Consumers facing financial pressures are purchasing less food, including bakery items, according to Michelle Bennett, senior vice president of client insights at Circana. Despite the decline in bakery purchases, consumers are still buying from the category, albeit selectively.
Bennett highlighted the impact of food cost inflation on consumers, with 95% expressing concern. The economic pressures have led to a decline in volume across various categories, including bakery.
She noted that stricter SNAP eligibility rules have affected bakery purchases, with a significant portion of declines attributed to consumers losing SNAP benefits. However, growth in bakery sales has been observed in non-SNAP households, particularly in middle and upper-income brackets.
Although bakery has experienced volume loss, Bennett identified areas of growth and opportunity within the category. The redefinition of value and wellness, along with innovation, present avenues for the industry to regain sales.
Consumers are reevaluating the value equation, focusing on quality and nutritional benefits rather than just price. Premium and value price points have seen growth in both dollar and volume sales, putting pressure on mainstream products to differentiate.
Health and wellness trends, such as the increasing adoption of GLP-1s and the demand for protein, are influencing consumer preferences in the bakery category. Bennett emphasized the importance of understanding consumer needs to drive product innovation.
Product innovation in bakery is driven by themes like premiumization, functional benefits, familiar flavors, packaging innovation, and new product shelf placement. Bennett highlighted the success of products that offer functional benefits like sugar, fiber, and protein claims.
While retail remains a significant portion of bakery sales, foodservice is where growth opportunities lie. Foodservice bakery sales have outperformed retail sales in recent times.
The evolving definition of health and wellness, consumer demand for familiar flavors, and the importance of understanding consumer segments are key factors shaping the future of the bakery category.
When looking at price-tier shares in the bakery category, premium and value price points are the ones that have experienced share growth in both dollar and volume sales versus a year ago, according to Circana.
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Photo: Flowers Foods, Inc.