State of the Baking Industry

It’s safe to say that the baking industry, like most others, is in a state of flux due to the global COVID-19 pandemic. In 2019, retail bakery sales in the U.S. grew by 7.8%, but we’re all aware that 2020 brought unique challenges. Unfortunately, the negative impacts of the COVID-19 outbreak will lead to a 12.1% drop in sales in 2020 as the unemployment rate spikes. However, the good news is that the industry is expected to bounce back in 2021 and grow steadily through 2024 by an average of 6.5%.

Let’s take a look at the current state of the retail baking industry and dive into a few predictions from Sundale Research that might help your bakery grow even faster. 

Health Conscience 

Over the last few years, we’ve seen people become aware of what they’re putting in their bodies and seeking out healthier options. That trend isn’t going anywhere, especially with the increasing interest in organic foods. 

In 2019, total organic food and beverage sales in the U.S. grew by an estimated 7.6% to $62.0 billion. More specifically, sales of organic breads and grains grew by an estimated 6.6% to $5.11 billion. Consumers are now embracing whole grains and other healthy bakery products as long-term components of better eating. 

Consumers are looking for more wholesome, clean foods when eating out. This includes less trans fats and more probiotics. Many are taking a balanced approach to their diets and are focusing on their overall well being rather than overanalyzing each item they eat. This has led to a rise in more indulgent, upscale food consumption, as bakery consumers often treat themselves to more indulgent foods despite dieting trends.

Upscaling products with smaller portion sizes is also proving to be very successful among health-conscious consumers, as Americans become more concerned with wasting food and money as well. Smaller packaging sizes, products made for two people, half cakes and pies, and even individual cake and pie slices are now prevalent in retail bakeries.

Takeaways for Consideration:

  • Offer a variety of organic products 
  • Source organic ingredients from local farms
  • Provide options for smaller or even individual portions

Go Where the Customers Are

The modern consumer wants so much more out of their bakery experience than just a delectable baked good. To entice, convert, and keep bakery customers, you have to be where they are—and that’s online. Overwhelmingly, bakery customers are getting information from various online sources, with 80% of consumers ages 25 to 42 relying on smartphones when shopping. They tend to learn about new products through online product reviews, blog posts, and mobile apps. 

They seek out online recommendations and are significantly impacted by social media interactions. We’ll continue to see an increase in e-commerce sales, even after the pandemic wanes.

Most consumers are interested in convenience and price, so the Internet is a perfect fit. 

Social media and the Internet have become a core component of bakeries’ operating strategy, as they help build brand awareness, boost interactions with customers, and allow companies to monitor what people are saying about their products. 

Takeaways for Consideration:

Consumer Behavior

More consumers, especially those age 25 to 42, want to know the story behind the bakery, production process, and ingredients. They’re invested in finding original, high-quality products, and they’re willing to pay a premium for them.

Although the last economic recession negatively affected consumers’ spending habits and this will likely occur again in 2020, many are still willing to pay more for an upscale baked good because it is seen as a value-added, high-quality product that is an affordable luxury.

Consumers’ palates are changing, and they are looking for bolder, more intense flavors. Modern consumers are even looking to take part in the development of new products or services through social media interaction.

Takeaways for Consideration:

  • Be more transparent with ingredients and production process
  • Offer a selection of upscaled baked goods
  • Update your bakery’s “About” page on your website with your backstory
  • Offer a more collaborative process when creating new items, perhaps through email marketing

Overall, research shows that retail bakeries that offer fresh and innovative products, transparency and traceability of high-quality ingredients, affordable pricing, a clean and uncluttered store, enticing display cases, short wait times, and excellent customer service will be most successful over the next few years.

BakeSmart can help with quite a few items that research has shown to improve bakery sales, such as an e-commerce store, more transparent production, and more. Schedule a demo with BakeSmart to start conquering the chaos.

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