Industry insight into US bakery market

In the US – as in the rest of the world – the indulgent side of baked goods has taken a slight step back as consumers turn towards gluten-free, low-carb and high fiber options. Consumers are increasingly substituting baked Health, natural (artisanal baked goods) and convenience (par-baked and frozen items) are on the up, and consumers are increasingly substituting backed goods with nuts, yogurt and fruit bars. However, to celebrate special occasions and in times of distress and uncertainly, Americans love to revert to traditional bakes like the Boston Cream Pie – a hot milk sponge filled with pastry cream and topped with chocolate ganache – which has been around since the mid-1850s. Be it health or indulgence, though, when customers are looking for a specific item, most are willing to pay a premium price. Big bakes The US bakery industry is a huge business, making up 2.1% of the gross domestic product, according to the American Bakers Association. The market is highly fragmented, essentially made up of almost 3,000 independent bakeries – 65% of which have less than 10 employees – that bring in an annual revenue of $30m. Another 6,000 retail bakeries bring in an additional $3bn, with 50 of the largest companies generating 75% of this revenue. Three producers – Mexican bakery giant Grupo Bimbo, Dave’s Killer Bread maker Flowers Foods and Pepperidge Farm owner Campbell Soup Company – account for 55% of total commercial bakery revenue in the US. However, profits are not particularly high because of the volatility of raw materials like wheat and vegetable oil, which can vary as much as 40% in a single year. Bakeries are not always able to pass on these increased costs to consumers by raising prices. Low growth The US market for baked goods is forecast to grow at only 1% CAGR per annum in the next decade, tied to the low growth of the population, as well as changes in disposable income, consumer preferences and economic conditions. Conversely, the US bread production industry has seen exports rise by 7.2% to over $1bn, with 80% of products going to Canada, 10% to Mexico and 6% to Japan. The UK accounts for 2% of bread exports. Piece of cake According to IBISWorld, although the industry began with a chilling start, the Frozen Cake and Pastry sector will continue to expand, driven by a rising health consciousness, changing consumer tastes and competition from fresh bakery items. In response to these trends, manufacturers have focused on reformulating their existing dessert selections with healthier ingredients, experimenting with new flavor combinations and launching single-serving varieties that have a wider appeal.

Industry insight into US bakery market

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