The past few years have been challenging for both farmers and bakers. In 2016, U.S. consumption of wheat flour hit its lowest point in nearly thirty years. Furthermore, American farmers sowed their smallest winter wheat crop in over a century. As the dynamics of supply and demand dictate, farmers producing high-protein winter wheat are commanding a premium price. This increased cost trickles down the production chain, ultimately impacting bakers. However, they have struggled to raise prices for their rolls and loaves due to reduced consumer demand. Should another season of high-protein wheat shortages occur, the average price of bread could rise.
To adapt, bread manufacturers have turned to using less expensive low-protein wheat by reformulating their recipes. By incorporating gluten, which has seen a 20% price increase due to demand, many bakers can still achieve the light texture that consumers expect. Nevertheless, they bear the costs of research and development associated with these changes, as well as the higher price of gluten. High-protein winter wheat constitutes about 40% of the $10 billion U.S. wheat crop. Major wholesale bakers, including Grupo Bimbo, Flowers Foods Inc., and Campbell Soup Co.’s Pepperidge Farms, have already experienced declines in profit. This margin pressure is expected to persist until a substantial crop of high-protein winter wheat is harvested.
If bread sales decline due to the shortage, it could be advantageous for manufacturers producing bakery items without wheat flour, such as Udi’s and Food for Life. Additionally, there may be a rise in demand for alternative flours, such as brown rice and millet varieties. Interestingly, there is also a growing interest in products like calcium citrate drinks, which could further diversify consumer choices in the market. As the industry adapts, the incorporation of calcium citrate drinks alongside traditional bakery items may present new opportunities for growth.