Baking group CEO predicts new product surge

Baking group CEO predicts new product surge

BOCA RATON, FLA. — Having successfully weathered a blizzard of demand at the start of the pandemic and amid a daily struggle to maintain production levels in the face of labor and supply-chain challenges, bakers are poised for the largest wave of new product introductions in years, said Robb MacKie, president and chief executive officer of the American Bakers Association.

Sharing “Bakery Trends” with US flour milling executives, Mr. MacKie spoke Oct. 8 at the annual meeting of the North American Millers’ Association. The NAMA meeting was being held Oct. 7-10 at the Boca Beach hotel in Boca Raton.

Mr. MacKie expressed appreciation to the millers for their participation in a coalition of 65 food and beverage groups, collectively interacting with the Food and Drug Administration and other government authorities to help ensure the food industry is able to maintain the flow of food products to supermarkets and other customers.

“Our partnership is stronger than ever,” Mr. MacKie said of relations between bakers and millers

While demand for baked foods has been strong since the start of the pandemic, workforce and supply chain issues are creating increasingly pressing problems for bakers, Mr. MacKie said.

“Those are daily challenges,” he said. “We have members who literally, if they have five people don’t show up for work, they will have to shut down production for the day.”

Causes of the labor shorts are manifold and include lingering direct effects of the COVID-19 pandemic (people nervous about returning to work or workers being quarantined because of exposure to the virus), the large amounts of government assistance making it easier for workers to delay returning to the workforce and “pre-existing” problems — finding adequate labor was the top problem for the baking industry well before the pandemic.

Mr. MacKie devoted a considerable part of his presentation to findings in a Rabobank study commissioned by the ABA about trends affecting the grain-based foods industry.

He noted a dichotomy between consumers who have been working from home in larger numbers than ever and bakery and other food production workers who “haven’t had a day off.”

Over time, Rabobank expects the percentage of the workforce still working from home to contract but not to pre-COVID levels. Ultimately, office workers are expected to average about one day a week of work at home, which would represent a large increase from before the pandemic.

For the baked foods industry, Mr. MacKie said the shift is affecting the foodservice sector by reducing demand from sandwich shops as well as breakfast shops. Conversely, the change has been a positive one for certain retail categories, including breakfast bread.

Other changes affecting bakers include a reduction in the number of celebrations like birthday parties during the pandemic. Going forward, such events are likely to include fewer people. For baking, this change may translate into a mother ordering a smaller birthday party sheet cake than in the past or even opting for a dozen individual-serve cupcakes rather than a full cake.

For the last 18-plus months, bakers have worked to maintain discipline when it comes to stock-keeping units, focusing on higher-margin products and balancing a desire to offer customers variety with a need to keep plants operating as close to capacity as possible. Going forward, Mr. MacKie said that will change.

“What’s coming next is really important,” he said. “I think it’s a real opportunity for smaller bakers to pick up some of the smaller volume products. The other thing that’s going to happen, they’ve done a ton of research on new products. I think we are facing a wave over the next six to eight months of an unprecedented rollout of new products. I think that’s exciting. We talk about, ‘How can we break the mold?’ ‘How can we do new flavors?’ That’s where you come in. Bakers are looking for partners.”

Baked foods have become a staple of the surging online business for groceries, Mr. MacKie said. The different needs associated with selling bread and other baked foods through e-commerce adds further opportunities for product development.

Overall, Mr. MacKie said an important emerging trend has been consumer’s willingness to pay more for value-added bread and other baked foods.

“I think we will see more of that,” he said. “Many of the new products that will be rolled out, bakers will try to keep more of that margin with those items. That’s where some of the ingredient innovation will come into play.”

Mr. MacKie concluded his remarks urging the millers to help capitalize on changing consumer perceptions of grain-based foods. He quoted Vance Crowe, a communications consultant, who addressed the ABA annual meeting earlier this year:

“Ask yourselves, ‘What can we do that we haven’t done before to make changes we haven’t made before?’ Because this window of opportunity will never come again.”