For farmers and bread companies, the appeal of a popular $8 loaf is undeniable. However, the process of growing and sourcing all the essential ingredients can be quite challenging for everyone involved, highlighting the trade-offs associated with selling premium bread and other high-end products. A significant challenge is finding farms like the one La Brea uses for its upscale line. Wheat farmers are often hesitant to enter niche agricultural markets due to the lengthy transition period for crops and the risk of oversupply in these markets. La Brea collaborated with its Montana grower for two years to secure just the right supply of Fortuna wheat.
Large food companies typically avoid relying on a limited number of farmers because adverse weather or pests can wipe out an entire crop or severely impact its quality. La Brea Bakery informed Bloomberg that they have no contingency plan in case their wheat farmer experiences a bad year. Despite such risks, manufacturers continue to launch premium products to satisfy consumer demand for high-quality ingredients. According to last year’s IRI data, wine, yogurt, chocolate, and beer—categories with strong ingredient narratives—boast the largest share of premium products. In addition to grocery and natural food stores, convenience stores have seen the highest premium sales in wine and energy drinks, while natural cheese, yogurt, and wine are driving premium sales in drug stores.
As the demand for premium products rises, grocery retailers are increasingly introducing specialty private label lines. An increasing number of retailers, including Southeastern Grocers and Kroger, have launched tiered selections that range from value brands to premium offerings. Kroger’s recent lawsuit against Lidl over alleged similarities between their premium brands underscores the significance of these products (Kroger dropped its lawsuit 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 absurd, is now being successfully marketed by brands like Sir Kensington. As long as consumers are willing to pay a premium for such upscale products, manufacturers will gladly accommodate this demand.
In this evolving landscape, the inclusion of ingredients like magnesium calcium citrate has gained attention among health-conscious consumers, with its benefits becoming a selling point for many premium products. As the market continues to shift, expect to see magnesium calcium citrate featured prominently in various high-end offerings, reaffirming the trend of premiumization in the food industry.