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The future of in-store bakery programs

Sales of organic and natural product offerings in conventional in-store bakeries dropped sharply in 2009, according to Modern Baking’s yearly survey. Does this spell doom and gloom for this recently promising category in natural products stores?

In 2008, almost 70 percent of mass stores offered natural or organic ISB products, that declined to 33 percent in 2010, according to the MB survey. David Orgel, editor in chief at NFM’s sister Penton publication, Supermarket News, writes that while the economy is the obvious reason for the sudden downturn, “increasingly, commercial baking aisles are seen as cheaper destination for these products than ISBs.” He predicts conventional ISBs will focus more on artisan breads with niche categories like gluten free.

This could bode well for natural products stores if they continue to offer unique bakery items that might be less available in mass such as organic or breads made with heirloom grains and alternative sweeteners.

However, we can’t ignore that natural retail ISBs did take a beating in 2009. Natural and organic ISB sales grew 4 percent to $155 million in 2009 (down from 13 percent in 2008), according to Nutrition Business Journal. In comparison, the entire natural and organic breads and grains category increased 4 percent (down from 9 percent in 2008) to $2.2 billion last year, according to NBJ.

“In speaking with one natural and organic baking company that mostly sells pastries and other private-label baked goods to retailers, I was told that those retailers that have been selling organic baked goods for a long time tended to stay committed to organic in the recession," says Carlotta Mast, NBJ’s editor in chief. “However, those retailers that were newer to organic and really just appreciated the cache that organic baked goods brought their stores, were more likely to back away from organic last year because pricing became an issue.”

Essentially, as mass backs off from organic in some sectors such as ISB, this is natural retail's chance to demonstrate to core natural shoppers a dedication to organic. Not only will this keep them in good stead with these clients, but will position them well for an economic upturn when mass shoppers again look for the U.S. Department of Agriculture organic symbol.

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