Iba Connecting Experts virtual event reveals impact of covid pandemic on bakery sector
The IBA Connecting Experts online event has highlighted key impacts on the European and US bakery market as part of its sessions ahead of the major industry event taking place this October in Germany, writes Neill Barston.
According to its organising team, the series of webinars, equipment displays and virtual bakery tours proved a success in attracting a broad global audience.
Among presentations for the virtual showcase this week was a market overview for from the Gira global industry research group, which expressed concern on the medium and long-term effects of the coronavirus crisis on the European sector.
Anne Fremaux, the organisation’s bakery director, noted there had been some marked trends during the past year as the pandemic took hold.
She said: “Gira conducted research last summer, the only thing guaranteed is uncertainty – over the past months not much has changed, there are still a lot of covid issues, and economies still in a difficult position.
“Modern retailers have been the least affected by fresh bakery distribution (with sales volumes dropping 9% in 2020), and they saw a huge growth in sales at the beginning of the pandemic, but then shoppers began shopping less frequently tried to avoid large stores after that.
Also, many in-store bakeries have been closed during the pandemic, with consumers preferring smaller and less crowded outlets, and the trend was to shop more locally (with artisan bakery stores were down 16% in volume growth last year), but the main point was the collapse of food service sectors – restaurant recorded a sales drop of 60% for fresh bakery sales for the second quarter of the year, they were able to compensate for some of the losses in the second half with take-away.”
Fremaux, added that the sector saw a slight summer recovery before the second lockdown, noting that home delivery and click and collect services were among the standout developments of the year within bakery.
Perhaps the most concerning trend, she said, was the Foodservice segment saw a 31% reduction in sales, with commercial restaurants being down 40%, social foodservice segments down 26% and bakery chains down by a total of by over 20%.
The analyst noted that modern retailing operations had been the more busy shopping channel, but with product ranges reduced combined with the wider economic downturn, discount operations were the ‘big winners in the covid crisis’ due to their well defined ranges and pricing policy.
As for the prospects for 2021, she was that the first period “would probably remain weak” with a comparable decline to the last year, in modern retail, we might see a recovery rapidly, at least for bread, but for snacks, it may take longer until 2022.
Fremaux added: “Within foodservice, this year is one of transition and rebuilding in Europe and it will take some time to get back to pre-pandemic levels. We may have some improvements in the summer with a good vaccination rate, when restaurants will re-open again.
“The 4th quarter of 2021 still has some big questions, it is expected that economic crisis will keep consumption low, and foodservice will suffer the most – and some restaurants may never reopen. Social foodservice will continue to be affected. A rebound of foodservice only expected by the summer of 2021, and not a full recovery until 2022.”
In terms of direct impact on productions, last year, bread was least affected, with sales down 12% in the second quarter of 2020, yet had begun to recover by the end of the year, patisserie sales were down 17%, and savoury pastries were down by 25% last year.
US bakery performance
While conditions in Europe remained challenging, the picture was equally mixed in the US, as a session led by Kerwin Brown, president of BEMA industry association and Robb Mackie, president and CEO of the American Bakers’ Association revealed.
With the US bakery market put at a value of $154 billion, employing 764,000 people, the sector has undoubtedly been hit by the pandemic – with commercial aisle bakery sales reportedly up 10% in 2020, to $64 billion, yet in-store bakery figures fared worse, recording $6.8 billion in sales (down 6.1% (441 million) due to the pandemic as many stores remained closed.
The Industry will now be looking ahead to its next international IBIE held in the US next year (the last show in 2019 pictured), with hopes remaining strong of a recovery materialising later this year.
Kerwin Brown, President and CEO, BEMA projected optimism despite unprecedented and uneven conditions that impacted the region’s markets and significantly altered shopping habits of consumers. He said: “For last year, in the second quarter, a lot of people were panic buying in stores and cleaning out the shelves. However, all four quarters reflect positive sales compared with 2018/2019.”
For his part, Robb Mackie, President, CEO, American Bakers Association, said that ‘groceries are doing well now, but foodservice figures are overwhelmingly down,” reflecting on conditions within the US.
He added: “Pre-pandemic, 53% of meals were out of home – then literally overnight within a couple of days, almost all of those went to being inside the home, so it’s just natural to see the pick-up in the bakery side as a result of those meals where someone might have had a ‘ sub’ meal outside of the now, they’re now converted inside the home.”Instore bakery sales – down 6.8 billion
On the trend for reduced instore bakery sales, he explained, the artisan products had been hit with ranges such as, bagels, cakes and other occasion foods were not being bought in the same volumes as consumers opportunities for celebrations and gatherings were severely restricted amid last year’s pandemic conditions – which have continued into 2021’s market conditions.
Speaking on the year ahead, he added: “Nearly half of the bakers are expecting long-term increased production. That consistent 25-30% drop is on the foodservice side, so there have been two or three segments that have been really impacted, but I think the future looks pretty good in the not too distant future, although it will take a lot of effort of getting through covid.”
In addition, he noted that sector studies last year had shown that the biggest challenges facing the bakery sector for 2021 related to the covid crisis, with 71% of respondents stating that protecting employees and keeping them healthy amid the crisis remained the top priority. Furthermore, 65% of industry professionals said there were concerns over rising costs of ingredients, and 55% said logistics costs were also a concern, posing challenges ahead for the sector as it seeks to recover and restrictions are anticipated to be gradually eased during the year ahead.
Reflecting on the overall event Cathleen Kabashi, head of iba believed it had offered a strong opportunity for network, showcasing new equipment developments and virtually experiencing bakeries around the world.
She said: “Present via our own iba booth, we were really looking forward to a virtual – but nevertheless personal – reunion. The three days gave us the opportunity to connect, foster contacts and create new ones. Whether in live chats or through video calls – we were very pleased to be able to communicate directly with numerous exhibitors, visitors and journalists at the booths. iba.CONNECTING EXPERTS proved that the need for exchange, networking and the ability to meet in a high-level place, like iba can offer as the world’s leading trade fair, is great in the national and international industry. Our aspiration is to offer a place for personal exchange and a platform for business and knowledge exchange in times like these. We are all the more pleased that everyone experienced the new format so well.”