Baking & Snack’s Capital Spending Survey, conducted by Cypress Research and sponsored by BEMA, revealed that many of the challenges that the industrial baking industry faced the past four years are easing. While bakery sales are mixed, flour production was up in Q3 of 2024, including whole wheat flour production. Josh Sosland, president of Sosland Publishing and editor of Milling & Baking News, reported that for the first three quarters of 2024, flour production was up compared to the same three quarters in 2023. 

Supply chain challenges also fell in importance from 2024 by 10 points. In the 2023-24 Capital Spending Study, 44% of bakers reported supply chain as a major business challenge for the next 12 to 18 months. In 2025, only 34% reported this as a major challenge. Inflationary pressures declined by 7 points to 42%, capital constraints fell by 8 points to 20%. Cybersecurity was down 7 points from 2024 with only 13% of bakers reporting it as a business challenge. 

That’s not to say there aren’t challenges facing the industrial baking industry; they’ve simply shifted. Labor and increased raw material costs remain the top challenges facing bakers for the next 12 to 18 months. While in 2024 the top challenge was attracting and retaining a quality workforce at 73%, for 2025, 69% of bakers are concerned with labor costs and 66% are concerned with attraction and retention. Increased raw material costs remain in the No. 3 spot with 61%. The need for greater automation remained in fifth at 44%. 

“[Material costs] continues to be a real issue; supply chain is flowing again, but materials are just expensive,” said Marjorie Hellmer, president of Cypress Research.

From there, challenges and priorities shift from 2024. Food safety rose in prominence with 56% of bakers reporting it as a challenge, up from 42% in 2024. Changing consumer attitudes/preferences also rose from 22% to 27%, outpacing regulatory/legislative concerns (26%), rising health care costs (25%), weaker domestic economy and product sales (25%), trade uncertainties (24%), and even cybersecurity (13%).

“Food safety is the biggest risk to the industry as a whole because it affects everyone,” explained Clay Miller, BEMA chairman and president of Burford Corp. “The conversation around food safety has also changed. The blinders have been taken off about the liabilities around food safety, and it has upped the ante.” 

Citing his conversations with food safety professionals, Kerwin Brown, president and chief executive officer of BEMA, pointed out there’s more quality control available to baking companies than ever before. 

“There is a new level of testing and data that’s available to bakers to really pinpoint the food safety issues in their facilities,” he said.

This article is an excerpt from the February 2025 issue of Baking & Snack. To read the entire feature on Capital Spending Study, click here.