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Baked goods sales seen hot in '90s, with frozens to rise 9.3% annually.

Baked Goods Sales Seen Hot in '90s, With Frozens to Rise 9.3% Annually

$6.1 billion in-store bakery segment, which relies heavily on frozen dough, should grow 10-12% through 1995. Meanwhile, sales of bagels, waffles, pancakes, low-calorie desserts and breakfasts are healthy.

The United States baking industry continues to enjoy a good growth and diversify its product offerings to consumers. Total domestic sales of bakery wholesalers for 1989 hit $27.5 billion, an increase of 3.6% over the revised 1988 estimate of $26.6 billion. In turn, the 1988 estimate represented a 5.7% increase over 1987 figures.

Although the growth rate for the total bakery products industry is projected to expand at an annual rate of 6.4% during the period 1987-1997, growth by segments varies significantly. According to private analysts and the U.S. Department of Commerce, frozen bakery product volume will rise by 9.3% per year during that period, cookies and crackers by 8.5%, bread and bread-type products by 4.7%, and cake and cake-type products by a modest 3.8%.

By 1997, the cookie and cracker segment of the wholesale industry is estimated to be larger than the bread and bread-type products category, or 41% of the total compared to 35%. Frozen bakery foods will represent 11%, and cake and cake-type products will shrink to 13% of the total dollar volume.

According to a recent study, sales of in-store bakery products, including bread, currently at $6.1 billion annually, are projected to grow 10-12% during the period up through 1995. Off-the-shelf packaged bread and rolls, meanwhile, are projected to see sales growth of only 2% annually. The number of in-store bakeries, currently about 20,000, will grow at 5% until late in the next decade when the saturation point will be reached. In recent years, sales from such units have risen at a rate of about 17% annually with increases in the number of in-store bakeries being approximately 6% annually.

Frozen Product Trends

Frozen specialty bakery products grew only 2% last year, down from a hefty 5% annual growth between 1982 and 1987. While the demand for frozen baked foods and low calorie items has increased, the popularity of frozen entrees has leveled off. More than a third of U.S. households purchased low calorie entrees in 1988, up from 25% in 1986.

The demand for frozen convenience foods has gone up with the increased number of two income families and single parent households. Frozen entrees and baked goods are very convenient for families whose time for meal preparation is limited and who require that food be prepared at different times. The frozen convenience food segment has also benefited from the jump in percentage of U.S. households that have microwave ovens -- from 10% in 1976 to 60% in 1987.

The largest freezer counter bakery entree is pizza, but its sales have been struggling, gaining only 2.7% in dollars last year to about the $1 billion level. On examining the figures, however, there has been a great deal of shift within the category. The warehoused brands decreased 4.3% in volume while there was a strong + 13% showing by frozen pizza producers using direct store delivery.

It is obvious that some inroads into traditional and frozen baked products sold through grocery store freezer cases are being made by in-store bakery outlets. In spite of this, wholesale baking executives report that single serve frozen bakery food offerings are fueling a resurgence of sales in dessert products and opening up new avenues for snacking. While breakfast is overwhelmingly the single eating occasion most commonly targeted by frozen baked goods producers, desserts and snacks, especially in individual portions, are securing a fair amount of shelf space. Such alternatives, some of which are reduced calorie, are perceived among smaller households and health conscious consumers as more permissible than a full size pie or cake.

Meanwhile, frozen baked foods regulars such as bagels continue to perform well in the freezer case. And waffle and pancake sales are healthy despite the relatively short life cycle of such items in general, and the ongoing problem of limited space. During the last year, a number of major manufacturers introduced single serve dessert-type or breakfast-type lines of products. Among them were Pepperidge Farm, Sara Lee, Lender's, Pet, Inc., and Weight Watchers.

There is also significant growth in the microwaveable sandwich sector, with sales of $140 million in 1988 representing a 42.3% increase over the previous year. Successful products from J. R. Simplot, Hormel, Quaker Oats Co., Pitaria Products, Jimmy Dean Meat Co., and Tyson Foods are leading this exciting category.

The trend toward single serve bakery foods is one that is here to stay and is driving the category more than any other single factor.

Production Source for Bakers

It is evident that frozen doughs and batters are now being used widely in traditional retail bakeries as well as in-store bakeries. The percent of the total production of different items varies quite widely, from the frozen representing the majority of the raw material source for labor intensive items such as puff pastry and croissants, to rather modest portions for other products such as donuts which rely heavily on prepared mixes.

New information indicates that a very important market is also developing for frozen doughs and batters in foodservice on-premise baking. Information indicates accelerating use of frozen doughs and batters for bake-off in a number of important foodservice items. Potential volumes are huge with some 185,000 establishments now doing some on-premise baking.

New Products & Research

The major efforts in new products and research are in the area of nutrition and low calorie bakery foods. The evidence at hand is that these have reached the marketplace to some degree.

In the area of nutrition, in addition to the now widely known improvement in sales of high fiber breadstuffs, studies completed at the University of Kentucky under the sponsorship of the American Institute of Baking have shown the value of the soluble fiber contents of bread and bread products in lowering blood cholesterol and particularly in lowering low density lipo-proteins. While the highly publicized recent work at a Boston hospital was not intended to do so, it verified that diets high in breads were also valuable in lowering cholesterol as well as were diets containing high levels of oat bran.

While many of the high intensity non-caloric sweeteners and fat substitutes have not reached the commercial market, there have been, during the last year, important introductions of low calorie baked goods. A number of products, such as Hostess |Lights' snack cakes, and Entenmann's and Freihofer's new lines of sweet goods which are limited to only 100 calories per serving, are being well received in the marketplace. Pepperidge Farm is also introducing light desserts, and other companies will soon have similar items. It is only a matter of time before these products are available through the supermarket freezer chests to meet the demand for single size convenience snack and dessert entrees.

A new category of importance to the frozen bakery group is seen in fully baked, frozen bakery items prepared for thawing and resale at in-store, retail, or foodservice outlets. There has been a great deal of activity in this area during the last year, and it is now becoming a common practice with a great number of entrees being used in this way to primarily cut labor costs and to avoid the necessity of having highly skilled bakers at the point of purchase.

Finally, a rather old idea but one that seems to be coming to the fore of commercial reality, is a fully proofed frozen dough for breads. The dream is to have a frozen dough product that is ready to simply take from the freezer and put in the oven for final baking. While there is no such item on the market at this time, several patents have recently been issued and a number of companies, both in the U.S. and in Europe, are showing interest in commercializing the concept.

Heinz Purchase of Pestritto Companies Ups Presence in Frozen Dough Business

H.J. Heinz Co. has expanded its bakery business by acquiring Pestritto Companies of Blackwood, N.J. The Italian specialty frozen dough products manufacturer is being operated as a unit of Heinz-Canada.

Pestritto's line features some 15 different ready-to-bake bread and roll shapes in addition to pizza dough balls, specialty grain breads, mini breads, cinnamon buns, muffins and stromboli (Italian breads stuffed with sausage, cheese, smoked ham or vegetables).

Bullish on the bakery segment, Nicholas J. Iacovelli, vice president of Heinz Company of Canada Ltd., commented: "In-store bakeries now ring up sales which increase more than $1 billion each year. And the U.S. baked goods and frozen dough market is huge and growing. More than $4.8 billion in refrigerated and frozen dough is sold each year, much of it to the rapidly growing in-store bakery segment.

The company has also identified as dynamic the business segment represented by submarine sandwich shops, which are racking up growth rates of 17% annually and account for a major portion of Pestritto's sales. Another area of impressive sales expansion is the "natural" breads sector.

Since Heinz-Canada entered the North American frozen baked goods trade in 1987, it has acquired Pro-Pastries of Mississauga, Ontario, and Pro-Bakers of Buffalo, N.Y. Both produce frozen unbaked pastries (primarily croissants and Danish pastries). Heinz then added W.P. Foods of Edmonton, Alberta, makers of frozen unbaked pie and pastry shells.

In 1989 Ore-Ida (a Heinz unit based in Boise, Idaho) entered the U.S. market for frozen finished baked goods by acquiring Bavarian Speciality Foods of Torrance, Calif.

PHOTO : Sara Lee's Southern Pecan Pie Snacks are offered as four individually wrapped units per 8.5-oz. (240g) box. Retailing for $2.99, the Deerfield, Ill. packer's microwaveable product features pecan pie filling baked in a cookie crust and topped with crisp pecan halves.

PHOTO : Another example of "individually wrapped" frozen baked goods products that are popping up around the USA is Pepperidge Farm Apple Danish, which sells for $1.39. Marketed for consumption either at breakfast or during snack occasions, the Norwalk, Conn.-headquartered manufacturer urges consumers to "carry them with you and eat them, anytime."

PHOTO : Kellogg's has come out with Eggo brand Common Sense Oat Bran Waffles to appeal to health conscious breakfast eaters. The product features fruit and nut ingredients.

PHOTO : The market for pizza dough balls continues to look good.

PHOTO : Pestritto's range of products includes 15 ready-to-bake bread and roll shapes.

Dr. WILLIAM J. HOOVER president of the American Institute of Baking, Manhattan, Kansas. His article is based on remarks delivered at the annual scientific advisory council meeting of The Refrigeration Research Foundation held in Orlando, Florida.
COPYRIGHT 1991 E.W. Williams Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Frozen Foods in North America
Author:Hoover, William J.
Publication:Quick Frozen Foods International
Date:Apr 1, 1991
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