27/08/2019 – Special Report / Baking Industry / US / American Bakers Association / ABA
The voice of America’s baking industry
Robb MacKie, President and CEO of the American Bakers Association (ABA), offers insight into the trends and challenges impacting the US baking industry, alongside ABA’s vital role in helping its members navigate such dynamics.
You would be hard pressed to find a more experienced individual with whom to assess the health of America’s baking industry than ABA’s Robb MacKie, who has worked for the Association for almost a quarter of a century, and served as its President and CEO (ergo, as the baking industry’s chief advocate and spokesperson) for the past 13 years.
And the Association that Mr MacKie heads up today has proved a powerful voice for America’s baking professionals for much longer than the President’s tenure, of course. Formed back in 1897, ABA’s raison d'être has nonetheless remained the same over the decades – to interface with the body that governs all US food produce (today, the Food & Drug Administration), and to act as the main organisation through which bakery sector professionals can come together to share information and best practices for the betterment of the industry.
Ahead of the International Baking Industry Expo (IBIE), which ABA is co-organising in Las Vegas from 8th–11th September, Mr MacKie joined us in a conversation spanning shifts in consumer tastes, the fall-out from trade disputes, and the task of attracting talent to a baking segment that generates more than US$153 billion in economic activity annually.
(F&B Networker): How does ABA support the US baking industry today?
(Robb MacKie): “Our core mission revolves around a few key factors. We interface with Congress and the federal agencies to try and reduce regulatory burdens on the baking industry. We also look for opportunities to remove barriers to success, so our members can go into the market with innovative new products that serve the ever-changing needs and tastes of the consumer.
“Information sharing is another important part of our mission; B2B networking that allows for discussion about important aspects beyond the federal or government action around our industry – in terms of energy efficiencies, packaging sustainability and workforce development, for example. Our work with members extends to suppliers and customer organisations (retailers and restaurants, for example), which enables us to work through supply chain challenges.
“Beyond that, our ‘Cookie & Cracker Academy’ provides technical training at different levels for baking professionals. Our role is therefore about advocacy, it’s about B2B networking and it’s about education.”
What resources do you have in place to support such activities?
“ABA’s number one resource is the collective subject matter expertise of its members, which, on the production side, predominantly comprise leading industrial bakers. As a result, we can pull experts on a specific subject to develop sector-wide programmes and initiatives. A key example would be food safety – an area where the industry sees no particular competitive advantage. We all want consumers to be healthy, so there’s a big push to ensure everyone is following the protocols for food safety, and we have many members that can lend technical expertise in that respect.
“On top of that, there’s the considerable expertise of our 15 or so core ABA professional staff – in the areas of food safety, the environment and workforce. We also draw upon a stable of external consultants, should we require very specific technical expertise.
“We currently have 324 members, approximately 45 per cent of which are baking companies, while the rest are suppliers – flour millers, packaging companies, equipment manufacturers, and consultants to the industry. We’re fortunate to represent both the suppliers and the bakers – and several of our bakery members are also affiliated with large retail grocery store chains, including our current Chairperson, Erin Sharp, who is Head of Manufacturing for Kroger Co. We therefore represent the entire waterfront of the baking industry, which is certainly advantageous when it comes to seeing the bigger picture and resolving challenges.”
What recent projects/initiatives has ABA engaged in?
“ABA prides itself on its close connection to its members – and the Association has actually just emerged from a deep-dive two-year strategic planning exercise aimed at further strengthening such bonds and our organisation’s overall impact.
“Our team asked the industry: “What are the challenges you face? And what role should ABA play in order to create a more positive environment in which you can succeed?”. One interesting finding was that members told us they needed more information about the various sales channels, alongside more intelligence on what consumers thought about their products. Resultantly, at ABA’s annual meeting in April, we unveiled two major thought leadership projects: one entitled ‘Power of Bakery’ – produced in collaboration with retail organisation the Food Marketing Institute (FMI). The study approached the bakery industry from a more holistic perspective at retail and what the consumers were telling us in terms of how they engage. We’ll actually be updating that report with new insight from Nielsen in time for the IBIE show in September.
“The other study is titled ‘Attracting Gen Z and Millennial Customers’ – key demographics whose perspectives it will obviously become increasingly important to understand in the coming years.
“The success of those two studies has resulted in the industry requesting that we next explore doing detailed research on the bakery category as a growth driver for the restaurant industry.”
How have dietary shifts impacted the baking industry?
“We’ve always been subjected to evolving consumer tastes – and the pace of that is now faster than ever before. Clearly, there are some challenges presented by the ‘free-from’ movement, although our recent research actually shows that Millennials and Gen Zs enjoy our products – they see the health benefits. As part of our aforementioned study, we asked those two consumer groups: “Why don’t you buy our products?” Interestingly, the ‘low-carb, no-carb’ issue didn’t even register. It had more to do with portion size, the accessibility/ availability of the product, the ability to sample products, and also – as crazy as it may sound – not knowing how to use bakery products as part of a bigger meal occasion. So, there are challenges, but also opportunities – specifically in the breads and rolls segment, which has a lot going for it, health-wise. For instance, our products are high in fibre, folic acid and B-complex vitamins – all things that consumers are searching for; we just need to do a better job of telling the story.
“On the indulgent side, our research has come back very strongly with the message not to mess with formulations but perhaps have more single-serve packages and smaller portion sizes. So, when consumers make decisions as to where they’re going to invest their calories, they might like the option of a half-sized cookie or smaller piece of cake – they still want it to be high quality and tasteful, but just in a smaller portion.
“Our research also shows that Millennials and Gen Zs broadly look at an overall weekly eating pattern when they’re checking all the boxes, but even in the course of a day they might have four or five meal occasions. That’s great news for the baking industry, which has products suitable for all such meal allocations – the challenge is in better communicating that.”
What major challenges exist for the US baking industry today?
“In the US, we are practically working at full employment; the economy is doing very well and it’s therefore an incredibly competitive environment for retaining skilled personnel and attracting new talent. Towards supporting such goals, ABA is working with external partners to develop a programme aimed at communicating with potential employees and painting a great story about what a career in the baking industry would look like.
“Another major challenge is the swiftly evolving retail and foodservice environment. New players are entering the market, and there’s a blurring of lines between different sales channels that were previously more segmented. The disruption caused by major discounters like Aldi and Lidl, who are already well established in the UK, is now also beginning to be felt in the US.
“Beyond that, various trade disputes loom large over American manufacturing – and its food & beverage industry in particular. The lack of resolution over the new NAFTA trade agreement disputes is probably the number one trade situation that we face, given the large quantities of food ingredients and finished products that are traded between the US, Canada and Mexico. The other trade issue, of course, is the on-going dispute with China. Tariffs that America has imposed relate to steel and aluminium products. However, the US food (and particularly the finished food) industry is a net exporter, so when we as a country impose tariffs on other products, the retaliation is felt on food – it’s an easy target. What many people don’t realise is that ‘finished food products’ is today the largest manufacturing sector in the US – and ‘baked goods’ is the biggest segment within food manufacturing, so our members feel the negative impacts of retaliatory tariffs to a disproportionate degree. On top of that, the industry relies on certain ingredients that only come out of China.
“We’re working very closely with other manufacturers (both within the bakery segment and throughout the broader industry via a wider food and agricultural base coalition) to present a united voice in communicating our concerns. While we haven’t been able to completely convince The White House as to the common sense of our approach, they are taking notice. We’ve had some small victories along the way, but we’re not done yet. The President has a different view about the use of tariffs than most of the manufacturing segment. We’ve had very frank conversations – and while we greatly appreciate the Administration’s approach to reducing the cost of regulation, as well as supporting a tax reform bill that really did prove a shot in the arm for US manufacturing, such measures are now being offset by retaliatory tariffs.
“Understandably, many bakers who would love to leverage on new capital investments and new facility modernisations are now actually holding back and waiting to see how this situation plays out – as a result, money isn’t being invested as it should, and it’s impacting the industry.”
What does ABA have lined up for the future?
“We will continue to ensure we’re doing everything we can to promote and grow the baking industry of the US – and part of that is about learning from our international partners. Many of the challenges we’re experiencing in the US we’re actually seeing around the world. At the IBA show in Munich last year, we had 22 international delegation meetings spanning workforce, consumer trends, efficiency and sustainability – all of those issues were front and centre. Arguably, there’s never been a more challenging time to be in the food and baking industry, yet it’s also an exciting time because the challenges are pushing both manufacturing and product innovation. There’s a lot of energy and risk-taking going on, and our job is to help provide actionable insight and information that gives our members the confidence to take some of those risks.”