In-Store bakeries are slowly reopening

Hang in there. The reopening is happening, but in many parts of the country, it may take a little bit longer to turn the corner. Some schools decided to wait until this fall to fully return to in-class learning while many companies are only partially opening their offices.

“We are still working from home,” noted Jonna Parker, team lead, IRI Fresh Center of Excellence, during an April COVID-19 Impact webinar by the International Dairy Deli Bakery Association (IDDBA). “We need more retail food solutions, especially fresh, premium, healthy solutions that the deli-dairy-bakery group offers. We need these healthy solutions for breakfast, we need them for lunch, and we’re not commuting, so we also need dinner solutions.”

This is certainly good news for bakeries serving the retail market, be it the bread aisle in the center of the store or the in-store bakery and deli around the perimeter. At least for now, time is on the retail market’s side.

“This time we’re in right now — this window, this bubble — is a gift,” stated Bob Villapiano, director, fresh bake division, Wakefern Food Corp., Keasbey, NJ, during the recent American Bakers Association’s virtual convention. “It’s a gift in the sense that we have a heightened awareness with consumers. They’re engaged. They want to get back into celebration mode from the big holidays to the little ones and everywhere in between, and now is not the time to throttle back.”

Yes, people want to party like it’s 1999 or even 2019 as they reunite with their families and friends in person, but today is different from the past for in-store bakeries.

Ms. Parker is predicting a pent-up demand for small celebrations as groups expand from the more restricted coronavirus (COVID-19) family bubbles to new, slightly larger vaccinated bubbles. Still, don’t expect mass gatherings of people blowing out their birthday cakes and eating them like they did in the past.

“We are so ready as a society to celebrate and buy something,” she said. “Even some fun, kitschy cakes and specialty desserts from the in-store bakery — the perimeter bakery — can really help prime those celebrations and special occasions.”

Josh Harris, chief executive officer for Distinctive Foods, is seeing more portion control. The Wheeling, Ill.-based producer of a wide variety of branded and private label hot snacks, crackers, flatbreads and value-added desserts is still getting more requests for individually wrapped cheesecakes, and it’s not only for food safety reasons.

“We always had a strong position in allowable indulgences,” Mr. Harris said. “Consumers are not buying the ginormous nine-layer chocolate cake anymore, but they want an allowable indulgence that doesn’t blow their diets, doesn’t blow their budgets and doesn’t ruin their self-images.”

Demand for mini snacks is also surging, suggested Raoul Dexters, general manager USA, Vandemoortele USA. The Gent, Belgium-based company supplies a wide variety of frozen bread, pastries and handheld snacks for in-store bakeries and foodservice outlets for the North American and broader global marketplace.

“In-home snacking has increased tremendously because people’s home habits have changed, certainly boosting sales of our handheld pastries and donuts,” Mr. Dexters pointed out. “All-day breakfast has become another trend for us. Because of the interest and consumer snacking activity, we also created new packaging options to allow grocery stores to bundle items, like an assorted donut pack, for instance.”

Mr. Villapiano urged bakers to push forward with new products and other innovations this year. However, he isn’t basing this year’s recovery on last year’s levels.

“As things start to open up, we’re excited about getting that business back and not only growing versus 2020, but growing significantly versus 2019 levels,” he said.

That’s exactly how Ms. Parker and Anne-Marie Roerink, president, 210 Analytics, crunched the numbers during their IDDBA presentation. Comparing IRI supermarket data from March 2021 with the same month in 2020 is possibly misleading because of the record sales caused by massive panic-buying a year ago.

Instead, IDDBA’s monthly “COVID-19 Impact” reports (visit IDDBA.org for the latest update) now also include 2019 comparisons as a baseline for retail bakery sales, and the data are eye-opening.

In the center store, comparable sales in nearly all categories (except croissants and muffins) are down from their March 2020 levels when at-home households left the bread aisle shelves bare. For instance, bread sales have plummeted 23.5% from last March while buns and rolls dropped 17.9%, cookies fell 21% and English muffins dropped 15.4%.

But how did sales in these selected categories compare with the same period two years ago? Center store bread sales were 5.4% higher than in March 2019 while buns and rolls jumped 20.7% and English muffins rose 11.3%.

“What Americans learned during the pandemic was that we can cook at home, and it is a cost savings,” Ms. Parker said. “And [packaged] baked goods increased because of those at-home lunches and because we’re working from home or we’re still seeing about 45% of school-age children who are having school at home.”

In the perimeter, it’s a bit more complicated. In March 2021, for instance, sales of bread were down 14.3% from March 2020 peak-pandemic levels. However, this year’s in-store bakery bread sales are up 9.3% compared with March 2019. This growth indicates that perimeter bread sales are now significantly higher than their historic, pre-pandemic norms.

On the flipside, sales of indulgent desserts soared in March 2021 compared with last year because everyone hunkered down, resulting in smaller gatherings. For example, sales of in-store bakery pies climbed 5.7%, and cake sales jumped 17% as more households bought desserts this March compared with last year.

But on a more historical basis, this year’s pie sales fell 3.2% compared with March 2019, which indicates that more people are getting together as the reopening continues, but still not as much as they did in the past. Meanwhile, IDDBA reported, cake sales rose 6%, partly because the Easter holiday was earlier this year.

Ms. Parker pointed to several other growth categories, such as bars, brownies and squares.

“When you are at home more and want to put something on the counter so throughout the week you can snack just a little bit, the brownies, squares and bars category did extremely well in that perimeter bakery,” she said. “You often see these items cut into smaller portions.”

Breakfast croissants and pastries are also selling well — climbing double digits since 2019 levels — as these clamshell-packaged baked goods replaced the coffee shop stop on the way to work.

“Many of us are sitting at our desks now working from home,” Ms. Parker observed. “That pastry, Danish and coffee cake, especially in a small, single-serve portion or a multi-cut portion that can last throughout the week, [provides] a really strong opportunity for growth.”

In an uneven recovery with high unemployment and government-based pandemic assistance eventually waning, shoppers will view value in more ways than one.

“The economic fallout from the pandemic is uneven and will be felt in some areas more than others,” said Liz Rayo, senior vice president of marketing and innovation for CraftMark Bakery. “Consumers are likely to be guarding their wallets, but they’re also going to define what ‘value’ means to them — placing emphasis on convenience, quality and other attributes.

“After a year of the pandemic and comfort food indulgence, consumers are now shifting to a more balanced and better-for-you eating approach,” Ms. Rayo added. “While they still want to indulge, it will be with wholesome, authentic foods with clean labels, possibly organic, GMO-free and more.”

To leverage against these trends, the Indianapolis-based producer of cookies, muffin batters, ready-to-eat flatbreads and other baked goods rolled out new Toast ’N Go Toaster Flatbreads to meet consumers’ desires for simple, convenient breakfast and snack items. Made with grains, seeds and real fruit, the line has no artificial flavors and comes in three flavors: Grains ’N Berries, Apple Cinnamon Raisin and French Toast. Additionally, CraftMark Bakery launched Thaw & Sell Cookie Bites, which are 0.42-oz mini cookies sold in 1-lb tamper-evident tubs.

“These new soft-baked mini cookies are ideal for families who want a fresh-baked cookie experience in a convenient ready-to-eat format. And the 1-lb tubs are perfect for portion control — allowing shoppers to eat a few at a time and store the rest,” Ms. Rayo said. “Available in three varieties — Chocolate Chip, Rainbow Sprinkle and Candy [with mini candy-coated chocolate pieces], these mini cookies are the perfect ‘permissible treat.’”