Milling & Baking News - March 10, 2020 - 7

Editorial

Nuanced picture of baking emerges from survey

hough describing 2019 as anything but a diffiIn terms of bakers' financial picture, many meacult year for the flour milling industry would sures in the survey showed little if any deterioration
be inaccurate, it would be a mistake not to in 2019 from three years earlier. For instance, 38 per
acknowledge the glimmer of light emerging in the cent of bakers described their business as "firmly in
final quarterly flour production report of the year. the black" and 52 per cent said "financially sound,"
U.S. Department of Agriculture data for October-De- nearly identical to 2016. More than half the responcember 2019 showed a 0.2 per cent increase in mill- dents said they were on track for higher sales in 2019
ing outturn of flour from the final quarter of the year than the year before and expected sales gains in 2020
before. The fourth was the only quarter of the year in from 2019 (though the percentages were smaller than
which flour production was not down at least a full in 2016). More than a third expected gross margins
percentage point from the same quarter a year ear- to be up for the year in 2019 with only 14 per cent
lier. Additionally, miniscule as it was, the gain ended expecting tighter margins. Additionally, margins in
a streak of five consecutive quarters in which flour 2019 were estimated to have widened by 230 basis
production was down from the year before, the lon- points from 2018. In 2016, the margin improvement
gest such streak since 2001-02.
from a year ago was estimated
More than half the (bakers)
Even with the modest reat only 160 basis points.
said they were on track for
bound, flour production in
Another hopeful sign, 37 per
2019 fell to a seven-year low
cent of respondents expected
higher sales in 2019 than the
and, down 4,594,000 hundredto add to its workforce in 2020
year before and expected sales
weights from 2018, endured
from 2019 with only 10 per
gains in 2020 from 2019.
the largest year-to-year decent reducing employees.
crease since 2011. Still, weakness in flour demand
Signs meriting concern emerged in the study as
has not matched the downward slide in the lead- well. Bakers last year forecast they would spend 8
ing flour-based food - commercially baked sliced per cent of 2019 revenues on capital projects, versus
bread. Under pressure for years, even decades, the 14 per cent projected in 2016 for the following year.
bread market appeared especially weak in 2019, with Labor issues, beginning with a lack of skilled workers,
scanner data showing 52-week sales volume down have emerged as bakers' top concerns going into 2020.
as much as 4 per cent from a year earlier.
Perhaps most dispiriting was only 27 per cent of
Helping reconcile the concerning trends in flour bakers said the outlook for baking was better for
with the more alarming data on sliced bread are re- 2020 than conditions in 2019. By contrast, 54 per cent
sults of a triennial survey published in the February of bakers in 2016 believed conditions would improve
issue of Baking & Snack, sister publication of Milling in the new year.
& Baking News. The survey presents a snapshot of
These concerns aside, the net takeaway from the
the sentiment, financial picture and business plans Baking & Snack survey is the picture for the flourof 320 wholesale baking companies. Compiled by based foods industry is more nuanced and varied
Kansas City-based Cypress Research Associates, the than may be gleaned by a review of sliced bread scansurvey encompasses bakers of all sizes - about 30 ner data or aggregate U.S. flour production. While
per cent of respondents have annual sales exceed- numerous segments of the baking industry are struging $500 million, another 30 per cent have sales be- gling, many others remain on solid ground. The contween $50 million and $499 million and the balance cerns expressed by the bakers about the industry's
have sales below $50 million. The bakers' product outlook should not be ignored, but the totality of the
lines include mostly bread, crackers and cookies, data underscore the healthful diversity and resilience
with smaller numbers baking artisan bread, frozen that continues to characterize the baking industry soldough, tortillas, bars and pizza.
idly into the 21st century. MBN
WE'RE EAGER TO GET YOUR FEEDBACK: E-mail editor@sosland.com or write to us at
Milling & Baking News, 4801 Main Street, Suite 650, Kansas City, MO, 64112
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bakingbusiness.com
7 / January 2, 2018
/ world-grain.com
Milling & Baking News

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