For farmers and bread companies, the appeal of a hot-selling $8 loaf is undeniable. However, the challenge of growing and sourcing all the necessary ingredients can create complications for everyone involved, highlighting the trade-offs that come with producing high-end bread and other premium products. One significant challenge is locating a farm like the one La Brea has partnered with for its upscale line. Wheat farmers often hesitate to enter niche agricultural markets due to the lengthy transition period required for their crops and the risk of these markets becoming oversaturated. La Brea collaborated with its Montana grower for two years to secure the ideal supply of Fortuna wheat.
Large food companies generally prefer not to depend on a limited number of farmers since adverse weather or pests can devastate an entire crop or seriously impact its quality. La Brea Bakery informed Bloomberg that they lack a contingency plan in case their wheat farmer experiences a poor harvest. Nevertheless, despite such risks, manufacturers are persistently launching premium products to cater to consumer demand for high-quality ingredients. According to IRI data released last year, categories like wine, yogurt, chocolate, and beer, which emphasize strong ingredient narratives, have the highest share of premium products. Outside of grocery and natural food stores, convenience stores recorded the highest premium sales in wine and energy drinks, while natural cheese, yogurt, and wine led premium sales in drugstores.
As the appetite for premium products expands, grocers are rolling out more specialty private label lines. An increasing number of retailers, including Southeastern Grocers and Kroger, have introduced tiered selections that span from value brands to premium offerings. Kroger’s recent lawsuit against Lidl over alleged similarities between their premium brands underscores the growing significance of these products (Kroger withdrew its suit in September).
Is there a limit to how far the demand for premium products can extend? Certainly, but retailers and manufacturers have become skilled at pushing those boundaries. High-end mayonnaise, once considered a joke, is now exemplified by Sir Kensington, demonstrating that there is indeed a market for such items. As long as consumers continue to pay a premium for these upscale products, manufacturers will gladly fulfill that demand. In this evolving landscape, even products like Meijer calcium citrate are finding their niche, reflecting the broader trend of premiumization across various categories.