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How are America's biggest bakery businesses performing in 2016?

Vince Bamford

By Vince Bamford+

17-Aug-2016
Last updated on 21-Aug-2016 at 19:29 GMT2016-08-21T19:29:38Z

Sales of hamburger and hot dog buns dipped in the first half of 2016. Pic: © iStock/circlePS
Sales of hamburger and hot dog buns dipped in the first half of 2016. Pic: © iStock/circlePS

IRI data reveals how the biggest businesses in key parts of the US bakery market performed in the first half of 2016

 

America's bread market has been as challenging in the first half of this year as it was in 2015, with unit sales of fresh bread down 1.4% compared with the same period 12 months ago [IRI year-to-date July 10, 2016].

Flowers Foods - owner of biggest US bread brand Nature's Own - last week said price increases on its core brands had failed to offset volume losses due to increased promotional activity and softer consumer demand. According to IRI, Flowers' overall sales fell 1.2% by value in the first half of this year, with unit sales down 2.8%.

But the business can take comfort from the outstanding performance of organic brand Dave's Killer Bread, which was acquired by Flowers last year. Sales growth, which was already strong, has accelerated with the national roll-out of the brand this spring to more than 9,000 stores.

Retail acceptance of the brand been "nothing short of remarkable,” Flowers senior vice president David Roach told analysts earlier this year. “We’ve had retailers asking us when can they put it in,” he added. “They want it in a big way.”

Tough start for private-label bread

At the other end of the sales spectrum, private label bread has had a tough start to 2016. Unit sales have declined 7.3% year on year, almost twice the rate recorded by IRI for the whole of 2015.

The average price of a private label loaf has risen three cents over the period, which has helped to offset some of the volume decline - overall value fell 5.6% year on year to $1.07bn.

Announcing its financial results for the first half of 2016, Grupo Bimbo said pressure on volumes in the US private label bread market had offset growth in its brands, which rose 1.3% by value and 1.5% by unit sales according to IRI data.

Overall sales from the Grupo Bimbo's North American segment grew 19.8% year on year, reported the company last month , but it added this was largely down to the benefit of the exchange rate. 

FRESH BREAD

Year on year performance. Source: IRI year-today July 10, 2016 (Supermarkets, drugstores, mass-market retailers, gas/c-stores, military commissaries and select club and dollar retail chains)
Note: data can be re-ordered by clicking on column heading
IRI is a Chicago-based market research firm (@iriworldwide

Rolls and buns are outperforming their larger cousins, although unit sales remain flat and the 2% increase in category value has been driven by price increases. Some manufacturers are bucking the lackluster performance, however, with King's Hawaiian, Peppridge maker Campbell Soup Co and H&S Bakery among those recording unit and volume growth.

FRESH ROLLS, BUNS & CROISSANTS

Year on year performance. Source: IRI YTD July 10, 2016
Note: data can be re-ordered by clicking on column heading
IRI is a Chicago-based market research firm (@iriworldwide

Private-label has been responsible for much of the decline in the hamburger and hot dog buns category. With private label accounting for almost half the market, a 6.2% decline in value has offset growth in sales from manufacturers including Flowers and Aunt Millie's - and particularly strong performances from Campbell Soup Co and King's Hawaiian.

HAMBURGER & HOTDOG BUNS

Year on year performance. Source: IRI YTD July 10, 2016
Note: data can be re-ordered by clicking on column heading
IRI is a Chicago-based market research firm (@iriworldwide

But it isn't all bad news for retailers' own products - private-label sales of donuts have risen 4.3% in dollar terms, ahead of the overall category.

Even more impressive has been the revitalized Hostess brands. Three years after its return from receivership, the business has recorded 12.3% value growth in its donuts - and similarly strong performances in categories including muffins and pastries. In the past week, the business has made its first foray into frozen food with the roll-out of Deep Fried Twinkies .

DONUTS

Year on year performance. Source: IRI YTD July 10, 2016
Note: data can be re-ordered by clicking on column heading
IRI is a Chicago-based market research firm (@iriworldwide

Hostess will also be hoping to ramp up its business in the cupcakes and brownies category through a new partnership with Mars that has brought MilkyWay and M&M’s brownies to market.

For now, however, its growth has been overshadowed by private label. Manufacturers including Bon Appetit Danish and Give & Go Prepared Foods have also got off to a good start this year in the cupcakes and brownies category, though growing slower than recorded by IRI for 2015.

CUPCAKES & BROWNIES

Year on year performance. Source: IRI YTD July 10, 2016
Note: data can be re-ordered by clicking on column heading
IRI is a Chicago-based market research firm (@iriworldwide

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