Thomasville, go. -Flowers Foods Inc. is ‘very well prepared’ in the midst of a consumer migration away from traditional white and wheat bread products, said A. Ryals McMullian, chairman and chief executive officer.
“The bread category in the Middle Stores as measured in kept channels has been put under pressure,” said McMullian in reporting tax 2024 results at the end of the year. “Consumers have attracted more to the store of the store as they are looking for restaurant -like experiences and what they regard as healthier options.”
In the tax 2024 fourth quarter, the dollar sales for flowers’ freshly packaged bread fell year after year after the win of 4.3% in the first, 1.9% in the second and 0.5% in the third quarter, what resulted in a full year of about 1.3%, based on Circana detail trade data. The sale of units also decreased in the fourth quarter, fell by 1.3%, but followed the rises of 0.2%, 1.4%and 0.7%or in the first three quarters respectively, the volume ended the year With around 0.3%.
Promotional prices influenced the sale of dollars, just like some rationalization of the stock treatment unit and “some seasonal noise” in the fourth quarter, a period that McMullian described as “typically fairly weak for sandwich bread.”
“Nevertheless, we have still seen very, very strong growth in some of our breakfast items, sandwich bread and sandwiches,” he said in an analyst call of 7 February.
However, the CEO noticed a clear change in the preferences of consumer bread outside the problem of the price.
“It is that consumers shift from soft variety and white bread, where I think we are very well prepared,” McMullian told analysts. “Soft variety and white bread were weak. I now have it in terms of the entire year, not just the fourth quarter. However, the investments we made in innovation around Keto, Gluten-free and Organic, and our Sandwichbun and Roll-Business, in particular under the National Wonder label, were more than enough to compensate for that. So if you get the Cakeparton from Merkwinkel, we were positive in units and dollars for the year. “
Adjustment to consumer trends
Flowers said that the bread dollar share in the fourth quarter to 16% fell after around 16.9% during the previous three -quarters. Yet the brands of the Dave’s Killer Bread, Wonder and Canyon Bakehouse all won 10 Basic points in unity share for the quarter and they grew their channel volumes followed by 2.9%, 0.5%and 17.8%respectively, McMullian said.
“I think it is more a secular shift from those (traditional bread) categories,” he said in the call. “We have now discussed the shift for more differentiated, premium items for a number of years. Part of it comes to us in the terms of (own) perfectly manufactured and Dave’s murderous bread. Other parts of it go to the outline of the store, other parts go to tortillas and flatbreads. So consumers are looking for something else.
“Yes, there are still value consumers who buy a private label or wonder or nature’s own butterbread. But there is definitely a shift in flavors and preferences away from those mainline items. We are for this and we meet that new consumer question and compensate for the softness so far in those traditional categories. “
Nature’s Own offers a further illustration, McMullian noted. The result of the fourth quarter followed channel volume for the brand-oriented on traditional bread bread, the market segment that was most affected by the current consumer environment-Was 1.6%, but surpassed the general category, he said. At the same time, their own perfectly manufactured premium line of nature of nature rose by 8.5%.
“That is a good example of where the market is going, when you think of white sandwiches and what we have done with perfectly,” he said. “While a traditional bread is under nature, it was perfectly manufactured with 8.5% in units in the fourth quarter, which is usually weak. So that’s an example. We also have a white bread under Dave’s. So that gives the consumer a place to go that is more premium and more differentiated than those Mainline items. “
Are GLP-1S a factor?
In his tax overview of 2024 before the call of the analyst, McMullian GLP-1 mentioned weight loss medicines as a potential factor behind weakness in the bread category, along with a difficult economic climate and healthier eating trends.
“The impact of GLP-1’s on this shift is unclear,” he said. “Research seems to show that consumers who have taken over GLP-1’s, buy less food and shift more from their purchases to nutrient-tight items in the store perimeter. However, that effect appears to be declining over time and, for consumers who take GLP-1’s specifically for weight loss, research shows that the initial impact on purchases are reversing and ultimately results in consumers who spend even more on articles in the In the middle then prior to adoption. “
In response to an analyst question in the call, McMullian of GLP-1’s said that “everyone is still trying to find out what the impact is, what the size of the impact is, what the size will be.”
“We are already scanning the research, as I know for sure that many of you are, and part of it is contradictory,” he said. “It’s hard to get a strong hold on it, but we want to be knowledge of it.
“But what I would say is that if GLP-1’s become an important factor and influence overall food consumption, we think we are very good for that.”
The rise of GLP-1’s runs parallel with the growing interest in healthy eating, said McMullian, referring to the Make America Reme Reme Movement Movement and the focus on cleaner food labels. He Noted Flowers’ Cultivation of Brands Like Nature’s Own (No Artificial Preservatives, Colors Or Flavors) and Acquisitions Like Dave’s Killer Bread (Organic Bread Products and Now Snacks), Canyon Bakehouse (GLUTEN-FEULY, Most Recentlys and, Most Recentlys and, Most Recentlys and, Most, and, Most Recentlys and, Most Recentlys and, Most Recentlys and, Most Recentlys and, Most Recentlys and, Most Recentlys and, (Better-by-your crackers, cookies, snack bars and baking mixes).
“You see where we take the portfolio; It is definitely much more crooked to better for you, “he said. “Cleaning up labels, having DKB, Canyon’s dominance and adding simple mills to that mix, because many people on GLP-1’s are looking for items, just like Simple Mills. So with all those factors in mind, we form our portfolio to meet some sort of that new consumer who uses medicines. ”