Store Brands

APR 2016

Store Brands delivers unprecedented strategic and tactical information needed by retail executives to develop and support compelling, differentiated store brand programs to build customer loyalty.

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www.storebrands.info / April 2016 / Store Brands 7 1 Category Intelligence: Bread and Bagels Help bread revenue rise Strong sales opportunities in bread and bagels await retailers that respond to changing consumer consumption patterns. By Rich Mitchell he bread and bagels sector is not exactly rolling in dough. As more health- and flavor-conscious shoppers eschew long-time staples, traditionally active categories — including fresh breads, rolls and hot dog and hamburger buns — are experiencing flat or declining sales. Indeed, the sluggish U.S. bread market is forecast to lag over the next several years, with sector revenues rising from $24.7 billion in 2014 to just $27 billion by 2019, reports global market researcher Mintel. While bread has high household penetration, many consumers are limiting consumption because of health concerns, Mintel notes in its September 2014 "Bread and Bread Products — US" report. Many of those shoppers say they are avoiding breads that have excessive amounts of calories, carbohydrates and sugar. A 2015 decline in unit sales of packaged bread, meanwhile, reflects growing consumer sentiment against processed foods, as well shoppers' aversion to gluten, adds Euromonitor International, London, in its October 2015 "Baked Goods in the US" report. "Although a very small percentage of Americans suffer from celiac disease (a gluten allergy), a growing number believe gluten to be fundamentally unhealthy and so avoid it," Euromonitor states. "At the same time, many consumers are beginning to opt for unpackaged artisanal bread or ethnic varieties such as tortillas instead of packaged bread." Focus on health Sales of unpackaged bread are on the upswing and impacting the packaged sector, Euromonitor notes. Fueling the activity is consumer perception that processed foods are less healthful, regardless of the nutritional content; the lack of an ingredient list on most unpackaged foods, leading consumers to make a positive assumption regarding the nutritional content; and the growth of bakeries and high-end grocery stores that sell unpackaged breads. The development of fresh, higher-quality breads also is resulting in greater shopper interest in newer alternatives. And gluten-free and organic breads, as well as breads with added grains, are becoming more attractive to many consumers. "The healthier options used to taste like cardboard," says Karen Toufayan, vice president of sales and marketing for Toufayan Bakeries, a Ridgefield, N.J.-based supplier of bagels and bakery products. "But the taste and texture are getting better. People want to eat healthier but they won't compromise on taste. They will even pay more if they think they are getting their money's worth." Shoppers, in general, are more aware of product ingredients, adds Sabine Veit, CEO of Bäckerhaus Veit Ltd., a Mississauga, Ontario-based producer of artisan breads, rolls and pretzels. "Consumers are becoming more educated and are looking at selections with nutritional values, particularly for children and the elderly. The integrity of product labels [is] undergoing the biggest change as consumers seek more functional ingredients that provide a nutritional punch and are not just belly fillers." To make health benefits more evident, Veit suggests that retailers leverage in-store signage to spotlight products with attributes such as lower levels of sugar and salt. Include appealing packaging Retailers also could help bolster sales by adding to packages graphics that illustrate the use of the breads — for example, a hamburger on a bun with lettuce, tomato and cheese, Toufayan says. "It will be much more appealing having meal photos than showing just a picture of a bun," she states. "Investing in the photography will engage consumers. People are visually stimulated and impulse purchases are based on sight and perceptions of what the final product will taste like." While lively packaging designs that include messag- Don't obscure the product with too much packaging. Do leverage in- store signage to spotlight tasty, healthful bread options.

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