Instore bread options offer consumers the ability to upgrade their at-home dining with restaurant-like experiences through premiumization and parbaked, take-and-bake and thaw-and-sell options.
Over the last couple of years, sales of bread, buns and rolls have experienced incredible highs. During the pandemic, when at-home eating hit an all-time pinnacle, bread products became a shopping list essential. After such incredible highs, many manufacturers anticipated such a peak couldn’t last as the world opened back up and consumers could return to their favorite foodservice and restaurant options.
But economic uncertainty coupled with ongoing supply chain disruptions have shown recovery might not be as straightforward as anticipated. Consumers are once again looking for at-home options and ways to re-create restaurant experiences on a budget, helping to maintain bakery as a staple category for shoppers.
At home eating, versus away from home eating, remains a larger portion of consumer spend, according to Circana, (formerly IRI and NPD), Chicago and Port Washington, N.Y. 80% of meals are being prepared at home and 38% of consumers said they dine out less often. 96% of shoppers are concerned about food cost inflation and 79% are making one or more changes. The most popular trade-offs include looking for sales and cutting back on non-essentials.
An ADM Trends report, The Future of Ready-to-Eat Meals, found consumers are looking for cost savings over a standalone restaurant purchase. This includes a desire for quality, taste and healthfulness with no compromise on taste. Consumers also continue to rely on food for comfort with fresh bread as a well-established item on the dinner table for a growing number of consumers.
Within the instore bakery, retailers that continue to face labor challenges are rationalizing their offerings to reduce operational complexities. Thaw-and-sell items allow bakeries to have fresh baked solutions using less labor. Reduced redundancy in portfolios is also opening doors to new offerings and flavors such as brioche, rolls, upcycled grains and heirloom varieties, according to Brie Buenning, marketing director, La Brea Bakery, Van Nuys, Calif.
She predicted a shift from parbaked to more thaw-and-sell items as talent and labor issues improve and become less of a focus. These preferences will also be buoyed by an ongoing focus on how foods can impact and support health.
“There has been a rise in grain-based and sourdough breads, up 6.6%, coming out of the pandemic,” Buenning said. “We expect to see these types of breads continue to gain traction and for consumers to better understand the benefits of grains and fermented products and how higher quality breads help their overall health.”
St. Pierre Bakery, a part of Grupo Bimbo, Mexico City, is seeing the trend of premiumization also continuing to play out in the category. Premiumization hit a stride during the pandemic when consumers couldn’t travel or dine out and sought an accessible way to treat themselves. Now the rising cost of living has shifted the angle of premiumization slightly.
While consumers still desire permissible indulgence and treats, the act of premiumization might be more accessible through the action of trading up or trading one item for another as consumers look to treat themselves well at home. Premiumization in action might include choosing a premium bakery product to pair with more premium meats and cheeses. As consumers look to upgrade their bread-eating experience, many are choosing more rustic and artisan varieties. Sales of artisan bread are up 10% over last year with growth in specialty rolls up 22% and 14% in volume, according to Nielsen, New York.
“Understanding what value means to shoppers is always key, but it is particularly important in the current climate,” said Neil Pittman, U.S. sales director for St. Pierre. “Bakery is a relatively low-value category and with consumers watching what they spend, they are just more aware of what they perceive as value. This offers an opportunity for premium brands, particularly in the bakery. The difference between an extra dollar instore is minimal, but the difference it makes to the quality of a shoppers’ meal is much more significant.”
Another noteworthy consideration is the advantageous footprint of the instore bakery. Its location is known for offering sensory pleasures to all who enter the store. It’s an area of the perimeter known for the delicious and comforting smell of fresh baked bakery products. Those who respond to the bakery’s sensory call are rewarded with the sight of golden brown breads and buns that offer a crispy crust and soft interior.
Knowing the appeal of these items, it’s interesting that parbaked/take-and-bake breads, which offer consumers a similar sensory experience at home, remain so niche. The category is known by a variety of names: Bake & Serve, Bake at Home, Brown & Serve, Parbaked, Ready to Bake and Take and Bake. But all of these names translate into one thing – delicious baked breads that come directly from the consumer’s oven.
Like other products in the bread/bun/roll category, consumers expect parbaked products to meet long-time consumer desires for particular health needs while also tasting great. This includes simple ingredient labels, but specific free-from claims in the category remain particularly niche. Claims of no artificial preservatives or colors remain the most commonly touted package attributes.
Within the instore bakery, breads from La Brea Bakery offer the ability to serve fresh-baked artisan bread without expending labor hours, minimizing food waste and eliminating unnecessary expenses. La Brea Bakery’s Take & Bake breads arrive fully baked inside but at only 80% color. This allows instore bakers the flexibility to bake the exact amount needed when they need it. The Take & Bake breads can be stored in the freezer, so consumers can enjoy the ultimate artisan bread experience in minutes from the convenience of home. The parbaked breads can also be finished on the grill, retaining moisture and holding up to the char more than a fully baked bread.
Yet these shelf-stable breads and rolls currently account for less than 1% of Total Bread and Roll category dollars, according to Circana. Melissa Altobelli, principal, client insights, for Circana’s bakery vertical division, predicts the category will remain niche with continued dollar growth. Future insights reports expect a CAGR of 4.5% in the next 10 years.
In a time when consumers are looking to re-create restaurant-like experiences at home, these products are incredibly well-positioned to meet increasing demand for fast, convenient foods with a premium touch.“ Parbaked/take-and-bake can meet this consumer want as it is considered fresh and easy to make,” Altobelli said. “These products last longer in the pantry and deliver the satisfaction of homemade bread.”
Altobelli found The Essential Baking Company, Seattle, to be a bright spot in the category. The company’s take-and-bake artisan organic bread is showing strong dollar and unit growth. Available in garlic, sourdough, rosemary, French, Italian and assorted loaves, baguettes and boules, the breads are packaged in fresh seal packaging. This packaging offers the ability to keep the partially baked, organic take-and-bake bread unopened and fresh in the pantry for months without freezing it.
But these novel products might still need a boost of marketing promotion. Circana data found that across both the perimeter and center store, these products are underperforming versus the Bread and Rolls category. Dollar sales growth is lower and unit sales are declining at a faster rate. Research from Nielsen found sales of specialty rolls growing at 22% in the last year and brioche growing at 20% within the category.
The category is particularly underdeveloped among Millennials, one of the largest buying demographics. Purchasers of parbaked breads tend to skew toward Gen X and Boomers and toward upper income consumers. Perhaps this is because of lack of familiarity with the concept? This can be solved by making the product a discovery for frequent buyers and new customers, too. Merchandising can play a key role in increasing sales in the department and in other areas of the store. Jonna Parker, principal II, fresh foods team lead, Circana, champions the use of groupings in the perimeter along with an element of surprise and delight.
Offering the slightly unexpected is a good way to capture consumer attention within the perimeter. This might be as simple as a temporary seasonal display for graduation and summer gatherings, or a fun take on something trending such as Shark Week.
But Parker cautioned retailers to not underestimate the value of harnessing other areas across multiple aisles. This might be accomplished through a grouping for quick meals and snacks or simply the introduction of something new and innovative. Grouping products can be a smart way to entice and offer creative inspiration within the instore bakery and provide a reason for shoppers to return.
Additionally, these groupings can be positioned to “interrupt” the shopper journey with the discovery of an elevated experience.
This practice can be particularly powerful when merged with other fresh perimeter destinations, making it important for the instore bakery to offer products worth the destination.
“Despite financial challenges and a constantly changing consumer landscape, money will always be spent in the bakery sector and savvy retailers will look to engage with shoppers through quality, consistency and instore experiences that garner loyalty,” Pittman said.