A spending spree by Allied Bakeries on its UK plants spanning several years culminated in an investment of more than £30M in its Stevenage plant, just over two years ago. The overall aim was to increase efficiency rather than output.
Despite all of this strategic planning, by the end of September this year, parent company Associated British Foods (ABF) was talking about “significant margin decline” in “a very competitive market with low retail prices” for bakery. It went so far as to close one of its distribution depots.
According to Mintel, volume sales in the UK for pre-packed bread declined by 1.3% in the year to 2017, with similar or even larger drops for at least the three or four years prior to that.
There is a glimmer of light around value trends, says the market research company, given that the value of pre-packed bread increased by 1.2% over the past year. The year before, it fell by 2.6%.
“Before 2016, average prices were dropping because of supermarket price wars,” says Mintel’s associate director of food and drink Emma Clifford. “It was a matter of how low you could go to get shoppers through the doors.”
When there is a blaze of light at the end of the bakery tunnel, it can be short-lived. Take the example of sandwich thins, which, according to Mintel, notched up a value of £81M in 2015.
This new segment lost a quarter of its value by 2016, and saw a further fall to £44M this year – a year-on-year loss in sales value of nearly 28%.
Fast pace of change (back to top)
“The pace of change seems to be quickening, and there’s a rising number of ‘fad’ products that come and go rapidly, and which make the task even harder,” says Keith Graham, marketing manager at equipment supplier Baker Perkins.
So, is there any way for bakeries to ride each wave of new and trendy product formats (and ideally be ready for those waves when they come), without being left with under-utilised lines when the fashion starts to fade?
At the Federation of Bakers, director Gordon Polson points out that most bread lines have the flexibility to produce most kinds of loaf.
“Of course, what you can’t do is build in the flexibility to run crumpets one day and bread the next,” says Polson. “The large bakers that, around 20 years ago, were producing sizeable volumes of sliced bread are still producing a hell of a lot.
“But at the same time, they’re building in more variety with morning goods, products such as crumpets, sandwich thins, and so on. All of this has required more investment.”
Over time, this has meant that the big bakery producers have established mixed or dedicated plants for products outside the mainstream, he says. Others have made speciality products the mainstay of their business.
In the summer of 2016, Signature Flatbreads opened a new £10M factory extension, promising further investment to come.
“We’ve been seeing double-digit percentage turnover growth, year-on-year, for the past three years,” says Signature commercial director David Laurence. He adds that the figure is set to reach £100M “very shortly”.
“The bakery market at the moment is all about offering consumers something different, whether it’s bread for a sandwich or sweet bakery,” says Laurence.
Novel products continue to throw down new automation challenges. “For example, to produce folded flatbreads takes a unique piece of kit,” Laurence says.
“It’s a hell of an operation. For a start, the product has to be soft enough. In fact, when it comes to actually folding it, we haven’t automated that section yet.”
The need for variety (back to top)
The original Eid family business started with naans in the 1980s, before moving on to tortillas, crumpets and pancakes around a decade ago. The need for variety – and flexibility – is integral to the latest line.
“It is one of the largest in Europe. We can produce just about anything on it,” Laurence says. Currently, as well as folded flatbreads, the new line is producing thins, pittas and focaccias, he says.
“We’re very flexible,” Laurence emphasises. “We seem to be very good at changeovers. Frozen bakery is very different, but when you’relooking at seven to 15-day product life, you have to be flexible in order to manage short runs.”
How is this flexibility achieved? Signature likes to paint a picture of a factory built to be bigger, better (including more flexible) – and, not least, cheaper – because it is not “off-the-shelf”.
All of the equipment is “bespoke”, says the company, and built to the specifications of one of the owners, William Eid, a trained engineer.
Where there is in-built flexibility in bread-making, the focus shifts to minimising downtime and changeover times between the different types of loaf.
“Most bakeries are making lots of different product types on the same line over a 24-hour period,” says Graham at Baker Perkins. “That’s always been the case, but those pressures are probably getting worse, and will increase still further in the future.”
One driver for this has been the delayed impact of the EU’s deregulation of bread sizes, Graham argues. Just over eight years ago, UK bakers were for the first time permitted to produce loaves outside the 400g and 800g variants that had been legal up to that point.
“An operation will try to keep settings on the prover and the oven as similar as possible,” says Graham. “They can change the recipe on the mixer, maybe on the moulder, but as little as possible elsewhere, so they don’t have to wait for the oven to heat up, for example.”
Flexibility at the baking stage will also depend on whether the operation uses tunnel or rack ovens, he points out. With rack ovens, each can be used independently and individual settings regulated more easily.
At ovens and mixing supplier Reading Bakery Systems, European sales manager James Pocevicius says: “What I’m noticing is that everyone is trying to get as much utilisation and capacity out of their current equipment, which may mean changing the process to do that.”
But if manufacturers want utilisation, they also want efficiency. Oven technology has been evolving for years, and Reading has now added its own twist with the Prism Emithermic Oven Zone for biscuit and cookie baking.
“A key feature here is the fact that we don’t use heat exchangers around the oven,” says Pocevicius. “We use direct convective heat from gas combustion. When you take out the heat exchanger, you’re gaining 20% in efficiency.”
In fact, the convective heat is applied to black-oxide-coated panels in the oven ceiling, which in turn provide radiant heat. Operators can switch between 100% radiant heat and 70% radiant/30% convective.
Oven technology (back to top)
This emithermic zone could be used for the first development stage of baking, when one aim is to keep moisture in the product.
“You could have three zones over 45m, for example, with the first two emithermic zones followed by a 15m full convective oven for drying and colouring product,” he says.
“This would give the customer more control over the balance between radiant and convective heat, and offer more options.”
This ability to keep options open in biscuit and cookie manufacture can be equally important at the forming stage.
At this point in the operation, says Baker Perkins, businesses typically have a choice between equipment that offers greater or less flexibility.
In rotary moulding systems for soft biscuits, for example, it argues that investing in the simplest, one-size-fits-all type moulder is probably not a sound route to future-proofing a line.
While having fewer adjustable parameters and a single drive to operate the whole unit may not matter at lower speeds and with the most basic products, this will change when more demands are placed on the line.
If, for example, deeper moulded biscuits are emerging more cleanly on one side of the web than on the other, independent side-to-side adjustment will probably fix the problem.
This capability, and several others, may be seen as “optional extras”, says Baker Perkins, but only if the customer wants to rule out a wide range of product opportunities in the future. “The low level of additional capital cost is easy to justify,” says Graham.
The forming stage for bread can offer equally valuable opportunities. Sub-categories showing promise include what Mintel defines as “bread with bits”, which can include seeded loaves, multigrain and so on. These sub-categories grew by more than 6% last year and nearly 8% this year, according to Mintel’s figures.
Baker Perkins is among suppliers to have innovated in this area. Its Multitex4 bread moulder can not only add a full coating of seeds or grains but can also, in the same operation, add eye-catching swirls to the shape of the loaf.
Catching the eye may be important, but for Clifford at Mintel, pandering to the palate could have even better results for the sector.
“Flatbreads have been a great vehicle for flavour innovation, blurring the boundary, for example, between what’s bread and what’s pizza,” she says. “There could be more flavour innovation elsewhere in bakery.”