Baking & Snack - February 2023 - 32

CAPITAL SPENDING STUDY
" AND EVEN WITH ALL THOSE
PRESSURES AND TIGHT
MARGINS, [BAKERS] ARE
STILL PLANNING TO INVEST
AT ALMOST THE SAME
LEVEL AS LAST YEAR. "
Marjorie Hellmer, Cypress Research
Bakery Systems. " It's still a good time in the industry, but
the past 24 months, we've been on the mountaintop as far
as orders for equipment. We're still going to be well above
average for 2023, but we can't stay on the mountaintop. "
Optimistic outlook
Despite downward pressures facing the baking industry
- as all industries are facing them - respondents to
the survey still report a positive outlook for their companies
and the United States industrial baking industry.
Ninety-five percent of respondents reported a somewhat
or very positive outlook for their companies, and 84%
have a positive outlook for the US industry at large.
Nuance and softening of the positivity, however, can be
found when looking more closely at the numbers.
When it comes to company outlook, the change from
2022 outlook to 2023 can be found in the degree of positivity.
In the 2022 study, 55% of respondents were very
positive about their company's outlook, while for 2023,
that percentage dropped to 48%. Those who moved away
from a very positive outlook, however, didn't go far, as
those who had a somewhat positive outlook increased
from 39% for 2022 to 47% in 2023. This data point reveals
an industry in a strong place, even if abating a little.
" Overall outlook is down slightly because of some of
the mediating factors such as inflation and supply chain
challenges; some of the halo effect from the pandemic is
tempering a bit, and the industry is coming in line with
more realistic expectations, " Ms. Hellmer said. " The industry
isn't going to be able to hit consecutive home runs
year after year after year with increasing profits. So we
see that this year is a bit of a correction. The enthusiasm
is still there in the industry, but it's just a bit tempered. "
When it comes to the US baking industry as a whole,
30% of respondents reported a very positive outlook for
the industry compared to 2022's 22%. Respondents who
were somewhat positive fell from 68% in 2022 to 54%
for 2023. Those with a somewhat negative outlook, on
the other hand, grew from 9% to 15%.
" At the end of 2020 as bakers looked to 2021, they had
32 Baking & Snack February 2023 / www.bakingbusiness.com
an incredibly high level of positivity with 37% reporting
a very positive industry outlook, and looking ahead
to 2023, it's down to 30%, " Ms. Hellmer pointed out.
" Everyone was so glad to get out of 2019 and 2020, there
was more excitement for 2021. It's tempered since then,
but the outlook is still overwhelmingly positive. "
The outlook for the US baking industry becomes even
more positive when bakers were asked if they expect the
industry to do better, the same or worse in 2023 compared
to the year before. The results reveal an industry in
motion, definitely not stagnant, with 40% expecting the
industry to do better, 44% expecting it to do the same
and 15% expecting it to perform worse than 2022. Those
expecting the industry to perform the same was the only
group that shrank from 53% expecting 2022 to be the
same and 35% expecting the industry to do better. Even
Baking industry yearly
outlook remains strong
27%
35%
61%
66%
36%
7%
Worse
The same
11%
53%
44%
15%
Better
more telling is that when bakers were asked in 2019 -
before the coronavirus pandemic and subsequent challenges
- to predict the US baking industry's outlook for
2020, respondents reported an industry in stasis: Only 27%
expected the industry to perform better than 2019, 66% expected
more of the same, and 7% expected it to be worse.
" The demand for baked goods and the challenges of
the pandemic spurred optimism and investment for the
baking industry that continues today, " Ms. Hellmer said.
All of this points to the pandemic and its impact on
the American consumer as a catalyst for shaking the
industry out of a sleepy cycle into one of positivity and
investment. While some of that has leveled out since the
2020-21 study, demand for baked goods remains strong.
Sales have seen some slowdown due to inflation and a
balancing between foodservice and retail channels, but
the discrepancies between unit sales and dollar sales reported
by IRI in BEMA Intel for Q3 of 2022 show that
bakery products remain inflation-proof.
40%
2020 Outlook
2021 Outlook
2022 Outlook
2023 Outlook
Charts by: 2022-23 Industrial Baking Capital Spending Study
http://www.bakingbusiness.com
Baking & Snack - February 2023

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