Bakeries

THE MEDIACENTER
• From 2002 through 2004, the
baking industry appeared to be
losing ground. Today, it appears
to be on the rebound.

• One recent study has indicated

that in-store bakeries grew by
just over 1% percent in 2006.

• Categorically speaking, the baking

industry is comprised of several
product segments. These include
breads, cakes, cookies, crackers,
cereals and nutritional bars.
Manufacturers tend to specialize in
one or more of these segments.
THE MEDIACENTER
• According to BakingBusiness.com, bread and cake
shipments totaled more than $23 billion in 2006.

• Today, there are 2,250 bread and cake

manufacturing companies located in the U.S.

• In the cookies and cracker segment,

shipments totaled over $10 billion last year.

• Bakery snack food is an even larger

segment in terms of the value of its
shipments, even though there are
fewer manufacturers.

THE MEDIACENTER
• There are several different
types of retail establishments
within the bakery industry.
These include retail in-store
bakeries, specialty bakeries and
retail standalone bakeries.

• Retail in-store bakeries are

defined as those located within
larger retail establishment such
as a grocery store, mass
merchandiser or wholesale club
store. They offer an assortment
of bakery products such as
breads, cakes, pies, bagels,
cookies, donuts, and muffins.
THE MEDIACENTER
• An in-store bakery
typically staffs
counter space and
bakes their products
on-site. In 2006,
annual in-store bakery
sales were about $20
billion. While this is
nearly a 6% increase
over the previous
year, operators have
concerns over costs
such as labor,
ingredients and fuel.

THE MEDIACENTER
• Specialty bakeries are key players in the
industry and a significant portion of the
$38.4 billion specialty foods market.

• Stores such as Cinnamon Sam's

and Cinnabon are typically located
in shopping malls, airports,
college universities and retail
stores. They carry their own
branded products that are
baked on site.

• These specialty
bakeries are one of
the fastest growing
sectors in the U.S.

THE MEDIACENTER
• When looking at in store sales, the two top products
contributing to sales are cakes and bread.

• Due to a decline in the popularity of the low-carbohydrate diet

and an increase in whole grains, bread is making a comeback.

• Consumers are passing on bagels, pies and donuts offered at

in-store bakeries. This is most likely due to the perceived or
realized quality of the product.

• Cookies are also seeing high growth. This is probably due

to consumers who feel they deserve a little spoiling
or a pick-me-up.

THE MEDIACENTER
• After several years of expansion,
a lull is developing in the area
of in-store bakeries. The
slowed growth in this area
is attributed primarily to
rapid maturity of the
category, as well as
competition from other types
of bakeries and products.

• Long-term success in this

category is contingent upon the
development of innovative
products that are of high-quality
and meet the changing
consumer demands.
THE MEDIACENTER
• The holistic view of the industry depicts a much more favorable
picture. Analysts expect that the continued growth in the
Hispanic population will help to fuel the industry as more ethnic
products are developed to serve the demands of this
demographic.

• Consumers are beginning to demand healthier, more nutritional

food choices. By using whole grains and limiting trans fats,
bakeries can comply with more palatable options.

• With growth comes stability in the area of industry employment,

which is expected to grow at an average rate through 2014.

THE MEDIACENTER
• American consumers are well aware that a
diet rich in fiber and whole grains can
help stave off cardiovascular disease,
high cholesterol and diabetes.

• The U.S. market for whole

grain products is the
largest in the world.
It’s estimated to be
worth about
$5.6 billion.

THE MEDIACENTER
• Many American companies are beginning to
increase their offering of whole-grain products,
as well as those fortified with vitamins.

• Barbara's Bakery, started in Northern California in

1971, has been developing all-natural and organic
products for 36 years. It is one of the founding
members of the Whole Grain Council and works to
promote the health benefits of whole grains.

THE MEDIACENTER
• Given the company's history and mission, it is well
poised to take advantage of the forecasted growth in
the baked, whole-grain snacks market, which is
expected to reach $21 billion by 2010.

• In 2004, Con Agra Food produced wholegrain

flour using a special winter wheat with a
patent-pending, new technology to achieve
a finely milled product. Ultragrain,
as it is was named, has a similar
texture to refined flour
products and provides
bakeries with
the ability to
offer healthier
bread choices.

THE MEDIACENTER
• For decades, American children have been enjoying their
peanut butter and jelly and balogna on white bread. Mothers,
however, would prefer that they eat whole wheat bread.

• About 40% of the nation's bread consumption

is white. Today, whole grain white bread has
hit the grocery store shelves.
It offers a combination of
whole grain and enriched
white flour as its foundation.

• Sara Lee Corporation and

Interstate Baking Company
have both developed
their own white breads.

THE MEDIACENTER
• An increased whole grain intake has been shown to provide a
benefit of up to 40% reduction in cholesterol.

• Additionally, as noted by the Food Navigator - USA, people who

regularly eat wholegrain foods can have a 20 to 40% lower risk
of heart disease and stroke.

• Armed with these specifics, the U.S. government has modified

its dietary guidelines to include three portions of whole grains
into daily diets.

• There is a wealth of opportunity in the baking industry for any

baker or baking company that can develop, manufacture and
market new products that address the deficiencies in today's
American diet.

THE MEDIACENTER
• Recent additions to the bakery industry include wholegrain
products, fewer transfats and technology.

• For Stephen Pazyra, baked goods represent more than just

food and nourishment. They also represent the comfort and
familiarity of home.

• In 2002, Pazyra started 1-800-Bakery, Inc. with the purpose

of bringing the customer experience online.

THE MEDIACENTER
• Pazyra started out by offering products from La Patisserie.
Once customers began requesting products that
La Patisserie did not bake, Pazyra realized that there was
real potential in expanding his product offering beyond
his own kitchen.

• 1-800-Bakery.com is an excellent example of how the world

of ecommerce is changing every industry.

• Today, 1-800-Bakery.com is a sizeable network of about 20

bakeries across the country.

THE MEDIACENTER
• To ensure that the products arrive fresh at the consumer's
home, each bakery sends the products directly to the
consumer rather than through a distribution center.

• Keeping track of orders has been one of the greatest

challenges facing the business. Products often have to be
temporarily removed or made unavailable in order to ensure
the partner bakeries are not overwhelmed with orders.

THE MEDIACENTER
• 1-800-Bakery strives to maintain the personal feel of a
local, neighborhood bakery - just online. All customer
service issues are handled personally.

• Following each order, the customer is sent a handwritten

email asking how they liked their ordered products.
Pazyra says this aids the company in learning about any
errors, and to put in place measures ensuring that
errors are not repeated. The emails also add a personal
touch to what can seem an impersonal service.

THE MEDIACENTER
• In terms of business success, 1-800-Bakery seems to have a
corner on the market. In its first year, they generated about
$52,000 in sales.

• Over the past four years, the business has really grown through
word-of-mouth advertising. In 2006, figures reached $800,000.

• The company plans to continue to expanding beyond its current

partnerships. They’re looking to include about 50 bakery
products by the end of 2007.

THE MEDIACENTER
• In 2002, Hispanics became the largest ethnic group in the United
States. Since that time, this demographic group has continued to
grow and is expected to account for about 25% of the U.S.
population by the year 2050.

• Recognizing the potential with a group of that size, marketing

departments have begun focusing much of their effort on
developing campaigns and products that appeal to them.

• For the bakery industry, the growing Hispanic population

represents untapped potential. Paying attention to this group
could translate into significant overall growth.

THE MEDIACENTER
• Several manufacturers are modifying their business in order to
accommodate the Hispanics' taste buds. By giving this
demographic a little taste from their homeland in the form of food
and tradition, baking companies can expect their sales to rise like
the yeast in their cakes.

• Prime Choice Foods, Con Agra and La Tortilla Factory are a few of
the baked goods manufacturers that have begun targeting the
Hispanic demographic.

• In 2003, Flowers Food Specialty became the first wholesale baker

to offer Hispanic cakes produced in the U.S.

• Since then, Flowers has continued to develop different products to

accommodate the Hispanic taste of home. In 2005, they added a
croissant-like product to its offering.

THE MEDIACENTER
• What most companies focusing on the Hispanic market have
found is that the packaging is as important as the
product. Hispanics need to be able to relate to the product
and the packaging is the first thing to catch their eye.

• Without authentic, recognizable packaging, the product may

never be bought or tasted. Brighter colors and improved
product photography have replaced the previous, more
conservative packaging.

THE MEDIACENTER
• After packaging, the most important item is taste. The taste
of the product must be authentic with ingredients that are
recognizable, household items.

• The shape of the product is also key. Like other consumers,

Hispanic consumers recognize certain shapes from back
home. A round shape is identified as a concha, while the c-
shape of a croissant is identified as a curenito.

THE MEDIACENTER
• Companies that offer healthy bakery products that support the
new dietary guidelines published by the U.S. government
should include the new food pyramid in their advertisements.
It will make it that much easier for consumers to choose
healthier products.

• Children influence a large portion of a family’s spending

decisions. Advertising efforts for baked goods manufacturers
should be targeted at a younger demographic that is greatly
influenced by its peers.

• Bakeries located in areas where there is an influx of Hispanics

should begin to incorporate authentic Hispanic products into
their daily offerings and develop advertisements using
traditional Hispanic colors and verbiage. This will attract local,
repeat customers from the Hispanic demographic.

THE MEDIACENTER
• Companies that offer healthy bakery products that support the
new dietary guidelines published by the U.S. government
should include the new food pyramid in their advertisements.
It will make it that much easier for consumers to choose
healthier products.

• Children influence a large portion of a family’s spending

decisions. Advertising efforts for baked goods manufacturers
should be targeted at a younger demographic that is greatly
influenced by its peers.

• Bakeries located in areas where there is an influx of Hispanics

should begin to incorporate authentic Hispanic products into
their daily offerings and develop advertisements using
traditional Hispanic colors and verbiage. This will attract local,
repeat customers from the Hispanic demographic.

THE MEDIACENTER
The answer
is three
simple
reasons!

THE MEDIACENTER
1. Your customers and potential
customers use it — viewing
daily for long periods of time.
2. TV’s attributes of sight, sound,
motion and emotion let you best
communicate your message to
these people.

3. Television works in dollars

returned!

THE MEDIACENTER
 Remember,
Only television can
give you:
The right message
To the right people
At the right time
In the right place!

THE MEDIACENTER
THE MEDIACENTER