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22 June 2023Higher energy costs and rising consumer expectations. Challenges for the bakery industry in 2023

The situation for bakery and confectionery businesses has been difficult since the outbreak of the pandemic and has been constantly facing new difficulties since then. In this blog post, we look at what challenges the reality is for the industry and how to face them. We invite you to read on.

The bakery industry in 2023 - the challenges

Let’s start by looking at the problems that bakers and confectioners currently face, whether they run a small business or a large production facility. These include:

  • higher electricity and gas prices, which are a major burden in such an energy-intensive industry,
  • disruptions to the supply chain caused first by the pandemic and then by the war waged by Russia – particularly felt by plants that use unusual, exotic ingredients in their recipes,
  • increase in raw material prices,
  • increase in food prices, in response to the higher costs of maintaining an establishment – these have led consumers to seek cheaper products at discounters,
    a decline in the consumption of bread,
  • labour costs, which are rising not only because of prevailing labour laws, but also because of the lack of availability of workers and the need to carry out some of the work manually.

The bakery industry in Poland is therefore facing many difficulties, and these are mainly external problems over which the plant owners have little influence. But is there a way to protect against them? Let’s find out what our specialists and industry experts advise.

How to deal with challenges in the industry?

First of all, it is necessary to accept that our reality will no longer be what it used to be. As experts in every industry say, we cannot expect a return to so-called ‘normality’. Constantly following trends, reacting to them, looking for new solutions and ways to optimise work are our current realities. Companies that show flexibility and openness to the new, as well as those that decide to take bold steps, will fit in. Which ones?

Here are some measures that can help bakery companies survive and adapt to the changing market landscape.

Investing in energy-efficient technologies. Aiming to reduce energy consumption is the best way to achieve energy independence. Another solution may be to diversify energy sources and choose those that may be more beneficial for the plant. Recall that bakery ovens can be powered by electricity, gas or oil.

Automation and robotisation. Investment in modern technology can, on the one hand, reduce reliance on costly manual labour and, on the other, increase the efficiency of production processes. As we always emphasise, changes in production do not necessarily have to come at a high financial cost. Sometimes a smaller improvement is enough to save time or compensate for difficulties in recruiting employees.

Assortment optimisation. A way to reduce production costs can also be to focus on producing fewer products, but in larger batches. Changing recipes that rely on hard-to-find or expensive raw materials can also bring financial benefits. On the other hand, despite the decline in bread sales, the sector of confectionery products and sweet breads for export is growing. Expanding the range to include these items can improve business profitability, as can the introduction of ready-made sandwiches or lunch kits.

Also read: Fresh ideas to boost sales in your bakery →

Building a strong brand and looking for new sales channels. Ensuring better brand recognition is, on the one hand, a way to increase sales and, on the other hand, an opportunity to find new ways to reach further audiences. Setting brand differentiators, such as high quality or specialisation towards a specific product group, will make it possible to stop competing solely on price.

Observing trends and adapting the offer. Consumer needs are constantly changing, with new generations entering the market looking for different types of products. There is growing interest, for example, in vegan or gluten-free baked goods, reduced sugar or salt. Consumers want to buy healthy products, without artificial additives, and they also want to know their story. It is worth taking this group into account as well and offering them an offer that meets their expectations.

Despite the difficulties, the bakery sector is still essential – bread is a staple food on our tables. However, in order to survive and prosper in the new realities, it is necessary to think creatively and to be open to new solutions and innovations. The key to success, however, is to analyse one’s own situation, identify the biggest challenges and find the most appropriate strategies to overcome them.

We hope that our advice will inspire you further, and we continue to provide our support to all our Partners. Contact us to become one of them →