Bimbo’s rising margins and falling volumes analysed
- North American sales rose 1% excluding currency effects, but pricing and product mix masked lower volumes.
- Bimbo is targeting smaller stores and away-from-home channels to help rebuild demand.
- Nutritional improvements still have to deliver products that suit consumers’ budgets and eating habits.
- Higher costs in 2027 will increase pressure to make additional sales profitable.
Executives from the world’s biggest bakery manufacturer had plenty of good news for investors on its third-quarter earnings call, but they couldn’t report the recovery that would make their North American turnaround more convincing: that consumers are buying more of its products. After five consecutive quarters of improving margins, volumes were still falling, leaving the Mexican bakery giant looking to smaller stores and away-from-home sales to help put its available production capacity to work.
North American sales increased 1% excluding currency movements in the third quarter, with favourable pricing and product mix overcoming lower volumes, while adjusted EBITDA margin rose 40 basis points to 10.8%. Across Grupo Bimbo, currency-neutral sales grew 3.6% and adjusted EBITDA margin reached 15.7%, giving management stronger profitability alongside an unresolved demand challenge.
“The transformation will not be completed until North America returns to sustained profitable volume growth,” CEO Alejandro Rodríguez Bas told analysts. The Mexico City-headquartered company gained share in four of six North American categories, but taking business from competitors hasn’t yet delivered the regional volume recovery management wants.
Greg Koehrsen, president of the group’s American arm, Bimbo Bakeries USA (BBU), identified where the business needs to reach further. “Historically, our business has really been focused on what I would call large format retail,” he said. “Places where we have been maybe less penetrated on average would be small format retail and our away from home business.”
The weekly shop won’t rescue every loaf
Bimbo is pursuing growth in a bread market where even cheaper products are losing purchases.
US centre-store sandwich bread sales fell 1.5% to $9.97bn in the 52 weeks ended 9 August 2026, according to Circana, while unit sales dropped 3.3% to 3.07 billion. Nine of the 10 largest sellers recorded unit declines, and private label increased dollar sales by 0.7% while losing 2.6% of its units.
Manufacturers therefore face more than shoppers trading down from branded loaves. A discount might win a purchase from a competitor, but it won’t necessarily persuade a household to eat more bread or buy a pack it doesn’t expect to finish.
Demand is stronger elsewhere in the aisle. Speciality bread grew 9% in value and 6% in units over the same period, while crusty and meal bread increased 7% and 1.6%, respectively. Those figures give manufacturers reason to examine how their products fit particular meals, rather than assuming the traditional sandwich loaf will recover with household spending.
Koehrsen resisted predicting whether changing US consumption patterns would last. “It would probably be overrepresenting my understanding to predict how sustainable these changes are,” he said, describing consumers asking for value, quality and changes to the range.
Bimbo has already invested heavily in changing its recipes. Earlier this month, it reported that 98% of its global daily consumption portfolio met its Positive Nutrition criteria, while products classified as having optimal nutritional quality represented 48% of total net sales.
The company uses the Australia and New Zealand Health Star Rating methodology, applying a threshold of at least 3.5 stars out of five. Its reformulation programme includes increasing fibre, protein and whole grains while reducing sodium, added sugars and saturated and trans fats.
These are global measures rather than North American results, but they complicate the familiar prescription that healthier products will bring growth. A manufacturer can improve nutritional quality and still lose a purchase because the pack costs too much, contains too much or doesn’t suit what someone wants to eat.
More outlets have to earn their keep
The American business’s interest in smaller stores and away-from-home means serving purchases that look different from a supermarket shop for the week.
A shopper buying something to eat immediately needs a different proposition from a household stocking up, while foodservice operators judge bakery on consistency, handling and the cost of each usable portion. Existing production capacity helps only if it can deliver those requirements economically.
“The reality is we have installed capacity,” Rodríguez Bas said. “We are developing differentiated products according to the new trends. We are creating new offerings.”
Smaller packs could reduce the cash needed for a purchase and the amount a household risks wasting, but packaging and handling can absorb more money per unit of food. Additional outlets can also mean expensive deliveries to customers selling relatively small quantities, particularly if case sizes exceed demand or stock moves too slowly.
Manufacturers chasing distribution need to establish how much an outlet can realistically sell, how frequently it needs replenishing and what remains after delivery costs and returns. An order that helps fill a production run can still be poor business once the product leaves the factory.
Koehrsen described reviewing those journeys as part of BBU’s transformation. “For our supply chain, it really is about taking a close look at our footprint, the way that products are flowing from bakeries through our sales centres to stores,” he said.
He also stressed supplying “the right product in the right amounts for every single customer and store in which we serve”, connecting the efficiency programme directly to decisions about which products belong where.
Technical teams face similar calculations as recipes change. Koehrsen said BBU had removed Red No 3 ahead of the required deadline and that all artificial colours would be removed from every product by year-end. Such changes still have to preserve the flavour, texture and consistency behind repeat purchases, while leaving a price shoppers will accept. A cleaner ingredient list becomes an expensive achievement if the resulting product loses its appeal or costs too much to sell.
Higher costs leave less room for error
Management expects a more inflationary environment in 2027, increasing the pressure to win volume without surrendering its recovered profitability.
CFO Diego Gaxiola said almost all the group’s main raw material requirements for the first half of next year were already hedged. That provides visibility, although it doesn’t guarantee favourable comparisons with 2026. “We have continued with our disciplined hedging strategy but considering the cost that we have had for 2026, 2027 is going to be a challenge,” he said.
Higher transportation costs are already affecting ingredient deliveries and distribution, while a stronger peso increases the dollar cost of products manufactured in Mexico for the US. Gaxiola acknowledged that those increases couldn’t necessarily be recovered through market pricing, leaving North America to absorb them.
Longer-term sourcing investment is continuing, with regenerative agriculture programmes covering more than 500,000 hectares by the end of 2025, up 73% year on year. These programmes aim to strengthen the resilience of ingredient supplies, while the immediate challenge remains selling products profitably to cautious consumers.
Grupo Bimbo has also committed approximately $1bn to US investment between 2026 and 2028, supporting maintenance, innovation, affordability and nutrition improvements, among other priorities. That spending gives BBU resources to pursue growth, but management’s own comments show why manufacturers can’t leave sales strategy until after the factory improvements are complete. Products, pack sizes and delivery arrangements have to suit the purchases available, even when those purchases sit outside the channels that built the business.
Bimbo has proven it can run a more profitable bakery business, but it still has to get consumers buying more. As Rodríguez Bas put it, “We need to go out, service, and conquer that volume.”
