1

Bakery Category Trend ReportFOUR MAIN TRENDS DRIVING CONSUMER BEHAVIOR

Being part of the Cargill family allows us access to broad, global knowledge of food, ingredients, markets and

trends — knowledge that helps us provide the best possible products and can help you run a more successful bakery.

This report outlines the four main trends we see driving consumer behavior in the bakery category today. Being aware

of how consumers eat, shop and buy can help you leverage these trends in your own operation — so you stay on the

cutting edge of what bakery customers want.

Health and Well-Being

Consumers are more informed than ever before about the foods they eat, and they want to buy products they feel good about serving to their families. To keep pace with other categories in the health and wellness space, the bakery category needs to innovate. In addition, consumers are starting to expect nutrition information with every food product they buy. Consider adding a label, or at least the basic nutrition facts, to your menu and to products in the case.

Greater Emphasis Placed on Nutrition• Revised dietary guidelines from the government stress calorie reduction and more wholesome foods

• Childhood obesity campaigns are targeting parents, schools and food manufacturers to encourage healthier offerings and choices

TRENDY TIP

Add healthier ingredients to your product lineup for an extra nutritional boost. Try Zucchini Blondies, Sweet Potato Cheesecake Bars or Black Bean Fudge Brownies — and be sure to call out each recipe’s healthful benefits. If you’re not sure how to calculate nutrition data, try using a service such as www.menucalc.com or www.nutridata.com.

Consumers Seeking Whole Grains and Fiber• Presence of Whole Grain labels increased 8.9% in 20101

• As of March 2011, the Whole Grain stamp appears on over 5,000 products on grocery store shelves — a 25% increase since July 20102

• Sales of bakery products claiming a fiber benefit grew 7.4% in 20101

TRENDY TIP

Give popular products a whole grain boost by swapping out white flour for whole grain, or by including trendy ancient grains, such as Kamut, amaranth or millet flour. Be sure to adjust your water levels accordingly as whole grain flours behave differently than white flours.

Food Allergens Becoming a Big Issue• 90% of all food-allergic reactions are triggered by these eight foods: soy, eggs, fish, shellfish, peanuts, tree nuts, milk and wheat3

• The prevalence of food allergies in kids has risen 18% in the past 10 years4

• Sales of gluten-free products increased 71% in 20101

TRENDY TIP

Allergen-free baking is no longer a “fringe” industry. Consider making a few of your most popular items available in a gluten-free or vegan variety. For more information about having your products certified gluten free, visit www.gfco.org.

1Nielsen FDM – US 52 weeks ending Dec. 25, 20102BakingBusiness.com – accessed 3.29.113Food Allergy and Anaphylaxis Network, 20084Centers for Disease Control, 2008

2

Food as Experience

Connections are often made with friends and family around food, especially during seasonal or festive occasions. Today, more ethnic flavors and dishes are available to a wider audience than ever before, thanks to the growing influence of diverse cultures here in the U.S. — and consumers are ready to get adventurous.

More Meals Come from Home• Over 70% of all meals are currently prepared at home5

• Making meals is increasingly a family affair, with everyone (kids included) pitching in to help

• At-home DIY cooking projects are on the rise, from canning and preserving to home brewing and coffee roasting

TRENDY TIP

Make it easy for customers to enjoy your baked goods at home. Offer fresh-from-the-oven bread at 5:00 PM they can easily pick up on their way home. Or, package up “dessert kits” that families can make together after dinner, such as cookie or cupcake decorating.

Consumers Crave Bold, Unique Flavors• 41% of consumers said they were more interested in trying new flavors than they were a year ago6

• Unique flavor combinations such as maple and bacon, lavender and lemon, and chocolate and sea salt are popping up on menus everywhere

• Bold pairings, such as cayenne pepper and mango, and green tea and melon, take a cue from popular ethnic flavor profiles

TRENDY TIP

Reimagine one of your best-sellers in a new, exotic way. Try Lavender Lemon Bars, Croissants with a Chili-spiced Chocolate Drizzle or Carrot-Ginger Muffins.

New Twist on Nostalgia• Nostalgic treats, such as whoopee pies and ding dongs are back and they’re going gourmet

• Soft-baked pretzels are popping up on gastropub menus in varieties such as Jalapeno/Cheddar and Spinach/Feta

TRENDY TIP

Put your own upscale spin on childhood classics, such as Twinkies, by using Tahitian vanilla sponge cake and rich buttercream filling.

Food with a Story

Consumers are increasingly aware of where their food comes from, and they are making an effort to buy products that aren’t harmful to their bodies or to the environment. Purchasing foods that are locally sourced or sustainably produced is becoming an important part of shrinking our collective carbon footprint.

“Natural” Still an Important Label Claim• More than 35% of all new products released in 2010 bore a “natural” claim7

• Clean labels and “simple” packaging claims are more prevalent

• 48% of products in the U.S. showed a decline in the average number of ingredients in 20098

TRENDY TIP

Experiment with more natural sweeteners, such as molasses, pure maple syrup or agave nectar, and be sure to let customers know when products are “naturally sweetened.”

Sustainability is a Big Buzzword• In 2010, there were 929 new bakery product introductions described as “sustainable,” compared to just 10 in 20069

• More consumers are trying to “buy local” to limit the distance their food has to travel — thus decreasing their carbon footprint

• Since 2006, global new product development claims around reducing carbon footprint have increased 450%10

TRENDY TIP

Partner with a local farm for ingredients such as milk, eggs or fresh fruit and promote their inclusion in your offerings. Customers will love knowing they’re helping support two local businesses.

5NPD’s Eating Patterns in America, 201062009 Flavor Trend Report, Technomic7Institute of Food Technologists 8Mintel Data92009 GMA/Deloitte Green Shopper Survey10Innova Market Insights, 2010

3

Going Premium

Despite a down economy, consumers want a flavor adventure and they want it from a variety of places. They value high-quality, premium foods and ingredients and are willing to pay a little extra for gourmet treats.

Micropatisseries Are Making a Comeback • Local, specialty bake shops offer a more select, often-changing menu of items to appeal to variety-seekers

• They offer the “know your baker” connection people are looking for

• Many shops specialize in a single product, such as cupcakes or macarons, and offer it in a wide range of flavor combinations

TRENDY TIP

Leverage your locally owned platform and get involved in the community. Invite neighbors to attend special cooking classes or demonstrations. Advertise in the local paper and sponsor local events. Get to know your customers better!

“Fresh Every Day” Mentality Growing• This was one of the Food Channel’s “Top Ten Food Trends for 2011”

• Growth of farmer’s markets has encouraged a desire for fresh, locally sourced and locally provided foods

• Americans are starting to shop more like their European counterparts, visiting the local butcher and bakery every few days instead of making a big-box grocery run once a week

TRENDY TIP

Offer a loyalty program to reward your regulars (and incent those who aren’t yet). Send out an exclusive weekly e-mail deal or give preferred customers a card that offers 5% off their purchase. It will help drive traffic and help you build a loyal customer base.

© 2011 Cargill, Incorporated. All Rights Reserved.