The wholesale bakery industry ended 2021 on a largely positive note. That’s according to BEMA Intel’s data results for the fourth quarter of 2021.
The Member Pulse Survey, which asks bakery equipment manufacturers to offer their perspectives, showed that 98% of respondents had a positive view of the U.S. bakery equipment manufacturing industry, and 96% were positive about the outlook for the global industry. The US outlook improved by three percentage points, reinforcing a trend of positive outlook growth since the second quarter of 2020, when BEMA launched the quarterly survey.
When looking at their own business outlook, bakery equipment manufacturers see nothing but sunshine with 100% positive statements over the next six months of their business, which they are experiencing right now. One hundred percent of respondents were equally positive on both the industrial/commercial channel and the distribution channel.
“Demand continues to increase, putting pressure on supply,” said Tim Cook, Linxis Group chief executive and BEMA chairman. “Bakers are increasing their capacity to handle this new level of demand.”
Although price increases are passed on to consumers, their demand for baked goods remains strong. IRI data collected by BEMA shows that total dollar sales of commercial bakeries in the aisles continue to increase while unit sales remain stable from the third to fourth quarters, suggesting that price increases are not deterring consumers.
“Even with price increases, consumers aren’t reducing overall,” said Jennifer Lindsey, vice president of marketing at Corbion. “I don’t think bakery will be affected as much as other food categories as consumers deal with rising costs as the unit price remains relatively low.”
Even in-store bakery continues to recover from those early days of the coronavirus (COVID-19) pandemic with dollar sales up in the fourth quarter and unit sales up slightly from the third quarter.
The general trend in the CPI for bakery products is upward and reflects these price increases. Since August 2021, the CPI has fallen from 1.5% to 5.4% to 4.8%.
“What that tells me, and going back to comments from the third quarter, is that the baking industry is starting to see the effects of the pass-through of retail price increases,” Ms. Lindsey explained. “Overall, the food industry still tops bakery in the CPI, but the net trend for bakery is good. Yes, there is a drop in December, but a point does not trend as they say. We should revisit over time.
This is great news for the baking industry, which continues to face rising ingredient costs, fuel and transportation costs, and labor. Diesel fuel alone saw a 38% increase, and while there was a drop in December, Ms Lindsey pointed out that we already knew that drop was not indicative of a trend.
“Nothing escapes the pressure, and it’s a storm of weather, drought, supply chain and logistics,” she said.
Bakery equipment manufacturers also continue to cite these issues as their top challenges.
“So far, equipment manufacturers and bakers, working together, have met these challenges admirably,” Cook said. “Certainly not without difficulties or inconveniences, but suppliers have been very creative in their sourcing and staffing efforts, and bakers have been supportive by being flexible in how projects are organized and executed.”
The war in Ukraine is not reflected in these numbers, but that can only mean more disruption.
“It’s just more disruption with the supply chain for raw materials and costs,” Ms Lindsey said. “The only way I can see to sustain this is if the price increases continue.”