Categories / Bakery/Baked Goods / Desserts
Category Insights: Bakery

Private Label Helping Find Fresh Choices In Bakeries

Breads, rolls, desserts gaining share at retail bakeries in past year.

February 6, 2013
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In this article, you'll learn about:

  • How and why private label breads, rolls, and desserts have been more popular at retail bakeries recently

  • Growing convenience desires of consumers

  • Other major segments of in-store bakeries, such as pastry/doughnuts

Private label foods have made steady inroads around the perimeters of stores, in areas from deli counters to seafood. And they continue to grow and expand in bakery items such as fresh breads and rolls, and desserts such as pies and cakes.

Private label owns a 25.3 percent of the dollar share in fresh bread and rolls, the largest segment of sales in in-store bakeries with more than $13 billion in overall sales, according to data from SymphonyIRI Group. That share climbs to 36.9 percent when looking at units sold.

On the dessert side, pies and cakes, private label owns a 68.8 percent dollar share and a 61.8 percent unit share. That category had $1.3 billion in sales in the past year, SymphonyIRI data showed.

A 2011 report on in-store bakeries by Mintel Group Ltd. found that the breads/rolls segment grew 14 percent from 2009-11, the fastest-growing segment in in-store bakeries. It expected growth in that overall segment of 35 percent through 2016, topping $5 billion annually in sales. That would put private label sales at more than $1.25 billion annually at its current rate.

Jeff Getzkin, the vice president of sales for New French Bakery in Minnesota, said that his company does about 85 percent of its business in retail in-store bakeries, with about 65 percent of that being private label.

Business is going so well at the 18-year-old company that there are expansion plans this year and next to meet increasing demand from current customers and new ones coming online.

“We’ve had a good year, and January already is going to be a big month for us,” he said.

New French Bakery specializes in artisan breads. The company has two plants in Minneapolis, one that focuses on artisan breads and rolls that make up the majority of its business and a smaller facility that produces rolls, buns and sliced breads.

“Take and bake artisan breads are big,” Getzkin said. “What we find is a lot of retailers want artisan bread, but the shelf life can be one day. Depending on the bread, they can now get three to five days on the shelf. The consumer takes it home and bakes it and then they have fresh artisan bread that the consumer enjoys at home. It limits (the retailer’s) shrink and exposure.”

Getzkin said providing a quality product for retailers is the hallmark of the company’s success.

“Everybody says they want grain breads, so we have introduced more of that,” he said. “But we still sell far more white-type breads. They buy some grains, but not as much as baguettes or ciabatta.”

Mintel’s report said there was a difference in bakeries between retailers who have a “lackluster presence” and those who aim for more.

“Some retailers, however, have truly made their (in-store bakeries) the gem of the store,” the report said, “with bakery-style treats as well as breads that cater to

“Some retailers, however, have truly made their (in-store bakeries) the gem of the store ... with bakery-style treats as well as breads that cater to every taste and dietary need."

every taste and dietary need. In some cases, bakery kitchens are in plain view for consumers, which adds to the retail ‘drama’ while also taking advantage of flavorable aromas that may even attract consumers from other sections of the store.”

New French Bakery provides breads that can be baked in the stores, but Getzkin said the best sellers today are breads that can be made at home.

“People, once they buy it and bake it at home, they love it,” he said. “There’s other take and bake breads, but nothing to our quality.”

Retailers enjoy their conveniences from selling the take and bake items.

“It’s the ease of handling. It’s retail-ready,” Getzkin said. “They don’t have to put it in the oven. If you’re handling the product at retail, if you’re buying dough you can overproof it, if you’re baking it you can overburn it or not bake enough and run out by the end of the day. With take and bake, you’re in control of everything. So it’s a combination of execution and ease of shelf life.”

Consumers, meanwhile, satisfy their own convenience needs. And the growing convenience desires of those consumers have led New French Bakery to provide smaller sizes of breads as well.

“We’re coming out with more for families of two or smaller families,” Getzkin said. “Smaller sizes that we’re working on. Families don’t have five, six, seven people, they have two or three now. Even my family, we have two kids and my wife and I, so if we get a smaller loaf of bread, we each get a slice or a slice-and-a-half. If you take a 16-ounce loaf of bread home, you have to eat it the next day or morning still.”

Being able to provide different sizes for retailers also could expand the reach that New French Bakery can make in the market in coming years.

“We could go into convenience stores or other places than just traditional supermarkets,” Getzkin said. “It might go well in some limited-format stores like Trader Joe’s, drugstores like Walgreens and CVS, they’re expanding their food offerings all the time.

“People more and more, they want quality convenience.”

Private label pie sales were basically flat over the past year, according to SymphonyIRI data, but cake sales rose nearly 10 percent over that time. The Mintel report forecast a slowdown in growth through 2016 as consumers were cutting back on discretionary products. “For many consumers, this includes desserts, which are sold at a higher price point than other (in-store bakery) items such as bread and rolls,” the report said.

That price sensitivity could be a factor in increasing private label sales. SymphonyIRI reported the category as a whole grew 1.5 percent in the past year, with private label sales far ahead of overall growth.

Another major segment in the in-store bakeries is pastry/doughnuts. SymphonyIRI reported growth in that category of 3.7 percent in the past year, but private label sales slumped in doughnuts (down 3.3 percent) and pastry (down 4.0 percent). Only private label muffins made gains, up 10.1 percent in the past year. Private label accounts for about a 22.5 percent dollar share of the segment.

Bakery snacks grew 9.3 percent in the past year, according to SymphonyIRI, with private label sales up 13.5 percent to claim a 17.8 percent dollar share of the segment.

The Mintel report suggested growth expected in segments such as snacks and pastries.

“In many cases, bakeries have upped their game in recent years to retain consumers, by offering a variety of options at reasonable prices, particularly for the small indulgences such as cupcakes that many consumers are looking for,” it said.

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