Sector Trend Analysis – Bakery products in the United States

Retail environment and trends

Baked goods retail sales in the United States (U.S.) increased at a CAGR of 3.1% from 2017 to 2021, reaching US$67.9 billion. It is expected to grow at a CAGR of 2.2% from 2022 to 2026, reaching US$75.8 billion in 2026. Pastries was the best performing category in 2021, with retail value sales increasing by CAGR of 3.9%. reaching US$16.9 billion.

The U.S.market for baked goods was impacted by the coronavirus pandemic as U.S. consumers generally spent more time at home and ate out less. As restrictions have eased, consumers have been returning to restaurants, and on-trade sales of baked goods are recovering, although sales are expected to remain significantly below 2019 levels. Cakes and pastries will take time to recover to the 2019 level of foodservice volume sales. Both chained and unchained bakeries across the country took a serious financial hit during the pandemic. A reduced number of outlets specialising in sales of cakes and pastries means these categories are not likely to return to the 2019 level of sales until after 2024.

Baked goods volume sales grew at a CAGR of 1.0% from 2016 to 2021, reaching 13.9 billion tonnes in 2021. It is estimated that volume sales will increase by the same CAGR over 2022-26 to 14.6 million tonnes in 2026.

Artisanal baked good companies make up the largest manufacturer of baked goods, or almost half the market, ffollowed by private labels and 'others'. Top three baked goods companies were Grupo Bimbo (US$5.9 billion in 2021), followed by Flowers Food (US$2.9 billion in 2021) and McKee Foods (US$1.5 billion in 2021). Over 2017-21, Flower Foods sales grew the fastest by a CAGR of 5.4%, followed by Grupo Bombo and McKee Foods (3.4% each).

In terms of brands, Grupo Bimbo brands dominate with Sara Lee, Entenmann's, Thomas, Orowheat, and Brownberry in the top 15. Little Debbie (McKee Foods) and Nature's Own (Flower Foods) are the largest and third largest baked goods brands in the U.S.

Retail subsector analysis

Bread

While all bread categories have shown post pandemic growth, growth rates vary by category. Flat bread saw the most growth with unpackaged flat bread growing the fastest, at a CAGR of 7.7% from 2016 to 2021, reaching US$1.7 billion in 2021. Sales of packaged and unpackaged leavened bread increased slightly by a CAGR of 2.7%. Bread will continue to grow over 2021 to 2026, although growth rates are set to slow in most categories.

Flat bread is expected to see the strongest retail current value growth over 2022 to 2026 thanks to a variety of factors, including the diversification of food in the US and rising consumer interest in Latin American and Middle Eastern cultures. The growth of immigrant communities across the U.S., especially those from Latin America, has not only contributed to broader interest in flatbreads (e.g., tortillas), but also in the founding of regional and local bakery chains which specialise in flatbreads. In addition, national manufacturers are producing a growing variety of flatbreads, from tortillas to lavash and naan, as more consumers are trying new cuisines which traditionally use flat breads rather than leavened breads.

Packaged bread continues to incorporate an ever-growing list of healthy ingredients as many products are offering gluten-free or organic versions, in addition to innovative flavours. Combinations of grains, nuts and seeds in packaged products will attract consumers interested in the protein, mineral, vitamin and fibre content. Brands such as Dave's Killer Bread and Silver Hills go beyond the classic focus on whole grains that healthy breads have had and bring attention to their inclusion of healthy fats and low sugar content. Some brands also use fruit juice as a sweetener rather than sugar. Healthy brands also emphasise the high number of various whole grains. Consumers are increasingly interested in including a diverse selection of grains in their diet. All of these trends will grow and strengthen over 2021 to 2026, especially as high fibre content becomes a sought-after attribute across packaged food in the coming years.

In terms of retail sales volume, packaged flat bread grew fastest by a CAGR of 7.0% from 2017 to 2021, reaching 2.9 thousand tonnes in 2021. Volume sales of unpackaged leavened bread grew the slowest at a CAGR of 0.4% from 2017 to 2021, to 6.7 thousand tonnes in 2021. It is projected that volume sales of leavened bread will continue to grow slowly while sales of flat bread will grow fastest from 2022 to 2026.

Sara Lee and Natures Own were the largest bread companies in the U.S. with sales growing by CAGR's of 6.5% and 3.8% from 2017 to 2021 respectively, with sales increasing to US$1.4 billion and US$1.3 billion respectively in 2021.

Cakes

Both packaged cakes and unpacked cakes grew at a CAGR of 2.8% and 4.2% respectively. Sales of unpackaged cakes are expected to continue to grow while packaged cakes are expected to fall over 2022 to 2026. Cakes (and pastries) are expected to take time to recover to 2019's level of foodservice volume sales. Both chained and unchained bakeries across the U.S. took a serious financial hit during the pandemic, resulting in a reduced number of outlets specialising in sales of cakes and pastries. These categories are likely to return to the 2019 level of sales after 2024.

Private label, followed by 'Others' and Little Debbie are the largest cake brands in the U.S. Drakes experienced the largest growth at a CAGR of 7.3% from 2017 to 2021, followed by Entenmann's, which grew at a CAGR of 6.6% from 2017 to 2021.

Desert mixes

Sales of dessert mixes were stagnant from 2017 to 2021, at US$2.0 billion in 2021. This trend is expected to continue over 2022 to 2026. While the pandemic drove growth in dessert mixes due to increased home activity and home consumption, the popularity of such products is likely to wane once lifestyles and consumption return to outside the home.

Jello, Betty Crocker, and Duncan Hines are the largest dessert mix brands in the U.S. with retail sales representing almost half the total market sales in 2021.

Frozen baked goods

Sales of frozen baked goods increased slightly over 2016 to 2021 at a CAGR of 1.1%, reaching US$2.4 billion in 2021. This slow growth rate is expected to continue over 2022 to 2026.

In terms of retail sales volume, frozen baked goods grew at a CAGR of 1.4% from 2016 to 2021, reaching 234.6 tonnes in 2021.

New York brand frozen baked goods experienced the largest increase in CAGR at 2.7%, reaching US$171.8 million in 2021 from US$154.7 million in 2017.

Pastries

Sales of packaged and unpackaged pastries increase at similar rates with sales of unpackaged pastries double the size of packaged pastries.

Retail sales volume of packaged pastries grew at a CAGR of 2.7%, while the unpackaged pastries increased in a CAGR of 1.8%, reaching 713 tonnes and 1.2 thousand tonnes respectively in 2021.

Artisanal brands made up over half the retail sales in the market, increasing by a CAGR of 3.8% over 2017 to 2021. Following artisanal brands, private label brands have the highest retail sales and experienced the largest sales increase at a CAGR of 5.9% from 2017 to 2021.

Distribution channels

The vast majority of bakery products in the U.S. are distributed through store-based retailing. Grocery retailers represent 86.2% of distribution while the remainder are distributed through non-grocery specialists, mixed retailers, and non-store retailing (2021).

The collapse of foodservice in 2020 followed by a turbulent 2021 in retail due to pandemic related restrictions lead to challenges for the retail landscape for bakery products, some of which will have permanent effects. In addition, foodservice also continues to struggle with labour shortages, compounding the struggle to regain sales. Foodservice recovery is expected to be slow and will span a few years.

The biggest change is the emergence of ecommerce, which has quickly gained share during the pandemic, but as opposed to demand normalising, as seen for store-based grocery channels, ecommerce is expected to continue growing. Retailers and online delivery sites were able to quickly adapt to changing shopper behaviour, making online shopping easier and more convenient, while at the same time many consumers who switched to ecommerce have become used to it. As a result, ecommerce is expected to continue absorbing share from store-based channels.

New product launch analysis

According to Mintel's Global New Products Database (GNPD), 11,240 bakery products were launched in the U.S. from 2017 to 2021. Top sub-categories of new bakery products included sweet biscuits/cookies, baking ingredients and mixes, bread and bread products, and cakes, pastries & sweet goods. Flexible was the most common package type, followed by flexible stand-up pouch. New variety/range extension was the largest new launch type, followed by new packaging, and new products.

Examples of new product launches

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Resources

• Euromonitor International:
  • Baked Goods in the U.S. (December 2021)
  • Staple Foods in the U.S. (December 2021)
• Mintel Global New Products Database, 2021

Sector Trend Analysis – Bakery products in the United States
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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