To reach its target, Mondelez plans to expand Oreo by $1 billion over the next three years, said Gustavo Carlos Valle, executive vice president and president of North America. Mr. Valle also expects wafers to play a bigger role going forward, and anticipates more collaborative efforts among Mondelez’s chocolate and cookie brands.

Wafers also will play an important role in Lenexa, Kan.-based Hostess Brands, Inc.’s success moving forward in the cookie category. Shortly before the pandemic hit, Hostess acquired Voortman Cookies Ltd. As the company builds out the Voortman’s brand it also is seeking to grow the Hostess brand in the crispy cookie category. In June 2021, the company launched Cr!spy Minis, bite-sized snacks that have been well received in their first year on the market.

Daniel J. O’Leary, chief growth officer of Hostess, said the cookies were developed for targeted snacking occasion called “afternoon sharing.”

“Afternoon sharing is unique because it’s an occasion that involves other snackers, whether they’re family, friends or coworkers,” Mr. O’Leary said. “This occasion is one of the largest we identified and is an incremental opportunity for Hostess Brands.”