Baking&Snack - May 2012 - 16

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Nielsen: Baking industry faces tough times
Throughout the past year, the baking industry has experienced a lot of ups and downs in the retail channel, and that’s not necessarily positive news, noted Todd Hale, senior vice-president of consumer and shopper insights, The Nielsen Co., Cincinnati, OH. On the upside, rising commodity prices, energy and other input cost have forced baking companies to increase prices during the past year, Mr. Hale told attendees at the American Bakers Association’s convention in Scottsdale, AZ, in April. “Retailing has always been about location, location, location,” he said. “In 2011, retailing was all about inflation, inflation, inflation.” On the flipside, volume and unit sales declined during the past year in many key bakery categories, including packaged bread, buns, muffins, donuts and breakfast foods, according to Nielsen Scantrack data for the 52 weeks ending Feb. 18, 2012. Mr. Hale noted a plethora of factors continue to nibble away at unit volume, including a combination of higher prices and a drop in promotional activity. He added volume declined not only for bakery products, but also for nearly all major food categories in the retail market. “There are a lot of questions, mainly, ‘Where has the volume gone?’ The good news is you’re not alone,” he said. “Even though the recession technically will have been over in June for three years, we still have a lot of angst in terms of consumers.” He noted that angst is being felt by the 80% of the population who earn less than $100,000 in annual income and are making fewer purchases and shopping trips. The remaining households that make more than $100,000 have essentially exited the recession and are spending as much or more than they were two years ago. Perhaps most significantly, an evolution in demographics may be the cause for the loss of volume and unit sales in the bread category and other bakery segments. Baby boomers, empty nesters and other smaller households don’t need family packs of snack cakes or large loaves of bread. “Unfortunately, when you age or your kids age, you start eating less,” he said. Moreover, a declining marriage rate has resulted in population growth of barely 1%, which creates a challenging environment for the baking industry. “It’s not like the 1980s or 1990s,” Mr. Hale said. “We’re not popping out babies left and right that help drive growth. “ A long-term shift in the population’s ethnic makeup could be another factor influencing volume declines in conventional baked goods. Non-white and Hispanics account for nearly all of the growth in population in metropolitan areas, and that prompted a big question from Mr. Hale. “How big is bread to the Hispanic population or the African American population or the Asian population?” he asked. The increase in tortilla and flatbread consumption may have had an impact on sliced sandwich bread sales. Additionally, Mr. Hale said, the popularity of wraps has had a detrimental effect on overall sandwich making. The baking industry, he noted, needs to find new ways to create innovative products and make bread more relevant to a more diverse group of people. Mr. Hale suggested that bakers need to think about a change of course and roll out new products that compete outside of their core product lines. “How do we innovate to get people into the bread category?” he asked. For the baking industry, value is not just about price. It’s about a combination of price, innovation and quality. “Companies are figuring out how to turn a commodity into a premium offering, and that is the challenge you guys have, too,” he said. “How do you reinvent the sandwich? How do you reinvent the breakfast meal occasion?” — Dan Malovany

Blue Diamond breaks ground for almond facility

Blue Diamond Growers, Sacramento, CA, is building an almond processing facility in Turlock, CA, that initially will be 200,000 sq ft. The three-phase project will eventually feature about 500,000 sq ft of building space to process almonds. Phase 1 of the project is scheduled to be completed in May 2013. The second and third phases of the project are expected to take place over the next 15 years.
Blue Diamond Growers

/ Baking & Snack / May 2012

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Baking&Snack - May 2012

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