The bakery market is rife with change this year, as bakers face plenty of challenges that just keep coming. With a hailstorm of food-safety issues, for example, most bakers are beginning the certification process through the Safe Quality Food (SQF) program and others. They’re also dealing with soaring commodity prices, a still-lagging economy, more mergers and acquisitions, and modifying products to be healthier, with less fat, sugar and sodium and more functional ingredients. Bakers and snack food manufacturers alike are rolling out more clever products with demanding consumers and customers in mind.

This month, in our annual State of the Industry report on the Bakery Market, we uncover new and changing grocery aisles, with innovative breads, rolls, flatbreads, cookies, bars, snack cakes, tortillas, pies, breakfast items and much more.

Practically all American consumers eat some form of bread, and the market enjoys substantial household penetration. But consumers are eating bread less often and are consuming it in smaller quantities, according to research from Packaged Facts. Health and diet concerns, changing eating patterns and ethnic influences on food are making bread less important to consumers, the company reports.

Nevertheless, retail sales of packaged fresh breads and rolls totaled $12.5 billion in 2012, Packaged Facts says, and as of April 20, 2014, rose to a whopping $13.8 billion, according to Chicago-based market research firm IRI. Private-label breads and rolls grew to enjoy $9.1 billion in sales for the 52-week period as of April 20.

Yet some of the largest bakers are feeling a sales pinch this year, including Grupo Bimbo, whose U.S. baking business suffered a deep operating income decline in the first half of the year and foresees more troubled waters ahead. Reportedly, Bimbo states that flat sales in this year’s second quarter stemmed from the required divestiture of the Sara Lee brand.

Planning to close and consolidate some of its bakery operations and shift bread production to some of its other facilities, Pepperidge Farm says, “the baking industry in the U.S. is becoming increasingly consolidated and competitive,” according to Bill Livingstone, senior vice president, supply chain and operations. “In order to continue to grow and flourish, Pepperidge Farm needs to be innovative and agile, with the most cost-effective manufacturing facilities.”

Data provided by Chicago-based IRI for our Bakery State of the Industry reports indicate that consumers continue to want more nutritious, clean-label breads with few, if any preservatives, and simple yet high-quality ingredients and superior taste. Whole-grain, functional and “free-from” (allergens, gluten, etc.) baked goods are in demand, but they have to deliver on taste as well as nutrition.

Industry researcher Mintel also states that the gluten-free category is set to grow about 40% for the next few years, but the size of the market can be misleading. Mintel pegged it at $10.5 billion, but that number includes any package printed with the phrase “gluten-free” on the label and foods that are naturally gluten-free.

“Only 2.5% of U.S. households are heavy buyers of gluten-free products—they are spending $185 a year, and they are driving two-thirds of the sales of the market,” notes David Sheluga, director of commercial insights for ConAgra Mills, in a recent FoodNavigator USA report.

In other segments, snack bars, cereal bars and granola bars are also top sellers in this grab-and-go world, as Americans’ lives are busier and more frantic than ever.

In producing this issue, we thank all of our baking industry respondents who helped us coordinate these reports and relate their perspectives. We also thank our writers and the folks at IRI who furnished us with the data included in these reports. To get additional industry statistics from IRI, call 312-726-1221, or visit www.iriworldwide.com.

So read on throughout our June issue to find some of the key industry takes on what’s going on in baking, and look for our July State of the Industry report on the snack market. Also, be sure to check us out online at www.snackandbakery.com for even more bakery market news. The future of bakery is here and it’s changing—so don’t miss it!