The baking industry is a diverse marketplace comprised of thousands of retail owners, manufacturing titans, and large-scale food service companies. No matter the sector or scale, recent trends in the baking industry have changed how and where consumers enjoy baked goods. These trends and increased dietary restrictions have changed the basic ingredients of our favorite breads, cookies, and scones.
Gluten-Free: How Diet Trends Affect the Baking Industry
Once considered a major barrier for bakery manufacturing, gluten-free products have expanded total addressable market (TAM) estimates in the US, Asia-Pacific, and EU markets. Meeting dietary preferences has also allowed manufacturers to expand product offerings at higher retail prices without sacrificing per-unit profits.
It hasn’t been all tailwinds, however. Gluten-free baked goods tend to be drier, less stable, and more prone to temperature damage in frozen storage. Adapting formulations to mitigate the negative qualities of gluten-free bakery products has been an ongoing process.
However, a certain family of nature-based ingredients has played a large role in making gluten-free line extensions possible for manufacturers – and palpable for consumers.
Hydrocolloids in Baked Goods
There’s a reason more consumers are familiar with nature-based hydrocolloids like carrageenan and guar gum. In gluten-free baking, hydrocolloids improve texture, stabilize foams, and retain moisture. Used as viscosity enhancers and gelling agents, hydrocolloids like guar gum, xanthan gum, carrageenan, and agar are becoming as integral as flour in many baked goods formulations.
What Does Xanthan Gum Do in Baking?
Few ingredients are as versatile as xanthan gum. Gluten-free baking often requires freezing to preserve moisture content. Xanthan gum not only improves dough stability but also retains moisture, reduces viscosity, and improves final product texture. “Rise” during the baking process and chew attributes are significantly improved when hydrocolloids like xanthan and guar gum are used in combination.
What Does Guar Gum Do in Baking?
Like Xanthan, guar gum is a natural thickener used to improve texture and extend the shelf-life and stability of baked goods. For gluten-free products, guar gum enhances dough elasticity and prevents the crumbliness that is often characterized by GF breads.
Agar-Agar in Baking
Agar is a vegan alternative to gelatin in many gluten-free recipes. It is primarily used in icings, glazes, and frosting and adds bulk to low-calorie bread products. Like other hydrocolloids, agar serves as a nature-based alternative to artificial ingredients, another hot topic in the food and beverage industry.
Hydrocolloids will continue to shape new formulations as the demand for gluten-free bakery products increases. The prevalence of celiac disease and gluten sensitivity, combined with broader health awareness, has made gluten-free foods a staple, not a specialty, in many convenience food product lines.
Related: Everything You Need to Know About Food Gums
The GF Industry Keeps Growing
The gluten-free baking industry is expected to grow at a 10.8% compound annual growth rate through 2030, powered by health-focused consumer preferences and a rapidly expanded offering of GF products.
General Bakery Revenue Continues to “Rise”
Baked goods are more than companions to our morning brew at the local coffee shop. Pandemic-era regulations put a nearly two-year pause on weddings, birthday parties, and other event-based special-order revenue for thousands of bakeries worldwide. While sheet cakes may not be de rigueur, when it comes to baked goods in general, Americans are spending more than ever. For consumers, bakery spending has largely shifted from in-store orders to the grocery aisle, which accounts for more than 70% of bakery sales in the US.
Globally, the gluten-free baked goods market is expected to grow at 10.8% CAGR, much faster than the broad food markets. It’s a key growth opportunity for specialty ingredient suppliers and a pain point for manufacturers seeking access to gluten-free baking ingredients on an industrial scale.
Despite inflation and economic uncertainty, baked goods have been remarkably resilient in grocery stores over the past three years. Perimeter bakery items (like donuts, pies, and department-specific items) rose 31.6% in 2023 compared to the same period sales in 2019. Center store sales, which primarily include manufactured breads, increased 34.9% over the same period.
Experts believe bread, bagels, and other bakery products’ nearly endless versatility makes them resilient to both recession fears and measurable inflation – the price of wheat bread per pound has increased more than 36% since January 2019.
Breaking Bread: Baking Industry Headwinds
On the challenging side of things, most bakery businesses operate on razor-thin margins with almost no backstop against high inventories or price shocks. As an industry, reliance on relatively low-cost but highly commoditized ingredients offers inherent exposure to supply chain volatility.
Increased labor costs; a growing workforce shortage; rising egg, sugar, and flour prices; and changing nutrition guidelines pose real but not insurmountable obstacles for bakery businesses in the years to come. Gluten-free offerings may reduce exposure to these challenges by increasing the total addressable market and offering some diversification among food sectors and demographics.
Baked-in Expertise and Support – That’s Tilley Distribution
At Tilley, expertise, quality, and technical support are inseparable from our product catalogs. We take pride in supporting all aspects of our clients’ businesses and lending global insight to their operations. Source nature-allowed, vegan hydrocolloid ingredients backed by technical expertise. See why we’re so much more than a distribution company; we’re your partner in continued success. Let’s get started; contact us today to speak with a Tilley representative.
