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In-store Bakeries - US - March 2013

“A growing movement that calls for consumers to limit their intake of a number of key food ingredients, such as fat, sugar, sodium, and carbohydrates, thought to be harmful to one’s health, threatens in-store bakery sales as consumers feel pressure to cut back on indulgence. However, in-store bakeries have the opportunity to respond with innovative better-for-you alternatives that cater to consumers’ demand for both health and indulgence.”

– Sarah Day Levesque, Food Analyst

Some questions answered in this report include:

  • How can in-store bakeries grow despite already high penetration?
  • How can the category respond to demand for healthier food products?
  • How will more food regulations affect in-store bakeries?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                      • In-store bakeries continue to experience steady growth
                        • Figure 1: Total Number of in-store bakeries and average weekly sales per store, 2007-12
                      • Moderate sales growth expected through 2017
                        • Figure 2: Total U.S. sales and fan chart forecast of in-store bakeries, at current prices, 2007-17
                      • Dessert dominates in-store bakery while bread struggles
                        • Figure 3: Total U.S. retail sales of in-store bakeries, by segment, 2007-17
                      • Market factors
                        • Increasing demand for local, fresh products will drive ISB sales
                          • Figure 4: Important retailer attributes, November 2012
                        • Employment drives demand for in-store bakery convenience
                          • Figure 5: Purchase in past year, by employment, November 2012
                        • ISBs face competition within and outside the grocery store
                          • Figure 6: Purchase frequency by bakery type, November 2012
                        • The in-store bakery consumer
                          • In-store bakeries particularly appealing to households with children
                            • Figure 7: Purchase in past year by bakery type, by presence of children in household, November 2012
                          • Better-for-you bakery goods appeal to Hispanics
                            • Figure 8: Consumer interest in new products, by Hispanic origin, November 2012
                          • Consumers prefer ISBs for quality superior to prepackaged goods
                            • Figure 9: Why consumers prefer in-store bakeries, November 2012
                          • New products offer opportunities for ISB growth
                            • Figure 10: Consumer interest in new products, by generation, November 2012
                          • What we think
                          • Issues in the Market

                              • How can in-store bakeries grow despite already high penetration?
                                • How can the category respond to demand for healthier food products?
                                  • How will more food regulations affect in-store bakeries?
                                  • Insights and Opportunities

                                    • In-store bakeries that offer on-the-go and takeout experience…
                                      • …and dine-in ability for those who want to savor an eating experience
                                        • New flavor trends may offer boost in quality perceptions
                                        • Trend Applications

                                            • Trend: Transumers
                                              • Trend: Experience Is All
                                                • 2015 trend: Old Gold
                                                • Market Size and Forecast

                                                  • Key points
                                                    • In-store bakeries continue steady growth
                                                      • Sales and forecast of market
                                                        • Figure 11: Total U.S. retail sales and forecast of in-store bakeries, at current prices, 2007-17
                                                        • Figure 12: Total U.S. retail sales and forecast of in-store bakeries, at inflation-adjusted prices, 2007-17
                                                        • Figure 13: Number of in-store bakeries and average weekly sales per store, 2007-12
                                                        • Figure 14: Per household expenditures on in-store bakery products, at current prices, 2007-12
                                                      • Fan chart forecast
                                                          • Figure 15: Total U.S. sales and fan chart forecast of in-store bakeries, at current prices, 2007-17
                                                      • Market Drivers

                                                        • Key points
                                                          • In-store bakeries appeal to consumer demand for local and fresh
                                                            • Figure 16: Important attributes, by gender, November 2012
                                                          • Busy lifestyles demand convenience that in-store bakeries offer
                                                            • Figure 17: Purchase in past year by bakery type, by employment, November 2012
                                                          • Declining consumer confidence may keep consumers at home
                                                            • Obesity worries threaten demand for bakery indulgences
                                                              • Higher prices create purchase barrier for some consumers
                                                              • Competitive Context

                                                                • Stand-alone bakeries offer higher perceived quality
                                                                  • Figure 18: Purchase frequency by bakery type, November 2012
                                                                • Consumers use bread/dessert aisle as much as in-store bakery
                                                                  • At-home baking offers alternative to premade baked goods
                                                                  • Segment Performance

                                                                    • Key points
                                                                      • Strong growth in three out of four segments drives category growth
                                                                        • Sales of in-store bakeries, by segment
                                                                          • Figure 19: U.S. retail sales of in-store bakery products, by segment, 2010 and 2012
                                                                      • Segment Performance—Desserts

                                                                        • Key points
                                                                          • Dessert segment grows 25.9% to continue category dominance
                                                                            • Sales and forecast of desserts
                                                                              • Figure 20: Total U.S. retail sales of desserts at in-store bakeries, at current prices, 2007-17
                                                                          • Segment Performance—Bread and Rolls

                                                                            • Key points
                                                                              • Bread and rolls suffer in comparison to other ISB segments
                                                                                • Sales and forecast of bread and rolls
                                                                                  • Figure 21: Total U.S. retail sales of bread and rolls in in-store bakeries, at current prices, 2007-17
                                                                              • Segment Performance—Breakfast Bakery

                                                                                • Key points
                                                                                  • Breakfast bakery presents growth opportunity
                                                                                    • Sales and forecast of breakfast bakery
                                                                                      • Figure 22: Total U.S. retail sales of breakfast bakery in in-store bakeries, at current prices, 2007-17
                                                                                  • Marketing Strategies

                                                                                    • Overview of the in-store bakery landscape
                                                                                      • In-store bakery versus bakery in the store
                                                                                        • Treat of the month club stirs up interest
                                                                                          • Offering consumers authenticity
                                                                                            • Website and social media opportunities for in-store bakeries
                                                                                              • Kroger
                                                                                                • Walmart
                                                                                                  • Hy-Vee
                                                                                                  • Bread and Baked Goods Consumption

                                                                                                    • Key points
                                                                                                      • Most households eat bread but usage drops with age
                                                                                                        • Figure 23: Types of bread eaten in household, by age, April 2011-June 2012
                                                                                                        • Figure 24: Household frequency use of bread, by age, April 2011-June 2012
                                                                                                        • Figure 25: Types of bread eaten in household, April 2007-June 2012
                                                                                                      • Popularity of breakfast options offers opportunity for bakeries
                                                                                                        • Figure 26: Household consumption of selected breakfast items, by gender, April 2011-June 2012
                                                                                                      • Home baking from packaged mixes popular among consumers
                                                                                                        • Figure 27: Household usage of at-home baking mixes, dough, and crusts, by gender, April 2011-June 2012
                                                                                                        • Figure 28: Mean usage of at home baking mixes, dough, and crusts in past 30 days, April 2011-June 2012
                                                                                                    • In-store Bakery Usage

                                                                                                      • Key points
                                                                                                        • In-store bakery usage rivals bread/dessert/pastry aisle usage
                                                                                                          • Figure 29: Purchase frequency, by bakery type, November 2012
                                                                                                          • Figure 30: Purchase in past year, by bakery type, by gender, November 2012
                                                                                                        • Bakery goods hold stronger appeal to households with children
                                                                                                          • Figure 31: Purchase in past year, by bakery type, by presence of children in household, November 2012
                                                                                                          • Figure 32: Purchase in past year, by bakery type, by age, November 2012
                                                                                                      • Bakery Item Purchase by Outlet Type

                                                                                                        • Key points
                                                                                                          • Sweets bought in in-store bakeries, bread in the grocery aisle
                                                                                                            • Figure 33: Bakery item purchase, by outlet type, November 2012
                                                                                                          • Sweet sales threatened by competition from traditional bakeries
                                                                                                            • Figure 34: Sweet item purchase, by outlet type, November 2012
                                                                                                          • Income plays a role in which in-store bakery is used
                                                                                                            • Figure 35: Bakery item purchase, by outlet type, by household income, November 2012
                                                                                                        • Why Consumers Prefer In-Store Bakeries

                                                                                                          • Key points
                                                                                                            • Quality sets in-store bakery apart from the bakery aisle
                                                                                                              • Figure 36: Why consumers prefer in-store bakeries, November 2012
                                                                                                            • Lackluster response to in-store bakery product taste and quality
                                                                                                              • Draw of in-store bakery different for men, women
                                                                                                                • Figure 37: Why consumers prefer in-store bakeries, by gender, November 2012
                                                                                                            • Consumer Attitudes on Ideal In-Store Bakeries

                                                                                                              • Key points
                                                                                                                • Consumers’ ideal in-store bakery has it all
                                                                                                                  • Figure 38: Products and services important to consumers, November 2012
                                                                                                                • Men and women value different aspects of customer service
                                                                                                                  • Figure 39: Products and services important to consumers, by gender, November 2012
                                                                                                                • Millennials over index on demand for all in-store bakery characteristics
                                                                                                                    • Figure 40: Products and services important to consumers, by generation, November 2012
                                                                                                                • Consumer Interest in New Products

                                                                                                                  • Key points
                                                                                                                    • Whole grain tops list of new product traits consumers want
                                                                                                                        • Figure 41: Consumer interest in new products, by household income, November 2012
                                                                                                                      • Introduction of new types of products may attract nonusers
                                                                                                                          • Figure 42: Consumer interest in new products, by purchase in past year, by bakery type, November 2012
                                                                                                                        • Breakfast solutions offer opportunity to expand in-store bakery reach
                                                                                                                            • Figure 43: Consumer interest in new products, by generation, November 2012
                                                                                                                        • Potential Promotional Opportunities

                                                                                                                          • Key points
                                                                                                                            • Consumers not overly interested in any single bakery promotion
                                                                                                                              • Figure 44: Promotional activity, November 2012
                                                                                                                            • Promotions more likely to persuade consumers with children
                                                                                                                              • Figure 45: Promotional activity, by presence of children in household, November 2012
                                                                                                                            • Younger consumers more receptive to promotions, especially online
                                                                                                                              • Figure 46: Promotional activity, by age, November 2012
                                                                                                                          • CHAID Analysis of In-Store Bakery Promotions

                                                                                                                            • Methodology
                                                                                                                              • Service - and health-oriented non-Hispanics most receptive to promotion
                                                                                                                                • Figure 47: In-store bakeries—CHAID—Tree output, November 2012
                                                                                                                                • Figure 48: Promotional activities of in store bakeries—CHAID—Table output, November 2012
                                                                                                                            • Race and Hispanic Origin

                                                                                                                              • Key points
                                                                                                                                • Asians/Pacific Islanders most likely to go elsewhere for baked goods
                                                                                                                                  • Figure 49: Bakery item purchase, by outlet type, by race/Hispanic origin, November 2012
                                                                                                                                  • Figure 50: Why consumers prefer in-store bakeries, by race/Hispanic origin, November 2012
                                                                                                                                • Better-for-you and breakfast bakery goods more appealing to Hispanics
                                                                                                                                  • Figure 51: Consumer interest in new products, by race/Hispanic origin, November 2012
                                                                                                                                • Hispanics, Asians/Pacific Islanders best to target with online marketing
                                                                                                                                  • Figure 52: Promotional activity, by race/Hispanic origin, November 2012
                                                                                                                              • Appendix: Market Drivers

                                                                                                                                • Consumer confidence
                                                                                                                                  • Figure 53: University of Michigan’s index of consumer sentiment (ICS), 2007-13
                                                                                                                                • Food cost pressures
                                                                                                                                  • Figure 54: Changes in USDA Food Price Indexes, 2010-13
                                                                                                                                • Obesity
                                                                                                                                  • Figure 55: U.S. Obesity, by age group, 2008 and 2012
                                                                                                                                • Childhood and teen obesity—highest in decades
                                                                                                                                  • Figure 56: Prevalence of obesity among children and adolescents aged 2-19, 1971-2010
                                                                                                                                • Racial, ethnic population growth
                                                                                                                                  • Figure 57: Population, by race and Hispanic origin, 2008, 2013, and 2018
                                                                                                                                  • Figure 58: Households with children, by race and Hispanic origin of householder, 2012
                                                                                                                                • Shifting U.S. demographics
                                                                                                                                  • Figure 59: Population, by age, 2007-17
                                                                                                                                  • Figure 60: Households, by presence of own children, 2002-12
                                                                                                                                • Unemployment
                                                                                                                                  • Figure 61: U.S. Unemployment Rate, by month, 2002-13
                                                                                                                                  • Figure 62: U.S. Unemployment and underemployment rates, 2007-13
                                                                                                                                  • Figure 63: Number of employed civilians in U.S., in thousands, 2007-13
                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                  • Figure 64: Purchase frequency, by bakery type, November 2012
                                                                                                                                  • Figure 65: Purchase frequency, by bakery type, by age, November 2012
                                                                                                                                  • Figure 66: Purchase frequency, by bakery type, by race/Hispanic origin, November 2012
                                                                                                                                  • Figure 67: Purchase in past year, by bakery type, by gender, November 2012
                                                                                                                                  • Figure 68: Purchase in past year, by bakery type, by age, November 2012
                                                                                                                                  • Figure 69: Purchase in past year, by bakery type, by race/Hispanic origin, November 2012
                                                                                                                                  • Figure 70: Purchase in past year, by bakery type, by region, November 2012
                                                                                                                                  • Figure 71: Bakery item purchase, by outlet type, by gender, November 2012
                                                                                                                                  • Figure 72: Bakery item purchase, by outlet type, by age, November 2012
                                                                                                                                  • Figure 73: Bakery item purchase, by outlet type, by gender and age, November 2012
                                                                                                                                  • Figure 74: Bakery item purchase, by outlet type, by household size, November 2012
                                                                                                                                  • Figure 75: Bakery item purchase, by outlet type, by presence of children in household, November 2012
                                                                                                                                  • Figure 76: Bakery item purchase, by outlet type, by parents and children and age, November 2012
                                                                                                                                  • Figure 77: Breads purchase, by outlet type, by gender, November 2012
                                                                                                                                  • Figure 78: Breads purchase, by outlet type, by age, November 2012
                                                                                                                                  • Figure 79: Breads purchase, by outlet type, by household income, November 2012
                                                                                                                                  • Figure 80: Breads purchase, by outlet type, by race/Hispanic origin, November 2012
                                                                                                                                  • Figure 81: Breads purchase, by outlet type, by presence of children in household, November 2012
                                                                                                                                  • Figure 82: Breads purchase, by outlet type, by generation, November 2012
                                                                                                                                  • Figure 83: Sweets purchase, by outlet type, by age, November 2012
                                                                                                                                  • Figure 84: Sweets purchase, by outlet type, by household income, November 2012
                                                                                                                                  • Figure 85: Sweets purchase, by outlet type, by Hispanic origin, November 2012
                                                                                                                                  • Figure 86: Sweets purchase, by outlet type, by presence of children in household, November 2012
                                                                                                                                  • Figure 87: Sweets purchase, by outlet type, by generation, November 2012
                                                                                                                                  • Figure 88: Consumer interest in new products, November 2012
                                                                                                                                  • Figure 89: Consumer interest in new products, by gender, November 2012
                                                                                                                                  • Figure 90: Consumer interest in new products, by age, November 2012
                                                                                                                                  • Figure 91: Consumer interest in new products, by presence of children in household, November 2012
                                                                                                                                  • Figure 92: Why consumers prefer in-store bakeries, by household income, November 2012
                                                                                                                                  • Figure 93: Why consumers prefer in-store bakeries, by generation, November 2012
                                                                                                                                  • Figure 94: Why consumers prefer in-store bakeries, by bakery item purchase, by outlet type, November 2012
                                                                                                                                  • Figure 95: Why consumers prefer in-store bakeries, by bakery item purchase, by outlet type, November 2012
                                                                                                                                  • Figure 96: Promotional activity, by gender, November 2012
                                                                                                                                  • Figure 97: Promotional activity, by household income, November 2012
                                                                                                                                  • Figure 98: Promotional activity, by generation, November 2012
                                                                                                                                  • Figure 99: Promotional activity, by purchase in past year, by bakery type, November 2012
                                                                                                                                  • Figure 100: Products and services important to consumers, by age, November 2012
                                                                                                                                  • Figure 101: Products and services important to consumers, by household income, November 2012
                                                                                                                                  • Figure 102: Products and services important to consumers, by Hispanic origin, November 2012
                                                                                                                                  • Figure 103: Products and services important to consumers, by presence of children in household, November 2012
                                                                                                                                  • Figure 104: Promotional activity, by products and services important to consumers, November 2012
                                                                                                                              • Appendix: Trade Associations

                                                                                                                                Companies Covered

                                                                                                                                • Brookshire Grocery Company
                                                                                                                                • Facebook, Inc.
                                                                                                                                • Hy-Vee, Inc
                                                                                                                                • The Kroger Co.
                                                                                                                                • Twitter, Inc.
                                                                                                                                • Walmart Stores (USA)
                                                                                                                                • YouTube, Inc.

                                                                                                                                In-store Bakeries - US - March 2013

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