NAPLES, FLA. — In-store bakeries are delivering strong growth to retailers, according to a study commissioned by the American Bakers Association together with the Food Marketing Institute.
At its annual convention, held April 7-9, the A.B.A. rolled out the Power of Bakery study conducted in conjunction with the F.M.I.
“I hope your playbooks will be filled with good insights and great takeaways,” said Robb MacKie, president and chief executive officer of the A.B.A.
The research collaboration is the first of its kind for the two associations.
At the convention, Todd Hale, principal, Todd Hale L.L.C., and Anne-Marie Roerink, principal, 210 Analytics, presented an analysis of the findings.
The research is a result of 1,500 participants and intended to dig into the “why” behind consumer behavior, Ms. Roerink said.
The study looked at trends in consumer baked foods in both center store and the in-store bakery.
“When we look at the in-store bakery, it’s about $14 billion in sales,” Mr. Hale noted, citing 2018 Nielsen data. “That’s certainly a far cry from the $277 billion in total dry grocery, where the bulk of the bakery categories reside.”
However, in-store bakery delivered the second-largest compound annual growth rate in 2018.
Mr. Hale also noted that the bread and baked foods category is a $60 billion business, excluding retailers such as Costco and e-commerce outlets.
Although the three-year CAGR in total grocery was 0.8%, the bakery department saw strong growth at 2.2% CAGR.
“That’s not atypical to what we’ve seen in the perimeter of the store,” Mr. Hale observed, noting that retailers are increasing efforts to set themselves apart from competition that is coming from a number of different areas.
In fact, Ms. Roerink identified c-stores, farmers markets, online ordering, independent retail bakeries as well as home baking as direct competition to in-store bakeries.
“The bakery dollar is everywhere,” she said. “For manufacturers, it’s hard to get market coverage, and for retailers, you’re fighting against a lot of competition out there.”
For example, Ms. Roerink identified mobile apps such as Nextdoor — where people can exchange questions and recommendations for anything from products to services in their immediate neighborhoods — that are presenting challenges that could also become opportunities.
“Be known as a bakery destination, so when a cupcake comes to mind, people will come to your store,” she suggested. “It’s a great way to secure that dollar.”
She advised attendees to think about uniting the supply chain as a whole to educate and inform consumers.
With a rise in at-home baking, Ms. Roerink said retailers and bakery manufacturers can capitalize on the trend with products such as par-baked bread for meal kits or finished cakes that consumers can decorate at home.
“One of my favorite products I saw in a Dutch store was an apple pie meal kit,” she said.
“Creativity and idea generation is key,” she said. “Don’t just wait for the bakery want to hit. Generate it.”
The Power of Bakery collaboration was a natural fit with the F.M.I.’s “Power Of” series that looks at a number of different trends in various food categories, said Leslie Sarasin, president and c.e.o. of the F.M.I. The complete Power of Bakery study is available to all A.B.A. and F.M.I. members.