Though the wellness trend has been growing strong across the world, developed countries have had a substantial share in triggering a paradigm shift in consumers’ perception of bakery products. This has opened a whole new world of opportunities for bakery products that are whole-grain, gluten-free, vegan, organic, or simply “healthy” in North American and European markets.
Aditi Yadwadkar, feature writer, Future Market Insights
The health & wellness wave has come a long way; its impacts have ingrained significant changes in the way the bakery industry operates. The dynamic consumer demands for low-calorie and nutritious food products have influenced bakers’ strategies to mainly revolve around health-benefitting ingredients and manufacturing processes.
While healthy bread and other bakery items are gobbling a huge share in the bakery industry, consumers are gravitating towards contradictory demands: convenient nutrition and indulgence. Convenient nutrition is gaining immense popularity among consumers, driving bakers to adopt strategies to offer health benefits with indulgence to meet the changing consumer demands. Consumers are becoming more critical of their food choices, and this is pushing bakers to transform their business strategies, not just in terms of diversifying their product portfolio but also to sync with the changing regulations, distribution channel trends, and innovation platforms.
A mounting number of bakers and confectioners are entering bakery markets in the Americas and Europe to capitalize on an upsurge in demand for healthy bakery. Though health and innovation remain the common factors influencing market trends in both the regions, there remains a huge difference in consumer perception about “healthy” bakery products, which is inducing a significant deviation in market trends in the U.S. as against those in Europe.
Free-From Takes Root in the U.S.
The clean label movement grows strong in the U.S., and consumers have become critical about the ingredients in their bakery products while making a “healthy” purchasing decision. In addition, growing awareness about food allergies and increased prevalence of digestive diseases is boosting demand for bakery products with labels such as gluten-free, non-GMO, and vegan. Consumer demand for baked goods free from salt, dairy, gluten, acrylamide, artificial additives, carbs, and calories is surging, which has given rise to innovation in the bakery industry in North America. Bakers are constantly on the hunt for innovative ways to offer healthy and free-from baked goods while boosting their taste and texture, in a bid to improve sales potential for healthy bakery in the region.
Artisan-style breads featuring inclusions, such as ancient grains, high fiber content, and other healthy ingredients, are making up a strong trend in North America’s bakery industry. Bakers and confectioners are experimenting with bold new flavor fusions with the help of health-giving ingredients to provide consumers with authentic experiences.
The Rise of Artisan Bakeries: Europe
Though the bakery industry has always been intensely competitive in the Americas as well as in Europe, the business landscape in Europe varies tremendously as compared to the Americas. Baked food, especially bread, has been ingrained in Europe’s food culture since the ancient time, and local artisan bakeries have developed their own product arrays with healthy offerings. Regional players are growing strong in the region to compete with global players for long-term survival in Europe’s bakery industry. With a diverse and unique portfolio of healthy variants of breads and other baked goods, bakers and confectioners in Europe are aiming to capitalize on changing purchasing habits of European consumers.
Major European economies, especially Germany and France, had emerged as lucrative markets for healthy bakery long before the organic and healthy bakery renaissance. Consumed on most meals, bread remains the cornerstone of German food culture. German bakers have been baking nutritious bread and Germans have set a high standard for the quality, sizes, and variety of bread. As consumers are shifting to healthier dietary habits, German artisan bakers are transforming their operations by blending the tradition of German craftsmanship with innovative ingredients. Along with the rise of artisan movement, mixed bread with a combination of ingredients, such as wheat and rye, or wheat and seeds, is also likely to dominate the emerging trends in the German market for healthy bakery. While Germany is emerging as a leading market for healthy and organic baked food products, the trend is expected to spread rapidly across other European countries such as France and U.K. Health-conscious consumers are welcoming artisan bakeries in European countries, and premium prices of organic bread will no more be a barrier for European bakers.
Plant-based Ingredients: A Key to Win in Europe
Vegetarian thickening agents and bakery enzymes are taking roots in the bakery & confectionery landscape in both North America and Europe. A substantial rise in veganism can be mainly attributed to the palpable shift from animal-based ingredients to their plant-derived variants. Eventually, the share of animal-based bakery ingredients, including food thickening agents and bakery enzymes, is likely to decline steadily in the upcoming years, especially in European Countries.
With the increasing growth of the bakery ingredients industry in Europe, the European market for thickening agents grew rapidly in the past few years, reaching a valuation of over US$ 685 million in 2018. The sales of thickening agents in Europe’s bakery & confectionery industry accounted for more than one-third revenue share of the market and the demand for plant-based thickening agents is expected to grow rapidly in the coming years.
The global market for bakery enzymes is on the brink of crossing the USD1 billion mark. In 2018, North America and the European Union, collectively, accounted for more than half the revenue share of the market, and the demand is expected to surge in the upcoming years.
In the U.S., bakery enzymes, such as carbohydrase and protease, are expected to witness burgeoning demand among bread, cookie, and biscuit manufacturers. However, as bread is a staple for Europeans, the adoption of these bakery enzymes is likely to remain significantly high among European bread manufacturers.
Though a mass shift towards a healthy lifestyle and dietary habits has sparked a decline in bakery consumption, the bakery industry has been given a lift by health benefitting ingredients. Consumers’ desire for healthy indulgence has had the biggest impact on the demand for ingredients that were traditionally consumed by the bakery industry. As consumers are moving away from highly processed bakery with artificial flavors and ingredients, bakers and confectioners are innovating with healthy ingredients to add to the health quotient of bakery products in order to sync with the changing consumer demands.
Americans and Canadians are showing an inclination towards the ‘realness’ and authenticity of natural and organic ingredients in baked products while making purchasing decisions. On the other hand, goods with novel ingredients, such as seaweed and algae-based products, are likely to enjoy immense success in European markets. Bakers and confectioners in North America are trusting enzyme-based dough improvers for enhancing the characteristics of baked goods, such as shelf life, dough softness, strength, and dough relaxing. Looking at consumers’ reaction to vegan, vegetarian, and flexitarian trends, the European market for bakery ingredients is expected to create a huge sales potential for innovative bakery ingredients, such as specialty seaweed extract.
Regulations in North America and Europe
As the demand for healthy baked goods with labels such as ‘gluten-free’ or ‘organic’, has increased significantly, regulatory bodies have entered the landscape with a set of strict labeling requirements. While the awareness about regulations imposed on baked food products is growing, health-conscious consumers are also becoming more skeptical about ingredients before making a purchase. This is also boosting the growth of the ‘clean label movement’ in both regions. The EU has been regulating the use of food additives, flavors, and bakery enzymes with the imposition of Regulation (EC) No 1331/2008 and Regulation (EC) No 1333/2008. In January 2018, the EU announced an amendment to the Regulation (EC) No 1333/2008, which highlights the use of sweeteners in fine bakery products. With this regulation, the EU has imposed a ban on the use of artificial sweeteners, such as E 950 Acesulfame K, E 951 Aspartame, E 961 Neotame, and E 955 Sucralose, in fine bakery products with specific nutritional benefits.
In North America, the FDA has imposed stringent regulations on the manufacturing and marketing of all the food products, especially regarding baked goods that are promoted as “healthy”. The FDA recently published new standards for non-GMO bakery—an important segment in the healthy bakery industry in North America—and new labeling regulations are afoot.
Health – Universal Driver for Innovation
Bakers and confectioners are riding on the coattails of product innovation to offer healthy bakery items and ultimately to gain a competitive edge in the market. Innovations are varying in terms of ingredients, production engineering, flavors, and bakery performance.
Cargill, one of the global leaders in the bakery industry, recently launched its new palm oil shortening line, PalmAgility, to enhance performance in various bakery products such as donuts, pies, crème fillings. With the regulatory restriction on partially hydrogenated oils (PHOs) in the U.S., a shift is triggered towards palm-based alternatives to achieve creamier and smoother texture in bakery products, on which Cargill is planning to capitalize with the launch of PalmAgility.
Bellarise, the North American subsidiary of the Pak Group, recently announced that it has launched a new dairy-free, non-GMO, allergen-free and gluten-free alternative for egg wash in baked goods. The company also announced that it launched the new vegan egg wash replacer is a clean label ingredient to meet the changing needs voiced by industrial and commercial bakeries in North America.
Bimbo Bakeries USA recently announced the launch of its latest line of 100% organic bread in the American markets. The company has added a variety of breads to its latest product line, including 100% whole-grain breads; organic 22 grains and seeds bread; and organic rustic while bread.
Supermarkets and Hypermarkets in the U.S.
Health-driven purchasing habits of consumers have changed significantly in the past decade, directing the recent trends in the supermarket and hypermarket sector. More than 90% of the sales of organic bakery products including breads, are accounted for by conventional and natural food supermarkets and chains.
The demand for organic and bio-based bakery products is witnessing double-digit growth, reflecting in attractive market incentives for organic and vegan bakers in North America, especially in the U.S. In the country, organic products can be found in the isles in nearly 3 in 4 grocery stores. A recent study by the United States Department of Agriculture (USDA) found that organic food products have reached more than 20,000 natural food stores.
Bakery manufacturers are adopting strategies to satisfy a mindful consumer with trendy healthy ingredients and smaller package sizes. With consumers adopting healthier snacking habits, bakers are focusing on introducing bakery products with small portion sizes such as packages of two buns, half loaves, and four-packs of cookies. The recent rise in demand for healthy snacking options is expected to create immense sales potential for artisan breads and healthier snack items in the coming years.