Commercial and Retail Bakeries
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 9,500 bakeries in the US produce bread, rolls and other bakery products. Commercial bakeries sell primarily to businesses (retailers, restaurants, and food service companies). Retail bakeries sell primarily to consumers. Major revenue categories include bread, rolls, cakes, cookies, and crackers. Companies may also sell frozen bakery products or may specialize in a particular type of product, such as cupcakes.
Dietary Trends Change Demand
Trends and fads that drive food preferences can hurt demand for bakery products.
Variable Costs Impact Margins
The cost of ingredients, such as flour, sugar, and dairy products, can vary and affect margins.
Industry size & Structure
The average commercial bakery employs 41 workers, and generates $12 million annually, while the average retail bakery employs 9 workers and generates about $760,000 annually.
- The bakery industry consists of about 9,500 firms that employ about 169,600 workers and generate about $37 billion annually.
- Commercial bakeries account for 28% of firms and 86% of industry revenue.
- The commercial bakery industry is concentrated - the top 50 firms account for 70% of industry revenue. The retail bakery industry is fragmented - the top 50 firms account for just 16% of industry revenue.
- Large companies include Grupo Bimbo (Sara Lee, Arnold), Hostess Brands, and McKee Foods (Little Debbie).
- Bread is a standard household staple, with penetration in almost all US households.
Industry Forecast
Commercial and Retail Bakeries Industry Growth
Recent Developments
Mar 20, 2023 - Expensive Sugar
- Raw sugar futures hit a six-year high in February, threatening to fuel inflation by increasing the cost of making baked goods, candy, and soft drinks, Reuters reports. Sugar supplies are expected to remain tight and prices high at least until April when Brazil – the world’s leading sugar producer – begins harvesting. Meanwhile, weak output is likely to force India to cap exports while in Europe a drought and a pesticide ban has resulted in the smallest sugar beet crop in 20 years. The pain may be short lived however as Brazil is expected to deliver one of its best crops ever, resulting in the first sugar surplus in four years, according to Reuters.. After peaking at more than 22 cents per pound in late February, sugar prices retreated to about 20.5 cents in March.
- A pair of bills reintroduced in Congress in March would regulate CBD in food and dietary supplements, Food Navigator reports. The Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2023 and the CBD Product Safety and Standardization Act of 2023 both would require the Food and Drug Administration to utilize existing regulatory frameworks for CBD as dietary supplements and foods. “The FDA has dragged its feet in properly regulating CBD and hemp-derived products on the market, creating confusion about its legal issues,” said Rep. Morgan Griffith (R-VA) who sponsored the bills with co-sponsor Rep. Angie Craig (D-MN). The FDA in January concluded that existing regulatory frameworks for foods and supplements are not appropriate for cannabidiol (CBD) but said the agency is prepared to work with Congress to develop a regulatory framework for CBD.
- Grocery price inflation is driving sales and volume growth of private-label products, the Private Label Manufacturers Association (PLMA) reported in its 2023 Private Label Report. Store brands, which typically cost less than national brand products, contributed to an 11.3% sector sales increase in 2022, resulting in record revenues of $228.6 billion from all US retailing channels, according to the PLMA report. Store brand growth in 2022 was spread across the store. Dollar sales of bakery products rose 12.6% last year vs 2021 for a total of $8.4 billion. Among bakery products, dollar sales of store brand pastry/donuts and cookies increased by 19.3% (to $2 billion in sales) and 18.3% ($3.4 billion), respectively, in 2022. Store brand sales of fresh bread and rolls increased 9.4% to $3.2 billion.
- In-store bakeries are thriving with supermarket sales of baked goods on the rise, Supermarket News (SN) reported in February. “Bakery department shoppers are seeking high-quality fresh items, which is why in-store produced products represent the majority of our overall assortment,” Bennett Morgan, SVP and chief merchandising officer for grocer SpartanNash, told SN. Offering a variety of choices at compelling price points is key to satisfying consumers’ cravings for baked treats and meeting entertaining needs. Shopper visits to SpartanNash bakeries are on the rise, according to Morgan, with many customers seeking classic treats like donuts, cookies, cakes, and breakfast sweets. To encourage impulse purchases in today’s inflationary environment, he suggests that merchandisers situate fresh product displays in high traffic areas outside of the bakery department.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.