In the ever-changing world of fresh bakery, the drive to produce premium quality products remains a key constant. Holiday production planning starts with a commitment to innovation and continues with a dedication to exacting standards of excellence.
First it is important to dig a little deeper into the dynamics of profitability. Speaking during the recent International Dairy, Deli, Bakery Association (IDDBA) webinar, “Through Stormy Seas: Heavy Weather Strategies,” Eric Le Blanc, senior marketing executive for Category Partners, outlined three key developments in today’s marketplace: what is happening in the fresh bakery and overall fresh food category, what strategies are being employed, and what is working.
“We have got a range of positive sales trends. Sales are up (+13.7% in bakery), but volume has stalled,” Le Blanc said. “Prices have increased dramatically.”
While bakery volume (+0.7%) is up slightly, according to the latest 52-week data, average selling price in bakery rose 12.9% during the same period, according to data from select top 20 retailers in the United States, he said, Overall, bakery volume is up just a smidge at 0.7%.
“Half are building volume in bakery. And if half winning is as good as it gets, that is not a sign of a huge help,” Le Blanc outlined.
The “aha” moments from Category Partners’ research comes from the bakery dynamics involved in marketing strategies.
For instance, only three retailers grew volume in cakes, and all were above the market in price.
“Price is not destiny – even though we act as if it is so much of the time,” Le Blanc said.
The research identified three different strategies, and they found no overall connection between pricing and volume among the top 20 retailers.
“Maybe it is more about availability – planned purchases or occasion based,” he said of the cake category.
With cookies, 7 of 10 retailers had volume increases but won and held back their price increases, Le Blanc said.
“Cookies seemed to have a heavier influence on volume in change of price – and were more traditionally price sensitive than cakes. Pies were the same; the people who won protected their business without large price increases.”
As for the alpha group (the market leaders among the top 20 surveyed), they maintained their premium price position and didn’t take significant price increases from where they were. And for cookies, cupcakes, and muffins, they all maintained their position.
Supply side efficiencies
Speaking at another IDDBA webinar, Josh Allen, founder of St. Louis-based Companion, a bakery wholesaler that supplies bread to retail and foodservice operations across the country, implemented a QA efficiency program to analyze sales vs. complaints.
“We are now producing better product more efficiently with fewer complaints,” he said, adding that fill rates (the percentage of units shipped vs. ordered) had declined to 70% during the height of the Covid pandemic. “That’s lost opportunities.”
Paramount to these ongoing efforts is the principle that every customer needs to be assured prior to purchase that “if I need something, am I going to be able to get it?” Allen explains. “That is currently the No. 1 ranked concern among our customers.”
Through rigorous efforts, the Companion team has improved its 52-week average fill rate to 99.8 – a remarkable turnaround during challenging times.
“Now you can make opportunities,” Allen said. “This might drive more customers to you and build credibility with customers.” Speaking at another recent IDDBA seminar, presenters Anne-Marie Roerink, President of 210 Analytics, and Jonna Parker, Principal, Fresh Foods at Circana, reviewed the latest dairy, deli, and bakery trends report. In this webinar, the hosts shared the performance drivers and key takeaways of July’s performance, as well as how the bakery and other perishables departments fared in the context of fresh foods and food & beverage at large.
The perimeter cake category performed relatively well during the July 2023 sales period when the cake category climbed 5.3% vs. year ago in dollar sales for the category, according to data shared during the webinar. For the latest 52 weeks ending July 31, 2023, the cake category posted an 8.5% increase in dollar sales, reaching $5.5 billion in dollar sales for the 52 weeks.