US Bakery Industry

The US bakeshop diligence has combined annual revenue of nearly $25 cardinal from commercial bakeries and nearly $2 billion from small retail bakeries. There argon about 2600 commercial bakeries in the US and 7000 small retail bakeries. Some of the leading companies within this industry involve Interstate Bakeries and F starter Foods as well as small divisions much(prenominal) as Sara Lee and Nabisco. The commercial bakery segment is highly concentrated with 80% of the foodstuff held by 50 large bakeries. On the other hand, the retail bakery segment is highly fragmented.Larger bakeries dominate the marketplace because they pay greater economies of scale in procurement, action and distribution. The industry is likewise characterized by high automation. However, the end bakery product is generally low value and but the stable remove is sufficient to generate low revenues for most players in the market. The most commonly sold bakery items include baked breads (white, wheat and rye), rolls, muffins, buns, bagels and croissants. Other popular items include cakes, pies, pastries and breadstuffnuts. (Industry Overview US bakehouse Industry Hoovers Online)Competition is tough but differentiation can be come through through automation. Although baking is a low-technology business, the larger the bakery facilities and the to a greater extent automate the facility the bigger the profits for that company. This is because in large automated facilities, tire costs can be reduced significantly and maximum production can be attained. However, since bakery products ar highly perishable, large facilities argon only sensible for bakeries which ware high sales and do non maintain a great deal of inventories.Bakeries in any case face tilt from coffee outlets and fast food outlets since most of them also carry bakery style products such as bagels, pastries, doughnuts etc. Commercial bakeries again have it off a commanding position because they can act as sup pliers to these outlets opus smaller retail bakeries sometimes have to suffer since customers have more inclination to go to fast food outlets then to visit a bakery. Moreover, customer trends are rapidly changing.There was a time when the average consumer craved saucily baked products but now consumers are willing to secure packaged products and believe that they are safe, easy and convenient to use. Thus, packaged bakery snack products are also snatching the share from retail bakeries which offer freshly baked products to the consumers. (US bakery Trends) Consumer commands and preferences are also changing constantly. Today, customers have develop more health conscious and demand low prolific and fat free products. Moreover, customers are now increasingly aware and quite educated.They have detailed information about nutrition and quality issues and have civilize tastes and preferences. That is why the industry has seen a yield in non-traditional bread products such as bagel s, flat breads and organic products. Bakeries have had to change their strategies and their technological capabilities in order to keep up with the changing customer demands and preferences. (Bakeries and Snacks 2005) Bakeries are bear on by external factors such as volatile prices of raw materials. some baked goods use cistrons such as flour, sugar and vegetable oil.These are global commodities with fluctuating prices so it is important for both commercial and retail bakeries to make intelligent and proactive purchase decisions. Flour is the primary ingredient in baked goods and accounts for the largest cost element for bakery products. Wheat prices are quite volatile and this can have a significant shock on profit margins. Price of butter has a similar clash and many bakeries have switched from butter to vegetable oil but again quality has to be maintained in order to sustain a competitive position within the industry.The US bakery industry also has a growing export segment. S ince the 1990s exports of US bakery products have been increasing consistently. It is expected that exports of US bakery products will exceed $250 billion by the middle of the decade if not higher. Some of the core reasons for the growth in exports include rising incomes, increasing populations, growing tourist industries, decline in trade barriers and an overall increase in global demand for baked goods.The main factors hindering export growth are demand for freshness and transportation limitations. However, with the improvement of technology, bakeries are now able to bugger off products that overcome these limitations. Moreover, there is always a demand for baked mixes, cookies and doughs that can be easily packaged and transported and that have continuing shelf lives. The biggest customer of US baked goods is Canada. It is a huge market and Canadian customers have similar tastes to US customers.It is estimated that nearly half of US bakery products are consumed by Canada. (Cl air, Thomas 1992)Bibliography1. Industry Overview US Bakery Industry. Hoovers Online. Retrieved May fifth 2008 http//www. hoovers. com/bakeries/ID__91/free-ind-fr-profile-basic. xhtml.2. Clair, Thomas. (1992) Bakery products exports on the rise. AgExporter. Retrieved May 5th 2008 http//findarticles. com/p/articles/mi_m3723/is_n1_v4/ai_11754641/pg_2.3. The Canadian Bread and Bakery Industry. Agriculture and Agri Food Canada. Retrieved May 5th 2008 http//www4.agr.gc.ca/AAFC-AAC/display-afficher.do? id=1171653091262&lang=e.4. Bakery industry cashes in on wholegrain trend. 2005. Retrieved May 5th 2008 http//www. bakeryandsnacks. com/ intelligence activity/printNewsBis. asp viper? id=62237.5. Eyre, Charlotte. US Bakery markets beckons for Vivartia. Retrieved May 5th 2008 http//www. cee-foodindustry. com/news/ng. asp? id=83797-vivartia-nonni-s-wind-point-partners.6. US Bakery Trends. Retrieved May 5th 2008 http//www. bakeinfo. co. nz/industry/trends/article. php? id=43.