BEMA Intel shows that the pressure continues | 2022-06-13

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Slowly but surely, the bakery industry seems to be calming down. This is what the latest data from BEMA Intel seems to suggest. In the quarterly Member Pulse Survey for the first quarter of 2022, 84% of equipment manufacturers reported a positive outlook for the U.S. baking industry. This percentage has approached 100% in recent quarters.

“The survey confirms that the outlook for our industry is positive,” said Jason Ward, President of AMF Bakery Systems and member of the BEMA Board of Directors. “We’re coming out of these high demand quarters for equipment with a lot of projects going on, and we’re not going to maintain that pace indefinitely as an industry. So we’re seeing a natural softening.

When asked about quarterly bookings, 59% of equipment manufacturers said bookings were up from last quarter. In the fourth quarter of 2021, that number was 64%. For the first quarter of 2022, 16% of members said bookings were down from last quarter.

Mr. Ward was quick to point out, however, that this dip in positivity for the industry is likely not due to a drop in demand, but a natural response to the immense amount of pressure the industry is facing. industry is currently facing. Costs related to raw materials, transport and logistics far outweigh the other concerns listed in the data. Concerns related to the coronavirus (COVID-19) pandemic fell from 65% in the fourth quarter of 2021 to 24% in the first quarter of 2021.

These weak points are also reflected in the BEMA Intel industry indicators, which show prices soaring. The bakery ingredients indices increased significantly from Q4 2021 to Q1 2022 for all products except pasta. Saltine crackers, white bread and shortbread cookies saw the most drastic increases.

Other input costs are also increasing and more significantly than before. Diesel fuel prices jumped from just over $3.50 to over $5.00 in a matter of weeks. While unemployment is down overall, unit labor cost is up 6.6%, adding to previous increases.

“It’s always a story of compression,” said Jennifer Lindsey, vice president of global marketing at Corbion. “That unfortunately hasn’t changed and because of the new wrinkles from the conflict in Ukraine, it’s already adding more stress to a stressed supply chain.”

The good news, she says, however, is that bakers can pass those costs on to the consumer. The consumer price index for baked goods in March rose 9.1% from March 2021. And that figure catches up with the 10% increase in the CPI for all foods eaten at home. It also did not impact consumer demand during the first quarter, as IRI data for the period shows that in general, bakery unit sales remain flat even as prices rise. dollar sales.

“Consumers aren’t running away from baked goods because of high prices,” Lindsey said. “When you compare baking to all food categories, it’s one of the most cost-effective ways to feed your family. Food is something you can always splurge on during a recession.

This steady demand and recession-proof nature of the bakery is what Tim Cook, CEO of Linxis Group and Chairman of BEMA, attributes the continued positivity to.

“My experience is that bakers are cautiously optimistic,” he said. “Demand for baked goods remains strong and supply continues to be tight. During periods of inflation, people are unlikely to buy less bread from retail outlets. They can switch from a premium brand of bread to a cheaper brand of bread, and they can eat at home rather than going to a restaurant, which affects some categories more than others, but the bread remains one of the most economical and effective forms of bread for meals. food available to consumers.

It remains to be seen if demand remains high as prices rise in future BEMA Intel reports.

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