MINNEAPOLIS -- Parbaked products could be the key to future profitability in the in-store bakery, a consultant told attendees at the International Dairy-Deli-Bakery Association's annual expo and seminar here this month.
The seminar -- which focused on the coming of age of the parbaked industry and what it can do for supermarket bakeries -- was conducted by William P. Mason, a principal in the Hale Group, a Danvers, Mass., consulting firm that works with the food industry.
Sales in in-store bakeries have slowed and, at the same time, the pressure to make a profit has heated up, Mason said.
"The consolidation of ownership of supermarkets will demand profitability at all levels of the supermarket, not just the total," Mason added.
Consistency and quality of products will be the critical issues in making the in-store bakery profitable, he added. Parbaked products can satisfy those issues as well as others, by making it easy to produce a consistently top-quality product with the use of minimum labor. Associates can be freed from production to help merchandise and sell the products, he said.
"Also, there has been a huge waste factor in the in-store bakery and that can be solved with these products. You can bake several times a day, which adds to the customers' perception of fresh, and you can time baking to meet peak traffic periods," Mason said.
He stressed that real growth in supermarket bakery sales is no more than 1% (compared with a year ago) and therefore in-store bakeries must find ways to push profits up on the products they're selling.
"Traditionally, in the in-store bakery, gross profit was the measuring tool, but that doesn't work anymore," Mason said.
"I can't guarantee a 50% margin with parbaked product, but a 10% net is possible and that's better than a 60% gross and 2% net with scratch and mix," he added.
Only 7% of in-store bakery sales are currently linked to parbaked products, but Mason foresees that percentage doubling in the next five to seven years.
He can make this prediction, he said, because he sees manufacturers of parbaked products gearing up for it.
Manufacturers' capacity is growing at a rate of 20% a year, he said.
"The major players have added capacity and are expanding their lines to include more than just bread," he added.
Until recently, manufacturers had put their efforts into parbaked crusty breads almost exclusively, Mason said.
The demand was there for crusty breads in both traditional food service and in retail, Mason said. He also said crusty breads lend themselves well to the parbaked format because they hold their moisture well.
"Parbaked products can lose a lot of moisture because they're partially baked, then frozen, then finished off with more baking, but the crust on crusty breads prevents moisture from escaping so easily," Mason said.
"But we're not far away from having a parbaked white pan bread," he said, adding that manufacturers have improved their formulations on all parbakes to create more of a tolerance for error in the finishing. For example, the oven's temperature can be slightly off and still the product will retain its quality.
Until bread sales recently boomed in in-store bakeries, manufacturers had been using their capacity to supply the food-service industry with par-
baked products.
Now that the manufacturers are expanding their capacity, costs to retailers will come down and more support -- such as training -- will be provided, Mason predicted.
"I foresee that baked and parbaked product will be the only category that will see growth in the next few years. Frozen dough will hold its share, but the others -- scratch and mix -- will lose share," Mason said.
