WASHINGTON – Consumers are under pressure to buy food in volume, and that includes bread. But even with fewer bread purchases, consumers are still buying the category, said Michelle Bennett, senior vice president of client insights for food and beverage retail centers at market research firm Circana.
“All the savings from the pandemic are gone, but the pressure remains,” Bennett said. “And food inflation continues. So consumers are being selective about what they put in their baskets. There is no growth, only that growth is concentrated in certain areas.”
In a summary of the performance of the baking category at the American Bakers Association NextGenBaker Leadership Forum, held September 15 to 16. in Washington, Bennett pointed out that the bakery is not alone in the reduced volume, since many categories are experiencing sluggishness, mainly due to economic pressure on consumers.
“Food cost inflation is one of the most visible stressors on consumers today,” he said. “Ninety-five percent of consumers are worried about this.”
About half of the consumers surveyed said they were very concerned about food inflation, and that included all generations, with a concentration on Generation X and low-income consumers.
Tighter restrictions on SNAP eligibility have had a significant impact on bread purchases, according to Circana’s findings. The research firm said $237 million in bread cuts in the past 13 weeks was due to consumers losing SNAP benefits, and $79 million came from households that stopped buying bread altogether. Even SNAP buyers who remain bakery buyers are lower than they were a year ago. All of the growth in bread sales in the last 13 weeks came from non-SNAP households, especially middle and upper income, Circana said.
Despite the volume loss experienced by the bakery, Bennett sees pockets of growth and opportunity for the category. He said that the redefinition of value and well-being and the evolution of innovation provide a path for the industry to recapture sales.
As shoppers become more selective about what they buy, they look at price differently, with the value equation no longer about price but “what they buy,” Bennett explains.
“If consumers are eating less, what they eat should matter,” he said. “There is no exchange: It must taste good, give indulgence, be convenient and ideally also have functional benefits that people want.”
When looking at the price level shares in the bread category, the premium price point and value are those that have experienced share growth in sales dollars and volume compared to a year ago, which reduces the main product.
“Differentiation is really important for major brands,” Bennett said.
Health and wellness and the growing adoption of GLP-1 are also putting pressure on the bread category, he noted. By 2024, a quarter of food and beverage spending will come from GLP-1 households, and that is predicted to rise to 35% by 2030.
“GLP-1 consumers are still buying bread,” Bennett said. “We found that the longer you stay on GLP-1, the more likely you are to return to your regular diet.”
As consumers seek to reduce food intake, protein and other nutritional benefits are critical. The percentage of adults looking for more protein in their diet will increase to 48% in 2026 from 41% in 2025.
When looking at price-level shares in the bread category, premium price points and value are the ones experiencing share growth in dollar sales and volume compared to a year ago, according to Circana.
| Photo: Flowers Foods, Inc.The definition of health and wellness is also changing. Thirty-five percent of adults are trying to eat less processed food, up five points from a year ago. Artificial colors/flavors, preservatives, bio-engineered foods and artificial sweeteners are the things most consumers target for lower consumption.
While adding protein and other additives may seem to conflict with the priority of avoiding ultra-processed foods, which may vary based on consumer segments, Bennett said. The key to success is having a deep understanding of how consumers meet their needs.
“Some brands have the right to push into certain segments with brand equity,” he said. “Some consumers will be very strict about what they consider a viable protein source. So it’s all about knowing your consumer inside and out and where you can improve your brand.”
Product innovation is also changing. Bennett cites five themes driving new products: premiumization, functional benefits, familiarity, packaging innovation and new product shelves.
When it comes to premiumization, Bennett noted that in fresh bread and rolls, 38% of products launched last year were at a premium price point. For sweet baked goods, up to 41%. Both are nearly 10 points higher than the category average.
The functional benefits Bennett sees in breads and rolls focus on sugar, fiber and protein claims, with plenty of sugar and protein. He said the functional benefits are less in sweet baked goods but noted that the category may have some opportunities.
New products perform better when paired with familiar flavors. Sourdough, plain, chocolate or caramel is the best flavor for breads and sweet baked goods.
Bennett pointed to several other opportunities for growth in the bread category. While retail makes up 77% of the bakery’s total dollar share, food service is the growth. Foodservice bakery dollar sales rose 6.5% from a year ago, compared with 1% for retail, he said.