DALLAS — While volume sales of food and beverage are down across the industry, bakery is coming out on top, according to Melissa Altobelli, senior vice president of client insights, dairy and bakery vertical, Circana.
Ms. Altobelli shared the latest data for center-store and perimeter bakery from Circana at ABA’s NextGenBaker Leadership Forum, which was co-located with Nexus 2023, held Sept. 25-28.
“Bakery is winning as far as departments go,” she said. “Bakery is outperforming total edible, which is up 5% in dollar sales while bakery is up nearly 10% in dollar sales, and bakery is only down about 2% in volume while total edible is down almost 3%. And when you compare to other categories, bakery is winning.”
With consumers concerned about food cost inflation, it is no surprise that bakery volume sales are down overall while dollar sales continue to be up compared to a year ago. In Total Food & Beverage, when compared to 2019 data, volume on average is up 1.1%, though Ms. Altobelli expects this to even out soon.
“We expect that to bottom out in the next couple of quarters and become flat,” she said. “Pretty much every category is declining in volume right now.”
The decline in volume sales indicates that consumers are responding to inflation and changing their shopping habits accordingly.
Circana data from August 2023 reported that 94% of consumers are concerned about food prices. Ms. Altobelli said this has led to 84% of consumers changing their shopping behavior to meet the challenges of food prices. Fifty-five percent of consumers are looking for deals, and 46% are cutting back on non-essentials. However, indulgent bakery items don’t always appear to be considered non-essential in today’s shopper’s mind.
“The good news for perimeter baked goods is that consumers are still indulging,” Ms. Altobelli said. “They may be cutting back on non-essential, but they still like to give themselves a sweet treat.”
Evidence of that is reflected in donuts and cookie sales, which are particularly strong right now.
“Donuts are a success story right now,” Ms. Altobelli said. “Donuts are growing like crazy both from a dollar perspective as well as in units. Donuts come in a lot of formats and package configurations. … There’s really an option for everyone.”
Bakery items, whether staples or sweet treats, are outperforming other categories. Of the top 15 Fresh food categories with the fastest-growing dollar sales, six are bakery categories.
Both center-store bakery and perimeter are growing, but perimeter is outperforming the center store with perimeter experiencing a 1% decline in unit sales and center store is down 3%. This is for a variety of reasons, Ms. Altobelli explained. The perimeter bakery has had farther to recover than center store from the pandemic.
“From a volume perspective, perimeter hasn’t fully recovered from the pandemic,” she said. “It’s remained flat from a volume perspective for the past three years, but it hasn’t gotten back to pre-pandemic levels. Center store experienced that spike during the pandemic and only now is nearly back to the levels it was at pre-pandemic.”
With prices high, consumers are looking for an elevated experience from their baked goods as well, which they find in the in-store bakery. In-store bakery also provides people with a wide variety of options, especially regarding portion sizes.
Consumers are buying fewer perishables to prevent waste as one of their strategies to save money, so being able to purchase only what bakery items they need from the in-store bakery enables consumers to take control of their food waste.
Consistent with the theme of price concerns, consumers are shifting what channels they’re shopping at. Mass and dollar stores are winning among the channels as well as convenience stores for their grab-and-go bakery options.
Consumers are also trading down from premium options to private label. They began trading down in the second quarter of 2022.
This behavior shift has stabilized for food and beverage at large. For bakery items, however, consumers continued to trade down as of the first quarter of this year.
Ms. Altobelli noted that private label bakery isn’t where it was in 2019, but it continues to gain ground.