THOMASVILLE, GA. — Despite a tough market for premium and super premium bread in 2023, Dave’s Killer Bread in 2023 enjoyed a 10% increase in unit volume growth and achieved sales of $1 billion in tracked channels, said A. Ryals McMullian, chairman and chief executive officer of Flowers Foods, Inc.

In Feb. 8 remarks made in connection with the company’s fourth-quarter financial report, McMullian called DKB’s performance in 2023 “a particular standout.” Additionally, he said unusually strong prices for organic flour cut into the brand’s profit margin last year.

“Despite its premium status, the weakest part of the bread category, and an average price of more than $6 per unit, DKB’s consumer appeal transcended its price point,” he said. “The brand gained 30 basis points of unit and dollar share in the fourth quarter.”

DKB unit volume was up 10%, compared with a 3% decline in the overall bread category where average unit prices were $3.50, he said.

“DKB continues to demonstrate an ability to grow outside of core loaf products, increasing units 15% and 28%, respectively, in the breakfast and sandwich buns and rolls subcategories,” McMullian said. “With dollar share of only 7% and 1%, respectively, in these subcategories, we see significant white space in adjacencies, in addition to geographic expansion and extensions beyond the bread category.”

In a call with investment analysts Feb. 9, McMullian said the high cost of organic flour cut into DKB’s 2023 profitability “pretty significantly.”

“Now the margins are still very attractive for Dave’s,” he said. “I know we don’t disclose particular numbers there, but still among the highest in the portfolio. But they were down roughly 500 basis points last year just because of the increased organic wheat costs, which this year will moderate somewhat. So we’ll recapture some of that.”

DKB sales growth was especially strong in the breakfast and sandwich buns/rolls subcategories, McMullian said. He noted DKB currently has 7% and 1% unit volume share in the categories, suggesting considerable upside potential.

“That potential spurred our decision to launch DKB bars, which continue to perform well with market share and velocities in line with the category,” he said. “We achieved distribution in approximately 19,000 stores, significantly exceeding our original goal of 13,000, and we are excited about the potential for future growth in small format locations like convenience and drug stores.”

Already in 1,500 stores, DKB protein bars will be rolled out nationally the first half of this year, Flowers said.

Flowers’ gluten-free business was flat in 2023, but McMullian said the company has taken steps to restore growth.

“We’ve talked about the shortage of available capacity at Canyon Bakehouse as the brand has grown,” he said. “We’ve since added new capacity and are beginning to see the benefits of those additions.”