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Bakery Is Still Raking In The Dough(nuts) - Consumers Are Treating Themselves With Small Indulgences

August 25th, 2023 - by Alarice Rajagopal, supermarketnews.com - While consumers are still very aware of inflation and how it is impacting their wallets, they are still willing to indulge every so often, which can be seen in the double-digit dollar sales growth of bakery and dessert items, according to the most recent data from NIQ.

For the 52 weeks ending in May 2023, bakery sales as a whole were $19.74 billion (a 14.5% increase year-over-year) of which dessert sales were $7.69 billion (a 10% increase year-over-year). In looking at unit sales, the bakery still held steady at 0.8% growth, while unit sales of desserts declined 6.1% again impacted by inflationary prices.

"The bakery department underscores that indulgence can do well despite high inflation," according to Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm.

Roerink said that, especially during hard times when many Americans have to make concessions as they're balancing their budgets, an affordable little indulgence can help create some much-needed memorable moments.

"At the same time, functional baked goods like bread (which saw a 19% increase in dollar sales year-over-year and a 3.2% jump in unit sales), and rolls and buns (which had a 15.6% dollar sales increase year-over-year and rose 1.9% in unit sales), are doing well as consumers are integrating peanut butter, jelly, and tuna sandwiches, etc., into their meal lineup — at times choosing a more premium bread or roll and still ending up with a very cost-effective meal option," according to Roerink.

Several bakery subcategories also showed double-digit dollar sales growth, with doughnuts taking the lead (+26.6% to $1.37 billion), in addition to the highest unit growth (+7.9%) year-over-year.

Overall, bakery dollars for the 52 weeks ending in May 2023 were boosted by inflation like many of the fresh categories, whereas units were down slightly. However, the unit contraction was milder in the month of May, perhaps signaling that holiday demand opened consumers' wallets just a little further, according to the May marketplace report from Circana and the International Dairy Deli Bakery Association (IDDBA).

Deli and bakery have always been a destination for those hosting celebrations (think party platters and custom cakes), but there may be opportunities to drive even more sales around special occasions. These are also the types of premium purchases that consumers are inclined to spend more money on, Roerink said during an educational session at the recent International Dairy, Deli, Bakery Association Show in Anaheim, Calif.

The month of May also brought YOY unit growth for several of the perimeter bakery categories, including buns and rolls, pies, croissants, and tortillas/wraps.

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