US bakery and snacks market report

Future of US bakery and snacks driven by healthy indulgence, say analysts

The increase in health awareness is exerting a significant influence on the US bakery sector. Pic: ©iStock/leekris

Wholesome, convenient extravagance, gluten-free and ethnic breads are forecast to be the biggest drivers of US bakery and snacks NPD in 2017.

According to The Boston Consulting Group (BCG) and IRI, the seemingly contradictory desires of American consumers – for convenient nutrition and for indulgences – will continue to grow.

“Our research shows the growing popularity of convenient nutrition and wellness remains one of the most powerful trends in the US consumer packaged goods industry,” said Jim Brennan, a BCG partner.

“But this does not mean American consumers' craving for indulgences has diminished.”

Bifurcated trends

The healthy lifestyle trend has sparked a reduction in bakery consumption, noted Irinia Andreeva, market analyst at IndexBox.

“In the immediate term, this increase in general health awareness as the driver for consumer-based preference, will exert a significant influence on the bakery products sector,” she said.

Euromonitor noted packaged leavened bread continued to struggle in 2016, as it’s done since 2011, suffering both volume and current value declines of 1% to reach sales of 2.7m tons and $11.3bn, respectively.

The players

The US bakery industry is fragmented due to the existence of many small retail bakery products manufacturers located throughout the country.

“Artisanal offerings dominated the category last year, with a 48% share of all baked goods and sales of $27.5bn,” said Koerten.

According to Future Market Insights, the top four bakery manufacturers account for 35% of industry revenue, while commercial producers account for 91%.

Bimbo Bakeries, a division of Mexico’s largest bakery, Grupo Bimbo SAB de CV, continued to lead baked goods in 2016 with sales of $3.9bn and a value share of 7%, though this value share has fallen by over one half percent point since 2013, said Euromonitor.

Flowers Foods again ranked second with a 3% value share and sales of $2bn, while private label saw an increase in share to 15% in 2016.

Other major bakery manufacturers include the Bama Companies, CSM Bakery Solutions, Amoroso’s Baking Company, Lewis Bakeries and Kings Hawaiian Bakery.

BCG and IRI said companies such as Blue Diamond and The Wonderful Company – which market functional foods to promote nutrition or boost energy – were among the CPG growth leaders in 2016.

Also among the industry’s best performers were companies that derive much of their sales from indulgences, such as Twinkie’s Hostess.

The top 5 US snack food manufacturers in terms of profit include Frito-Lay North America, Utz Quality Foods, LLC, Herr Foods Incorporated and Boulder Brands.

Arla Food Corporation, Ballreich Bros, PepsiCo and ConAgra Foods are also some of the major snack food players.

“The decline of the category reflects the ongoing and growing consumer sentiment against processed foods in favor of more natural ones, as well as Americans’ increasing aversion to carbohydrates and gluten,” said Euromonitor’s research analyst Jared Koerten.

“Although a very small percentage of Americans suffer from coeliac disease, a growing number believe gluten to be fundamentally unhealthy and are seeking to avoid it, along with avoiding carbohydrates over concerns about sugar intake,” he said.

“This has led to the introduction of gluten-free products with lower amounts of high-fructose, fat, corn syrup and sodium but higher amounts of fiber,” said Sonal Shekhar, a consultant from the Food and Beverages domain at Future Market Insights.

Market figures

Shekhar said the US bakery industry is mature, growing at the rate of 2.9% annually.

“In 2016, the estimated market value for bakery products in the country was $32.3bn. The country’s snacks market was assessed to be more than $84.2bn; expected to grow at a CAGR of 3.4% from 2016 to 2026,” she said.

According to IndexBox, last year, the bakery and snacks market expanded by 3% against the previous year, reaching $71.4bn and is expected to register steady growth in the immediate term.

“In line with projections, the market is set to expand at an average annual rate of growth of 2.5% per year from 2016-2026, rising to $90bn, representing an increase of 28% against the figure achieved in 2016,” said Andreeva.

Snacks to lead sector growth

“Over the next decade, the snacks category is anticipated as being the fastest developing category in the structure of the US bakery and snacks market, increasing at 2.6% annually from $35.1bn to $45.5bn.

“The bakery segment is also projected to expand by 2.3% per year over this same period, allowing the market to surge in value from $35.3b in 2016 to $44.5bn by 2026,” said Andreeva.

Despite mounting health pressures, sweet bakery is still faring well, reported Mintel, growing at 4.1% CAGR over the past five years compared to bread’s 1.3% CAGR.

Artisanal and ethnic breads

Additionally, Koerten noted, “consumers are opting for unpackaged and fresh-baked artisanal bread or ethnic varieties, such as tortillas, instead of traditional packaged bread.”

Andreeva said downstream industries, including bakery cafes, are recovering from a period of prolonged recession, which has stimulated increased demand for bakery products and items.

“Bakery cafes now boast a wide range of flour and wheat-based products, such as bread, sandwiches, croissants and bagels,” she said.

“In 2016, both the number of accessible bakery outlets increased and consumer awareness of this relatively new segment in the food industry heightened. Over the next five years, the industry’s expansion is projected to continue unchecked, buoyed by the demand for healthy, gourmet-type foods,” added Andreeva.


According to Mintel, consumers are also challenging the snacks category to change.

IndexBox reported future growth and development of the US snacks market will again be driven by the healthy snacks segment.

Mintel added, over the past few years, the lines between ‘snack’ and ‘meal’ have blurred to the extent that foods typically considered snacks are replacing meals.

Portion control is also edging back into the market; the idea of the 100-calorie bag has transformed into a range of other portion-monitoring tactics, including resealable packages.

“Even in a sluggish market, the CPG growth leaders show that opportunities abound for companies that understand evolving consumer preferences,” said Peri Edelstein, a BCG partner.

“The key to sustained success in this rapidly evolving market is to follow consumers around the clock and compete in the marketplace with the mentality of a startup,” he said.[ON3] 

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