This year’s ABA convention calls for bakers to focus on innovation and retailer relations.
By Robb MacKie
There is much about baking that is timeless and traditional, but the theme of the 110th Annual American Bakers Association (ABA) Convention in La Quinta, CA was “innovation”.
This year’s convention focused on a myriad of opportunities for baking companies and their suppliers to take advantage of the changing retail marketplace and consumer tastes. The gathering of nearly 400 top baking industry leaders was challenged to consider the question of what would revolutionize baking in the next five to ten years.
One of the most illuminating and informative sessions featured Allan Noddle, former head of Ahold, USA, (owner of Giant, Giant Food, and Stop-n-Shop food chain companies). His no-nonsense approach challenged attendees to adapt their companies to the dazzling speed in which their retail customers are evolving. As examples, he discussed the blurring of traditional retail food outlets and the evolution of niche market opportunities. As the second largest selling category in retail grocery stores, he stressed that bakers’ fortunes are inextricably tied to their retail customers.
Noddle detailed how traditional retail grocery stores were already test marketing different competitive concepts — ranging from small footprint, no-frills essentials only, to upscale markets with ready-to-eat or ready-to-heat meals. A growing number of traditional grocery stores are trying to differentiate themselves through value added service and “event” settings, notably Wegman’s and HEB Stores.
Noddle also highlighted how many convenience stores are turning to quick-serve fresh meals as margin drivers. He specifically mentioned industry innovator Wawa Stores as a model worth watching. Finally, Noddle outlined how foreign innovators in the retail grocery industry are rapidly expanding in to the US and bringing new approaches to meeting customers’ needs.
Larry Huston, until very recently the head of product innovation for Proctor and Gamble Companies, gave an eye-opening and thought provoking look at how P & G refocused its product development efforts from internal to external sources. With a strong execution plan in place, P & G significantly grew both the number of new product introductions and the margins on its new products, he explained.
There were two key takeaways for bakers from Huston’s presentation. One was the need to constantly look for external partners to speed new product development as well as to clearly focus on meeting consumers’ needs and desires. The baking industry is fortunate that — unlike many industries — it has a short product development turn around time. The key for the industry is to be vigilant in spotting changes in consumer tastes early enough to bring new baked goods to the market place in a cost effective manner. Secondly, Huston emphasized the need for bakers to look closely at other parts of the world to help identify baked goods that meet certain cultural and demographic niches.
In addition to relying on leaders from other industries, the ABA Convention also featured a group of recognized industry leaders who helped answer the question of what would revolutionize the industry in three key areas: ingredients, baking equipment and distribution technology.
Ingredient suppliers will be increasingly focused on developing and providing baking ingredients that address consumers health and wellness concerns. Issues such as trans fat replacements, whole grains, and so-called nutraceuticals will dominate discussion in the coming years.
In order for bakers to respond to the rapidly changing tastes of consumers, the basic bakery production equipment will need to be much more flexible and modular. Increased product mixture will put greater demands on baking equipment. In addition, increased labor costs and the difficulty of finding skilled labor will drive equipment innovation. Because of these factors, future equipment will employ even more robotics and automation. Obviously, the high cost of electricity and natural gas will demand much more energy efficient baking equipment.
With all of the anticipated changes in retail store formats, new outlets for food sales and evolving foodservice needs, efficient and flexible distribution systems will be required. Hand written order slips and even traditional hand held computers will be nostalgic memories, replaced by sophisticated and fully integrated ordering and sales systems between bakers and customers.
All of these rapid changes present opportunities and challenges for bakers. Those bakers who are able to partner with their retail and foodservice customers to anticipate and meet the changing tastes of the consumer will thrive. New retail formats and venues will require quick thinking and ingenuity for bakers to succeed. Bakers are fortunate in that they provide healthy, wholesome and nutritious products that bring smiles to their customers.
The basic ingredients and processes are similar to those first employed over 6,000 years ago. However, the first bakers could not possibly imagine the fine art and science that has become today’s baking. If the ABA Convention proved one thing, it is that change is constant and companies had better stay ahead of the curve.
Robb MacKie is president and CEO of the American Bakers Association in Washington DC. Contact him at rmackie@americanbakers.org.