How significant are growth opportunities expected to be, in flour and bread manufacturing?

23 November 20207 min reading

Sunil Jha Research Content Developer Global Market Insights

Amidst the coronavirus outbreak confining millions to their homes, flour and bread manufacturing is witnessing a paradigm shift. Flour manufacturers are running around the clock to streamline supply chain following the tendency of hoarding following the COVID-19 fallout.

U.S. flour mills witnessed wheat flour production of around 422.27 million cwts in 2019, around 4.59 million cwts decline from the preceding year. Manufacturing of flour has surged in 2020 on the heels of rising domestic food production in the midst of COVID-19 pandemic, witnessing a home-baking boom. Nevertheless, bread production—that tends to be variable—has dipped in advanced economies.

According to Economic Research Service of the U.S. Department of Agriculture, per capita flour consumption plummeted to a 30-year low in 2019—was pegged at 130.7 pounds. Flour consumption was 429.6 million cwts in 2019. With changing consumer preferences and dietary trends, businesses such as prepared flour mixes have reigned supreme in recent years.

As a rule of thumb, bread needs high-protein wheat, while other sweet baked goods tend to use an ocean of wheat classes, ranging from mid-protein wheat to low-protein wheat. Novelty and taste will become increasingly become essential that will spur consumer behavior. Shifting consumer behavior from merely being a “sometimes snack,” to giving a run for the money to rice, for instance.

Some of the aspects necessary for bread manufacturing are delineated below: • High protein: Protein content is a major indicator of functional performance as it can work as an initial filter. It can be quantified at the point of delivery of grower through a near infrared machine.

Protein content will hog the limelight for it will serve as an indicator of milling attributes and will be sought-after for end-product texture.

• Stability and strength of dough: While stability of a dough will exhibit its tolerance to over- or under mixing, strength will streamline texture, composition and shape for long fermentation baking methods, including sponge and dough.

• Water absorption and wet gluten: Water absorption will determine volume of bread which can be produced from a specific quantity of bread and will be a commercial issue. Meanwhile, seasonal and environmental facets will have a notable influence on wet gluten.

• Crumb texture: Crumb texture will remain paramount to assess softness which is decided by bread-cell measures, including thickness, shape, number and size of each cell within the loaf.

A deep-dive into Canadian Western Red Spring (CWRS) wheat flour North American grades have reigned supreme across the globe: Dark Northern Spring (DNS) and Canadian Western Red Spring (CWRS) are perceived as the linchpins by millers. CWRS wheat, regarded as the largest wheat class in Canada, tends to produce around 15 million acres and is mainly grown in Manitoba, Alberta and Saskatchewan.

CWRS wheat flour has become talk of the town for the production of high-volume pan breads and a slew of other baked products. What’s more, it has gained popularity globally owing to exceptional baking and milling qualities with minimal protein loss during milling.

During the bread manufacturing, CWRS wheat flour is used either in blends or alone with other wheat varieties for the production of a myriad of products, including noodles, hearth breads, steam breads and flat breads.

When it comes to the production of high-quality flour, pasta and baked goods, CWRS is mainly preferred on the heels of its tremendous baking and milling quality. Accounting for over 60% of annual production, CWRS has the innate ability to boost the quality of lower quality wheats and has an outstanding end-product quality and milling characteristics.

Canadian Western Red Spring wheat flour will be sought-after for versatility in the production of heart breads and flat breads and in the fermentation and good mixing in all baking processes. Noodle and pasta application portfolios will be the catalyst for the manufacturers of flour and bread as flour is seen as a major ingredient in the production of fresh yellow alkaline noodles in light of its tremendous color and texture properties, clear and bright appearance.

Commercial viability to small and medium sized bakeries Both small to medium sized bakeries and large-scale industrial bakeries will look to cash in on the opportunities in the long-run. The relative attractiveness of the bread and baked goods portfolio may hover around competitive yields and functionalities ideal to bread flour blends.

Commercial viability of flour will count on an affable and coordinated approach among breeders, grower, logistics and marketers. In a scenario where customers are unfamiliar with the product specific attributes and in a scenario where industry players gear to claim new market share, streamlining flour and bread manufacturing becomes indispensable.

Smaller mills are catering to the needs of micro-bakeries and artisanal and rendering online services. Grappling with the empty supermarket shelves, several shoppers have turned to local mills.

According to the National Agriculture Statistics Service (NASS) of the U.S. Department of Agriculture, all wheat ground for flour was 219 million bushels during the Q2 2020, 6% dip from the Q1 2020. Meanwhile, 4% of the total floor production stemmed from 4.48 million hundredweight during the Q2 2020.

With soaring consumers spending, flour and bread manufacturing will gain a notable uptake as the prices of major commodities, including corn, wheat and other gains will witness less fluctuation.

Demand for flour and bread in the first and second quarter spurred by leaps and bounds, partly attributed to panic buying, stockpiling and in other cases, hoarding amidst COVID-19 fallout. Customers exhibited traction for larger 10- and 25-pound bags of flour as agencies and other governing bodies strive to flatten the curve.

Consumers’ inclination towards handcrafted, traditional and fresh breads has become the talking point. So much so that smaller loaves have gained impetus in recent years as sustainability takes center-stage.

Revenue stream in niche markets in Asia Even though consumption of bread is mainly dominated by the U.S., U.K., Germany, Russia, consumption has potentially reached at a saturation level in several western countries. Bread consumption is likely to surge in Asia and Africa, with countries such as Australia, Indonesia, India, South Africa and Nigeria leading from the front.

Asian diets will continue to mirror the dietary shifts witnessed in the past several years in advanced economies in the Europe and North America.

Assimilating the economic rationale, a major consideration may be to expand footfall in untapped areas in Asia, Africa and Latin America. According to Statista, China consumed around 125 million metric tons of wheat, while the U.S. wheat consumption was pegged at over 30 million metric tons.

Each flour and bread manufacturing market across the globe has unique and subtle needs, owing to their style of bread; physical appearance of the bread; ingredients; and bread-making process.

A moderate surge in per capita consumption of bread can keep up with the production of wheat. Dough-rheological parameters and grain quality may be the benchmark of the end product functionality. For instance, as compared to what with protein content of merely 10% protein, wheat with protein content of over 13% will make better bread. Baking functionality will count on grain attributes, including grain protein.

North American high protein grades may be more lucrative as Canadian wheat and American DN continue to expand penetration across the globe.

Major flour-use segment in the global market may hover around bakery products, instant and dry noodles, cakes, biscuits, confectionary and wet/fresh noodles. Upsurge in the production of these products will bode well for flour and bread manufacturing industry.

It is needless to say that bread is made is various ways in different markets and each market has its own consumer preferences. A niche market opportunity may be seen in geographically lucrative areas.

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