Opportunities and Challenges in Bakery and Cereal Products

The grain-based baking and cereals industries have a lot to contend with these days. Some issues, like rising commodity and energy prices are washing over the entire industry. But others tend to hit baked goods squarely in the eye, such as consumers’ shifting notions of healthy foods, gluten-free and acrylamide concerns. And that’s coupled with a mostly mature market predicted to experience only modest growth.

According to Innovation in Bakery and Cereals, a new report from Business Insights, the global bakery and cereals market was valued at $358B in 2009, and the market should grow a CAGR of 3.4% during 2009–14 to reach $423B in 2014. The report notes that bakery and cereal products have reached a level of saturation in many Western markets, so adding value and following consumer desires will be key to successful product lines.

Nutritional health and rising obesity concerns have driven increased scrutiny on the ingredients in processed foods and bakery and cereal products are dead center in many of the debates. Just one red flag among many signaling the future direction of these products is the recent edict by The Interagency Working Group on Food Marketing to Children (I.W.G.). It saysfoods marketed to children must have limited amounts of saturated fat, trans fat, sugar and sodium and whole grains vs. refined grains.

The same industries just went through a massive reformulation process to replace trans fatty acids in hydrogenated fats and oils used throughout the category, from bakery shortenings and frying fats to spray oils and filling fats. While significant strides have been made in using healthier oils, there is still work to be done in some of the more technically challenging areas. And if saturates become a major issue, it may be back to the drawing board for many products.

Next up is sweeteners. It’s not just the controversy swirling around sugar (sucrose) and high fructose corn syrup (and in some circles, any corn syrup) it’s about added sweeteners in general. Consumers—who just incidentally show a preference for sweet foods—have decided bakers and cereal makers need to cut the sugars, especially refined ones. Taste preference will be a big enough issue, but what about the technical issues that consumers don’t get, like bowl life, yeast metabolism and textural effects?

And of course there’s the flour. After decades and decades of formulation and process optimization with white enriched wheat flour and other bran-free grains, whole grains are what’s hot. Whole grains don’t taste, mix, absorb, extrude, bake or generally act like refined flours. If that’s not difficult enough the growing interest in labeling foods as “gluten-free” will spur many a reformulation or new-product project to find alternatives to wheat (think not just flour and gluten, but wheat starch), barley (bye to barley malt), rye and, depending what theory you follow, oats in baked goods and cereals.

And let’s not forget acrylamide. Thanks to headlines like “Alert on cancer chemical found in thousands of processed foods,” it’s a processed-foods problem, as apparently homemade and natural foods are immune to the laws of chemistry that occurs during baking if the general mythology is to be believed. The EFSA (European Food Safety Authority) report that gave rise to such stories mentions the “so-called ‘toolbox’ approach as a voluntary measure to provide guidance to producers and processors in identifying ways to lower acrylamide in their products. … it can be concluded likewise that the application of the acrylamide toolbox has had only limited success. To lower overall exposure it would be desirable to further reduce acrylamide levels in food groups contributing the most to acrylamide exposure” which includes bakery stalwarts like “soft bread” and “biscuits” (cookies to those of us on this side of the pond).

This is just a short list—although quite a significant one—of challenges faced by those who design baked goods and cereals. The Business Insights report outlines many more, including: competing with private label; creating value-added products with ingredients like probiotics, sterols and super fruits, or addressing weight control and calories; incorporating sustainability; and looking at premiumization and indulgence to drive sales. It makes for interesting times, but at least these sectors won’t be running out of product development projects for quite a while.

   -Lynn A. Kuntz