Slideshow: Branded bread business seen rebounding

by Josh Sosland
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KANSAS CITY — The market for fresh bread sales has been weak for years, a trend that continued in 2016. Still, overall demand for branded commercial bread showed moderate strength last year.

Fresh bread sales in the year ended Jan. 22, 2017, totaled $9,090,326,573, according to data from Information Resources, Inc., a Chicago-based market research firm. The total was down 0.3% from a year earlier. Unit sales of 3,884 million were down 1.7%. The average price of bread rose 3c, to $2.37 per unit.

While the overall bread market slipped, the entire decline was accounted for by weak private label bread sales. At $1,978 million, private label sales were down 6% from the same period a year earlier. Store brands dollar share declined to 21.76% from the 23.15% share the year before.

Top 10 fresh bread vendors chart
 

Excluding private label sales, branded bread sales were indicated at $7,112 million in the year ended Jan. 22, up 1.5% from $7,006 million a year earlier.

While each major baking company took steps to reposition its bread portfolio in 2016, new product innovation for bread was not front and center for most major baking companies.

Meanwhile, companies such as Hostess Brands, Inc. and a range of specialty companies have continued to eye opportunities to take share of the bread market through other channels than the bread aisle — principally convenience stores, in-store bakeries and food service.

At Flowers Foods, Inc., Thomasville, Ga., steps have been taken over the past year to bolster the company’s Nature’s Own line of soft variety bread. In September, the company launched a sub-brand Nature’s Own Life for Nature’s Own varieties with specific nutritional profiles, said Sherry Harper, brand manager, bread.

Nature's Own Life bread, sugar free
Nature's Own Life sugar-free loaf is the top seller among the six varieties.

The six varieties are 40-calorie honey wheat, 40-calorie wheat, double fiber wheat, 100% whole grain sugar free, wheat+protein, and 7 sprouted grains.

“We’re now about five months in, and we continue to be excited about the potential of Nature’s Own Life, which directly addresses some of the most common dietary concerns today,” Ms. Harper said. “Consumers are looking for foods that fit their specific diet — whether that is a diet high in protein, low in sugar, high in fiber or low in calories.”

Before the rebranding, when the products were sold as Nature’s Own, the sugar-free loaf was the top-seller among the six. That hasn’t changed, Ms. Harper said.

“Vying for the No. 2 spot are 40-calorie honey wheat and double fiber,” she said. “Wheat+protein and 7 sprouted grains, the two new varieties we added last year, are beginning to establish themselves. Wheat+protein delivers 8 grams of protein and 2 grams of fiber per slice and 7 sprouted grains, made with whole wheat flour, sorghum, rye, millet, oats, barley and brown rice, offer simpler starches that make micronutrients easier to absorb. Like the other Nature’s Own Life varieties, we developed these with attributes that many people are looking for today.”

Karen Buch, dietitian
Karen Buch, registered dietitian and nutritionist

To reinforce this point about consumer interest, Ms. Harper cited the research of Karen Buch, a registered dietitian and nutritionist and one of the first “supermarket dietitians.”

“(She says) consumers today are looking for foods that align with their personal nutrition goals,” Ms. Harper said. “Some consumers are choosing more protein to help trigger satiety and improve appetite satisfaction, others want to eat adequate fiber and whole grains to aid digestive health, and some are looking to trim calories and sugar as part of an overall healthy diet that supports weight management. Nature’s Own Life is a great solution for these goals, helping consumers boost protein, increase whole grains and fiber, and reduce calories and sugar in their diets, while still enjoying the delicious taste and texture that bread has to offer.” 

Setting Nature’s Own Life apart visually from other sliced bread has been important for the new brand, Ms. Harper said.

“We’ve been happy with how the packaging for Nature’s Own Life has established an easy-to-find brand set,” she said. “The bread aisle is visually busy, and we wanted this sub brand to be easy to find. That’s one reason for the different color scheme on the packaging. But, we also wanted each variety’s main attribute to be quickly visible to consumers who don’t spend much time at the shelf. The callouts in the large circles are effective in conveying each variety’s attribute at-a-glance.”

Nature's Own Life bread
Setting Nature’s Own Life apart visually from other sliced bread has been important for the new brand.

In late February, the company launched a tour to introduce Nature’s Own Life at women’s health and fitness events around the country.

“We think this will be a great way to continue our introduction of the brand with trial samples and coupons,” Ms. Harper said.

The addition of the Nature’s Own Life line caught the eye of Wall Street. Brett M. Hundley, an equity research analyst with Vertical Group, Richmond, Va., said a reinvigorated Nature’s Own line together with growth Flowers expects from Dave’s Killer Bread should bode well for the Thomasville-based company.

Brett Hundley, Vertical Group
Brett Hundley, equity research analyst with Vertical Group
“We like what the company is doing with the Nature’s Own brand with the new Life banner,” Mr. Hundley said in an interview earlier this year. “It’s very attractive to us. These are products that are very on trend — low carbohydrate, low sugar, ancient grains. These are products you don’t normally see in the bread aisle. We believe it will be meaningful.”

He noted that all the Nature’s Own Life products are formulated using the so-called 5-to-1 rule, which recommends that for every five grams of carbohydrate in the diet, the consumer should seek to consume at least 1 gram of dietary fiber.

The “spin-off” of the Nature’s Own Life line did not mean that Flowers’ Nature’s Own brand was neglected. After a test in the Texas market last fall, the company is in the process of rolling out a “freshened look” for Nature’s Own, Ms. Harper said.

Nature's Own butterbread
Flowers Foods is in the process of rolling out a “freshened look” for Nature’s Own.

“We’ve brightened up and slightly simplified the logo so it will pop more at shelf and added some flavor cues, such as a curl of butter on Butterbread,” she said. “We also have the Smart Label QR code on the back of the package. In reviewing the amount of scans to date, we can see that Smart Label is a valuable tool for consumers to gain more information about a product. We’re glad to be able to offer this to shoppers.”

For Dave’s Killer Bread, the past year has been a quiet one for new product innovation. The focus over the past year has been on making the D.K.B. line available in all of the company’s markets.

However, March 9, the brand returned to innovation with the launch of a new line of bagels and cinnamon raisin bread.

New D.K.B. bagels are available in three varieties: Plain Awesome, Cinnamon Raisin Remix and Epic Everything. Plain Awesome bagels contain quinoa, spelt, rye, millet and barley, and provide 13 grams of whole grains and 12 grams of protein per serving. Cinnamon Raisin Remix bagels contain swirls of cinnamon and raisins and provide 11 grams of protein and 10 grams of whole grains. Epic Everything bagels feature toppings such as flax, chia, sesame, poppy, garlic and onion and provide 12 grams of protein and 27 grams of whole grains.

Dave's Killer Bread bagels - Plain Awesome, Cinnamon Raisin Remix, Epic Everything
New D.K.B. bagels are available in three varieties: Plain Awesome, Cinnamon Raisin Remix and Epic Everything.

D.K.B.’s new Raisin’ the Roof cinnamon raisin bread is made with organic whole wheat, raisins, cinnamon bites, thick-rolled oats, flax seeds, sunflower seeds and organic cane sugar. The bread contains 8 grams of whole grains and 90 calories per slice.

The bagels and raisin bread are vegan, Certified U.S.D.A. Organic, Non-GMO Project verified, meet or exceed the Whole Grain Stamp requirements and contain no artificial ingredients. 

Holding its own over the past year was Bimbo Bakeries USA, the nation’s largest baking company, part of Grupo Bimbo S.A.B. de C.V. Bimbo executives have said that sales pressure on B.B.U. in recent months has been mostly in private label and that branded bread sales have been strong. Overall, B.B.U. sales in the 52 weeks ended Jan. 22 totaled $2,435 million, up 2.3% from a year earlier. Unit sales were 876,620,941, up 2.5%. The company’s average unit price of $2.78 was unchanged from last year. The company’s dollar share of the baking market edged up to 26.78%, versus 26.09% a year earlier.

New for Bimbo Bakeries USA last year was the company’s line of Extra Grainy bread, introduced in April 2016 as a complement to the company’s Eureka! line of organic bread. At the time just before Extra Grainy hit the market, the company said it was targeting consumers attracted to richly textured, super premium bread but for whom popular organic varieties may be too pricey. Extra Grainy was introduced under the Arnold, Brownberry and Oroweat brands. The line features three varieties: 17 Grains & Seeds, Cracked Wheat & Oats, and Flax & Sesame Seeds.

Oroweat Country bread
The Oroweat Country bread line includes country white, honey whole wheat, 100% whole wheat, multi-grain, oatmeal and oat bran varieties.

More recently, innovation at B.B.U. has not been as visible. The Oroweat Country line now includes a sourdough variety. Marked “new” and that it contains “no high-fructose corn syrup” the variety is part of a Country bread line that includes country white, honey whole wheat, 100% whole wheat, multi-grain, oatmeal and oat bran varieties.

B.B.U. broadened its Sara Lee Artesano bread line with the introduction of Artesano bakery rolls in 12-count trays. The rolls feature the flour-dusted crust and creamy texture of Artesano bread, and the packaging utilizes the same “steamed” plastic look as the bread, meant to conjure images of freshly baked rolls.

The company also received a boost in February when its Arnold Whole Grains 100% whole wheat bread emerged the winner of a Cook’s Illustrated competition between leading brands of 100% whole wheat sandwich bread.

The publication purchased seven widely available varieties of 100% whole wheat bread and ran a series of blind taste tests.

Cook’s Illustrated tasters sampled the bread plain, in ham and cheese sandwiches and as buttered toast. While describing all the varieties as “acceptable,” the publication said tasters showed a preference for bread with “cleaner, deeper flavors” plus “a touch of sugar.”

“Arnold Whole Grains 100% Whole Wheat Bread emerged the winner,” Cook’s Illustrated said. “With a full wheaty flavor, no discernible off-notes, and a dense, springy texture that welcomed and stood up to butter and sandwich fillings, this wider loaf was our top choice. This bread also has small flecks of bulgur on the crust and in the crumb, which deepened the whole grain flavors and added a pleasant crunch to each bite.”

Most recently, B.B.U. expanded in bread with the acquisition by Canada Bread Co., Ltd., of Stonemill Bakehouse Ltd. Based in Toronto, Stonemill Bakehouse bakes slow fermented craft bread baked in stone ovens using non-G.M.O. certified and organic ingredients. The company’s bread products are sold under the Stonemill Slow Crafted brand and are available in several varieties, including Sprouted 3 Grains, 11 Whole Grains, Bavarian Light Rye and Sprouted Flax.

For Pepperidge Farm, Inc., Norwalk, Conn., building on strengths was a principal focus in innovation over the past year. The company’s Swirl brand breakfast bread line has enjoyed leadership in the breakfast bread category for a number of years, and a new addition to the line will be launched in coming weeks. Meanwhile, the company said its overall experience in the bread market has been difficult.

Pepperidge Swirl bread with more cinnamon
In 2016, Pepperidge introduced a new base Swirl formulation with extra cinnamon.

With the approach of the company’s 80th anniversary, Pepperidge in 2016 introduced a new base Swirl formulation with extra cinnamon, the company said.

In late March, Pepperidge Farm will expand its line with Swirl Oatmeal.

“The new product will delight consumers with the delicious taste they love from Swirl in a more satiating slice — a breakfast solution so tasty it can be eaten straight from the bag and, with oatmeal and a thicker slice, it will hold kids over until lunch,” the company said.

The variety will be the 10th in the Swirl line, which also includes cinnamon, raisin cinnamon, brown sugar cinnamon, 100% whole wheat cinnamon with raisins, French toast and chocolate banana. Plus, seasonally, the company offers caramel apple, pumpkin spice and blueberry.

Pepperidge Swirl bread
The Pepperidge Swirl line includes such varieties as French toast and chocolate banana.

In the most recent financial report, Campbell Soup Co. said fresh bakery products were a drag on overall sales at Pepperidge Farm, Inc.

“Our fresh bakery sales declined as a result of intensified competitive activity, especially in the sandwich bread category,” said Denise Morrison, president and chief executive officer of Campbell Soup Co., the parent of Pepperidge Farm. It was the second straight quarter in which she cited competitive pressures in bread, noting at the time quality improvements were being implemented for the Swirl line (but without elaboration).

Regionally, Pepperidge will be introducing two new soft, long varieties under the Harvest Classics brand later in March, the company said. Honey wheat and 100% whole wheat varieties will be offered. The 100% whole wheat showcases the whole grains content on the front of the package.

Asked by Milling & Baking News about the bread marketplace, the company emphasized the role it plays in boosting whole grains intake, citing the “nearly 4 billion servings of whole grains annually” the company provides consumers.

While Hostess Brands, Inc., Kansas City, has not aggressively moved deeper into the bread market in the past year, executives at the company suggest opportunities may exist in the in-store bakery (I.S.B.) section. While Hostess’ first move in I.S.B., acquiring Superior Cake Products, Inc., has been centered on the sweet goods category, William D. Toler, president, has said many opportunities exist in in-store bakeries.

Superior Cake Products Madeleines cookies, Hostess
Hostess’ first move in I.S.B. was acquiring Superior Cake Products, Inc.

“There have been a number of businesses that sold last year in the I.S.B. space, and that is a $7 billion dollar category doing really well, highly, highly fragmented,” Mr. Toler said during an investor presentation in January. “So there’s lots of roll up opportunities inside of that.”

Also among sectors seeking to cut into the share of the traditional commercial bread baking industry has been artisan bread baking companies with product lines targeting in-store bakeries and food service. Companies with European origins sometimes need to adjust their formulations to better align their product portfolios with American taste preferences, said Olivier Morel, senior vice-president of U.S. sales and marketing at Bridor, Vineland, N.J.

“Consumer expectations are quite different in the United States,” Mr. Morel said. “In the U.S., everyone is looking for quality products, but many American consumers prefer a thinner bread crust, while European consumers prefer thicker crust.”

While launched in Quebec in 1956, Bridor imports some of its products from Europe, where the company established operations in the late 1980s.

A new bread line, Soft Artisan, was introduced in 2016 in the United States. Mr. Morel said Bridor developed the all natural new line with an eye toward clean label.

“It looks like a real artisan product, with natural ingredients and natural enzyme,” he said. “To answer market expectations, we added grains in the recipe.

“These products are doing very well. They come pre-sliced for ease of application for the end user. The bread has at least two-day shelf life, when baked.”

The line features four varieties — white, 12 grain, sesame/semolina and sprouted grains.

More recently, the company installed a new bread production line in Montreal with European technology to help meet growing demand for its products. Mr. Morel said North American sales are expected to reach $250 million in 2017, of which 40% is bread and the balance is pastry (including croissants). Roughly 10% of U.S. volume is imported from Europe. With a recent expansion completed at Vineland in 2016, the company currently has 270 employees in New Jersey.

Most of the company’s North American growth in recent years has come from food service, which accounts for 70% of sales. Without citing names, Mr. Morel said Bridor supplies nearly all the leading bakery cafe chains in the United States.

“Most of them carry at least one of our products,” he said. “Our focus is shifting toward retail. We see retail customers looking for healthier products. They know what we were able to do in food service. We see more and more interest in premium retailers, seeking high quality products. With more capacity we will be able to supply bigger players, customers for in-store bakeries or the deli section.”

To grow its food service business, the company has offered a broadening array of products from its European market in an effort to meet the needs of restaurateurs looking for something distinctive. For instance, Bridor has launched a mini-baguette with olives and thyme, for fine dining restaurants.

“For the premium market, we are launching a new range of products called the bagnet,” Mr. Morel said.

Popular in French Riviera in Nice, bagnets are crusty on the outside, soft on the inside.

“The flat oval shape of the bagnet makes them very good to carry around and very good for making sandwiches,” he said. “We think it’s a good fit for the American market, and we will be pushing it for 2017. It’s a very traditional bread from the south of France, but it will be baked in the United States. We have a plain one, but we also will have one with rye and grains (cracked wheat, sunflower, flax, chia, oats...).

“We try to stay ahead of the game. The European market is very traditional. The U.S. market is very much based on innovation. We launched a baguette, not made just with white flour but a blend of buckwheat and white flour. It has a sour flavor and is especially doing well on West coast. The buckwheat brings some coloring to the dough. Buckweat grows well in Brittany, acidic land.”

Bridor has grown in the United States through expanded distribution, not just new products, Mr. Morel said. Two years ago Bridor’s products were sold more narrowly, but the company has doubled its number of distributors. The nation’s two largest food service distributors handle the company’s products. Still, sales remain heaviest east of the Mississippi river, he said.

 

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