Bakery Department Continues to Bring in the Dough

The bakery department at grocery stores has seen significant growth, particularly now that in-store bakeries are fully operational and consumer concerns about purchasing single-serve items like bagels, cookies, and bread have eased.

Recent data from NielsenIQ shows an impressive 14.7% year-over-year increase in total bakery sales for the 52 weeks ending May 28, a notable jump from the 3.3% growth the year before. According to the International Dairy Deli Bakery Association (IDDBA), bakery sales surged by 8.7% to $3.8 billion in May, with cookies, muffins, and doughnuts among the top performers. However, inflation contributed significantly to these dollar sales, as the total units sold decreased by 3.4% in May compared to the previous year.

Both perimeter and in-aisle bakery items saw strong dollar sales in May, with the perimeter bakery segment growing by 7.2% and in-aisle baked goods seeing a 10.2% increase. Despite the price increases, unit sales in these areas dipped slightly, highlighting a shift in consumer behavior toward higher-priced, premium options.

One of the standout categories has been bagels, which had a significant recovery with an 18.5% increase in sales, following an 8.3% decline in 2021. Bagels, along with cookies and crackers, have contributed heavily to bakery growth, with cookies experiencing a 21.8% increase in sales, reaching $2.3 billion.

Premium breads have also gained popularity, with consumers willing to pay more for fresh, high-quality products. Bread sales saw a modest 4.9% increase, while rolls and buns performed even better, with a 12.3% increase. Fresh-made, artisan-style, and take-and-bake breads are particularly strong sellers. Publix and other retailers have observed significant growth in sales of fresh-baked bread, noting that consumers are drawn to the aroma and superior taste of breads baked in-store.

Overall, premium bakery items continue to perform well, even amid inflationary pressures. Consumers are willing to spend more on fresh, high-quality products such as artisan bread, which has not been as impacted by rising food prices as other supermarket categories. Despite the challenges posed by inflation, the bakery department remains a key growth driver for grocery retailers.