Apologies in advance for the cheesy bread puns!
But is catching after I went on a tour of #Davies Bakery yesterday on behalf of #School Mum and #Aldi (Davies provides bread to all the Aldi stores in Victoria). Aside from being indulged with warm, fresh, chocolate hot cross buns and gourmet sandwiches I received a snapshot of an industry that continues to re-invent itself despite having a range of challenges stacked against it.
If you haven’t noticed ‘bread’ is considered an evil commodity by some, mostly those in the diet industry. If you believe #Pete Evans and the Paleo diet followers, grains are not meant for humans; #Michelle Bridges does anything to avoid the bread basket; and, as a carbohydrate bread is often the first to be kicked off a diet if you want to lose weight.
As the granddaughter of German immigrants the thought of life without bread (and potatoes for that matter), is unthinkable.
With such celebrity status lambasting the humble loaf how has the industry addressed these issues?
The basic ingredients in bread have remained relatively unchanged for 1,000’s of years – flour, grains, water, yeast, oil and salt. Sixty years ago Australia was a white bread nation, brown bread was just white bread with colouring, and if you wanted wholemeal you had to bake it yourself. The traditional packaged loaf of sliced white bread is falling out of favour, with artisan, fresh-baked and ‘healthy’ bread ‘rising’ in its place.
Growing competition from supermarkets’ in store bakeries and the move away from factory-baked bread towards specialty and artisan retailers have caused the industry’s overall market of $3billion to fall (by 2.1%)[1]. In addition, volatility in commodity prices over the past five years squeezed profit margins.
Despite bread being ‘on the nose’, the industry continues to fight back and 99% of Australians have bread in their home – on average Australians buy 2 loaves of bread every week[2].
Given the maturity of the market, innovation and new product development have been vital to industry growth. Makers have responded to the health argument by introducing a wider variety of wholegrain and multigrain loaves, organic and fortified breads with healthy additives such as omega-3 and chia as well as gluten free options. Turkish bread, focaccia, sourdough, panino, wraps are also gaining popularity. And another trend is the mounting demand for organic products that is predicted to drive revenue growth through to 2016-17.[3]
With these trends the artisan bread segment has grown. Operators in the artisan segment have benefitted from the growing consumer focus on quality and health and are seen to be able to better tailor their products to a local market and can demand a premium price.
Supermarkets are increasingly emphasising freshness and value and are broadening their premium ranges in order to compete.
Packaging innovation has also been important to tap into the increasing trends of snacking and portability. The interest of consumers in palm oil has lead to many bakers signing up to the Roundtable of Sustainable Palm Oil. And with the recent frozen fruit scare customers want re-assurance that ingredients are either from Australia or come from a secure source.
The survival of the industry will rely on innovators such as Davies Bakeries who have been able to manage costs and risks while investing in technology and people; developed stable relationships customers and supply chain and on top of it all –they have listened and responded to consumers.
Ways to make dough from lessons learned by the bread industry:
- Jump before you are pushed
- Observe trends
- Listen to customers
- Create products that fit new markets
- Constantly innovate
- Continually look for ways to reduce costs and improve efficiency
- Be transparent – customers are increasingly interested in your ethics
Ps: Thanks to Matthew Davies , CEO of Davies Bakery for their insights and transparency when leading our tour and for #Aldi for making it possible. The Davies Bakery has been a family owned business for over 125 years and is one of the largest independent bakeries in Australia with it’s own state wide distribution service.
[1] IBIS World 2015
[2] ABC, 21/6/2013
[3] IBIS World 2012
