SPECIALTY BREAD IS RISING

Bread is not only the staff of life, but could soon become the undisputed foundation for the in-store bakery.The continuing introduction of a huge array of crusty and dense, European-style breads is building sales, retailers said in interviews with SN.Bakery executives polled said specialty bread is one of the most exciting categories in the bakery, and the one with the most potential for growth.Most

Bread is not only the staff of life, but could soon become the undisputed foundation for the in-store bakery.

The continuing introduction of a huge array of crusty and dense, European-style breads is building sales, retailers said in interviews with SN.

Bakery executives polled said specialty bread is one of the most exciting categories in the bakery, and the one with the most potential for growth.

Most of the nine retailers interviewed said they've added to their lines in recent years and plan to continue to do so in the future. The expansion is being driven, in large part, by consumer demand for more nutritious foods. "We're finding that our customers are much more health-conscious and they want to eliminate fat in their diets. So we'll expand the number of [low-fat] varieties as a result," said Donna Eggers, bakery supervisor at Brodbeck Enterprises, Platteville, Wis.

"Our customers are asking for good, healthy breads and we're going to be offering them more options in the months ahead," said Jim Taylor, bakery merchandiser at Haggen, Bellingham, Wash.

Major suppliers of bread products are expanding their lines. Suppliers interviewed by SN said they are getting into more of the heavy hearth and multigrain breads to meet the demands of retailers who are looking for more healthful products. One supplier of frozen bread products reported an annual production increase of 15%.

Health officials have for several years touted the nutritional value of breads, most of which are naturally low in fat and are a good source of grain and fiber. More recently, that message has been bolstered by the U.S. Department of Agriculture's new food guide pyramid, which encourages Americans to eat a diet high in fiber and grain and low in fat. As a result, consumers are demanding more bread and more varieties, and retailers are responding.

Supermarket bakeries still report that French and Italian breads are among the favorites, but growing in popularity are sourdough, crusty, hearth and multigrain breads.

Despite the increased demand for bread, expansion of a variety bread program has its challenges. On any given day, most in-store bakeries carry an average of 25 to 35 varieties. For many retailers, it's difficult to expand beyond that. Some of the reasons cited include lack of merchandising or production space, higher rate of stales (and therefore higher shrink), increased labor costs, competition with manufactured breads in the grocery department, and customer confusion due to too many varieties.

Even with these challenges, supermarket bakeries are moving full-steam ahead. Eager to capture sales, they are looking for ways to meet the rising demand for in-store fresh baked breads.

Here's what retailers had to say about the growth in variety breads and the challenges of expanding their programs.

Kathy Sears bakery manager

Buckeye Village IGA Markets Alliance, Ohio

We've introduced two new varieties in the past six months. One is a veggie bread, which has had very wide acceptance. It's made from a mix of dried vegetable bits: green and red peppers, carrots and onions. The other is Ciabatta bread, a coarse-textured, flat Italian bread, which is great served with pasta. Both of these have been very popular.

This past year we also tried a sundried tomato bread, which basically didn't move at all. We don't live in a trendy area; our market is middle America. They like the basics.

All of our breads are made from mixes, except our soft Italian bread, which is made from scratch.

Throughout the year, we carry about 25 varieties of bread. We average about 16 varieties in stock at any given time. The biggest roadblock for us in carrying more varieties is our limited production area. We have a wonderful sampling program, which results in wide acceptance of new varieties. So we would like to expand our production area to accommodate more. Of course, with more varieties, we will have to accept a higher percentage of products that go stale (and therefore slightly higher shrink).

Sue Kunstmann communications specialist

Schnuck Markets St. Louis

Throughout the year, we offer approximately 50 different varieties of bread. Not all varieties are available every day or in every store (Schnuck's operates 63 stores). At any given time, however, you can find an average of 30 to 35 varieties in each of our in-store bakeries.

We eliminated a few varieties several years ago but not lately. In fact, in the last year we've added three: focaccia, pane Italiano and a six-grain bread.

Our most popular varieties and the ones with the most potential for continued growth are sourdough and crusty breads.

The ideal number of varieties in each department really depends on store size and volume. The biggest roadblock we've found to expansion is that too many varieties can confuse the customer. The more varieties you offer, the less of any one variety you're able to keep on display. So, in fact, the customer may perceive that you have limited variety. You end up projecting the opposite image that you're trying to have.

Jim Finnerty director, service deli-bakery merchandising

Abco Markets Phoenix

The trend in variety breads has certainly been up. It's much better than it has been in the past. One reason for this is our customers' demand for nutritious foods.

French bread has been our most popular variety, but our new crusty bread program has shown the most growth. We've been involved in it for about six months and currently offer only a small selection of parbaked varieties: baguette, Parisian, sourdough and onion-dill rolls.

In the future, I see us getting into more grain breads. We see a lot of growth with these varieties as well as our crusty breads. When nutrition labeling becomes mandatory, it should help spur the sale of breads considered to be more nutritious.

Our stores have the opportunity to carry between 35 and 40 varieties of breads. Many of them are optional. The majority are made from frozen dough, while some are (sourced) parbaked or brought in direct from local bakeries.

A roadblock to expanding the number of varieties is limited merchandising space. The biggest problem with an extensive variety is that some varieties are simply slow movers. There is only a small market for some of them. A single loaf of bread may be handled up to 20 times before it reaches the display shelf. Then it may be rotated two or three times before it is purchased or thrown out. This adds a lot of costs to the price of carrying variety breads. It becomes even more costly when you're handling slow movers that may end up in the trash can.

It's a doubled-edged sword. Too much variety will kill you, but at the same time you want to take care of all your customers.

Donna Eggers bakery supervisor

Brodbeck Enterprises Platteville, Wis.

Our most popular line is our hearth breads: cracked wheat, pumpernickel and crunchy meuseli with nuts and raisins. We carry between 20 and 30 varieties at any given time. We bake nearly all of our products in our central bakery in Platteville, which services our eight stores (including a new store in Galena, Ill.) as well as Woodman's stores (a small chain of stores in the Madison area).

We'll be expanding our bread program this year. Early in 1994 we plan to introduce a new line of fat-free breads and a new six-grain bread. We're finding our customers are much more health-conscious and they want to eliminate fat in their diets. So we'll expand the number of varieties as a result.

Our least popular line has been our English muffin and whole wheat muffins. We'll probably eliminate them in 1994.

George Jenkins bakery, deli, restaurant buyer-merchandiser

Rosauers Supermarkets Spokane, Wash.

We offer about 75 varieties of breads throughout the year. Many of them are seasonal, so on a daily basis, we offer about half that.

We added sourdough to our line of breads about two years ago and it is now our second-most-popular bread. We typically offer it in five varieties: French loaf, hard rolls, a 1.5-pound square deli loaf, a 1-pound round loaf and an 8-ounce "cannon ball" loaf. This is a specialty item that customers will often hollow out, bake hard and use as a soup bowl.

Our most popular bread is our English muffin loaf. We currently offer it in a 1-pound loaf. This year, we plan to offer it in a 2-pound deli-style loaf as well.

We also hope to get into more grain breads. Currently we offer an eight-grain bread, but we want to get into more deli-style loaves like heavy pumpernickels. We'll move away from some of the standard white loaves. We'd also like to expand our operations to provide our delis with the breads they currently purchase from wholesalers. This will take some time as we will have to purchase more pans and step up production.

Our biggest roadblock to expanding our varieties is the competition with the wholesalers. Today they are providing the grocery department with many more varieties of manufactured bread that can be sold at a lower gross. It makes it very difficult for the in-store bakery to compete. The in-store bakery's bread sales have actually gone down over the years because the grocery department has gotten so aggressive. We're selling more bread out of our stores, but the growth is in the grocery department.

Jim Taylor bakery merchandiser

Haggen Bellingham, Wash.

We've seen nearly a 100% increase in variety bread sales in the last two or three years. We currently offer 21 varieties, four of which are our new specialty hearth breads. Our hearth breads program generates 7% to 8% of total volume, without a loss in sales of our standard varieties.

It's hard to predict an ideal number of varieties per department if you consider eight years ago we had 21 items in the bakery. Today we offer 120. We do, however, have a standard practice of eliminating the slow movers when we introduce a new variety.

Labor is our biggest roadblock to expanding our operations. We don't use frozen products; most of our breads are made from scratch in our 11 in-store bakeries (Haggen operates 12 stores), and some are made from mixes. So our program is labor intensive.

We do an excellent job. Our customers are asking for good healthy breads and we're going to be offering them more options in the months ahead.

Jean Story director, consumer affairs

G&R Felpausch Hastings, Mich.

English muffin bread is the most popular variety in one of our markets, while our most "health-conscious" market seems to favor any kind of wheat bread. They have become very popular and appear to have the greatest potential for growth.

We're thinking of adding some new items this year. Our market areas tend to be smaller, older households, so a smaller, mini loaf is something we're considering. We're also looking at additional varieties that would incorporate vegetables, meats and cheeses as ingredients.

We have had to drop some of the really slow movers like oat bread. Our customers are pretty knowledgeable about health issues in general and pretty picky about health claims and their believability.

The number of varieties our bakeries carry varies depending on the space for preparation and display.

Mark D'Aloia bakery manager

Byerly's Edina, Minn.

We've been expanding our variety bread program for well over a year now. Four new varieties have been added in the last two months alone. There really hasn't been a need to drop any of them.

We're selling a lot of variety breads. In the last year we've increased sales of crusty breads alone by one-third.

All of our breads are prepared at store-level. About 20 varieties are European-style -- such as seven-grain, rustic, rye. In total, we offer about 60 different varieties.

The maximum number of varieties a department can carry really depends upon what your customer is looking for. Our customers are looking for more traditional European -- not mainstream -- breads. The market isn't huge, but we certainly fill a niche.

We're seeing a trend among our customers toward more Italian-type breads: Ciabatta, pesto and sundried tomato.

Most varieties are prepared from scratch. A few are made from mixes, and only one -- a San Francisco sourdough -- is made from frozen dough.

We'll keep adding new varieties as long as we can find new ones. We believe you're only held back by your imagination and your ability to try new things. In the next six to eight months we'll probably get into the real heavy American breads, such as molasses, whole wheat, wheat and rye.

If we run out of display space, we'll get another display rack or we'll start offering certain varieties on an every-other-day basis.

A successful variety bread program is very complex. Each bread is different and needs to be handled differently. If you don't follow correct procedures, all of your bread is going to turn out just like white bread. If you're not doing something radically different from the rest of your bakery operations and your competition's, you might as well not be in it.

Tim Ryan director, bakery operations

Fred W. Albrecht Grocery Co. Akron, Ohio

We currently offer about 30 varieties of bread in our 20 in-store bakeries, a slight increase over the years. We add new varieties from time to time to help freshen up our mix and keep it from getting stagnant. Adding more varieties doesn't necessarily mean more sales, but it helps us weed out the slow movers.

I guess you could say that the 80-20 rule applies. That is, 20% of our products are doing about 80% of the business. Italian bread, for example, is by far the most popular variety and has been for some time. The rest of our varieties probably don't even add up to the amount of Italian bread that we sell.