How frozen process changes the bakery market?

How frozen process changes the bakery market ?

Frozen bakery market

Frozen bakery has already changed market : - To increase at a CAGR of 7.1% through 2018 - To reach a value of $32,505.2 million by 2018

Frozen bakery products : - Croissants - Crusty products - Burger buns - Rolls - Danish pastries - Brioches - Cakes - Bagels - Muffins - …

Represents more than 25 % in volumes

Take it as an example Source : Companies & Markets

$32,505.2 million

2018 2014

+ 7,1 %

CAGR of the frozen bakery market

Crusty… What is crusty ?

Caramel flavor (Maillard reaction) Crispiness THIN CRUST Short bite Melting in mouth No preservative, no chemicals

Yeast (including natural improvers) Flour Water Salt

Clean Label Crusty bread (no fat, no preservatives) : 6 hours shelf-life !

Crusty bread is even better when freshly baked

Countries where crusty bread is cultural, traditional, Mediterranean influence

Demand for crusty bread is growing worldwide

1,5 billion inhabitants

Demand for crusty bread is growing worldwide

Growing demand for crusty bread : - Low-carb - Low-fat - Mediterranean diet

SIMPLY GOOD !!!

Fresh bread : a supply chain challenge

Mixing 30 min

Proofing 120 min Baking

20 min Cooling 30 min

3H30 TO MAKE BREAD

Make-up 10 min


3h30 to make bread

6 hours shelf life

Extremely difficult to make bread Ingredients control Temperature and humidity control Process control Hygiene control

Cheap product

Very light (high cost to transport)

Fragile product

HIGHLY CAPEX DEMANDING

Extremely challenged by customers (Erik Kayser says : “A good bread makes a good sandwich”)

There is no OTHER SIMILAR

CHALLENGE in food industry


If no more bread at 6 pm SALES ARE LOST

Just in time : right quantity at a right time

If bread is not sold at 7 pm BIG LOSSES

When demand raises suddenly, it is too late to react : Risk N°1 : loosing sales opportunity Risk N°2 : wasting bread

Fresh bread : sometimes a political challenge

Many countries experiences recently RIOTS because : Bread is missing Bread is too expensive (or too cheap for bakers) In some countries, bread quality us an HEALTH ISSUE because BAKERS PUT A LOT OF

IMPROVERS TO COPE WITH THE ABOVE MENTIONNED DIFFICULTIES

We met a lot of top level political who are waiting for solutions for fresh bread supply chains

Supply chain challenge, economical challenge, growing challenge

Source : UN

Traffic jam in Cairo

Fresh bread: a supply chain challenge, INDUSTRIAL FROZEN BREAD : A PROVEN SOLUTION

Highly technical operations Capex consuming Excellent costs efficiency

required High safety standard

required High volumes Reduced losses of raw

material ….

INDUSTRIAL SOLUTIONS (why should bakery products not beneficiate of industry advantages ?)

Fresh bread: a supply chain challenge, INDUSTRIAL FROZEN BREAD : A PROVEN SOLUTION

Logistic issues Fragile, cheap, short shelf

life 3H30 to make bread vs

10 min to react to demand

variation Increasing transport

times to downtowns during day hours

INDUSTRIAL FROZEN BREAD SOLUTIONS Already booming « Cold Chain » to become FOR SURE a Fantastic business opportunity in future

Frozen bread : the proven success

Distribution of frozen bread

Distribution of frozen bread

Two challenges : technical / economical

How to prevent flaking :

Chemistry : not compatible with new demand (clean label)

Fat : not compatible with new demand (low fat, low carb)

Perfect process control

1. No flaking :

1. No flaking :

Frozen at core

No flaking

Thin and crusty crust


Mixing process (rest in bowl) to optimize : Water absorption Free water linked water

1. Flaking :


Perfect control of the free water in the baked bread

Make up process : ability to handle wet and fermented dough

1. Flaking :


Baking process : fast baking at high temperature to avoid water losses during baking (10-12 %)

1. Flaking :


Cooling process : controlling the water loss and the risks of condensing on the cooling support

Freezing process : Controlling the air flow to prevent peeling off Controlling the core temperature : final temperature balance inside the

product during storing or transporting Perfect control of the steam

1. Flaking :


Thanks to these process parameters, it is possible to reach the highest level of quality

Frozen bread : high quality

2. Costs are high :

Freezing is expensive (Capex, Opex)

Transport is expensive (negative temperature trucks, low temperature storage, light products with low value)

Packaging is expensive



SAVINGS ARE HIGHER !!! Better use of equipment and head overs :

24 hours a day production Less changeovers (longer batches)

Reduces losses during transport

No losses on selling points

High capacity to cope with demand variation on selling point

No preservatives costs


Some examples:

ARYZTA (Revenue in m€)

+80%

2012 2013 2010 2009 2011

HARRY BROT (Revenue in m€)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

489 515 580

645 650 669 738

813

910 930 + 90 % in 10 years

Savings in a production of frozen bread

Raw material

$7/9 cts

Energy

$1.2 cts for baking

$0,9 cts for freezing

Labor $1.2 cts

Packaging

$2.7 cts

Depreciation & other expenses

$2.5 cts

Industrial costs : Hypothesis : 20 hours a day. Line efficiency : 98 %

Examples : loaf baguette (315 g dough, 250 g final product( ex works direct costs)

TOTAL : freezing represents up to 20 % of the direct costs

Some figures

Overcost for freezing : ~ $15 cts per kg

Production capacity for a frozen line : ~ 2 tons per hour

Celling price : 1 € per kg $2,535 per hour

Turnover : $50,000 per day

ROI : about 30 %

Frozen Bakery Market to increase at a CAGR of 7.1 % through 2018 : Total $32.5 Billion by 2018

A fantastic business opportunity

Source : MarketsandMarkets.com

Fresh par-baked bread 2 days shelf-life Delivered at night Final baking during day

Alternative solutions

Usine

Final baking center

Final baking center

Delivery at night

Modified Atmosphere Packaging (MAP) A “B to C” solution

Alternative solutions

For each situation, there is an optimized industrial / logistic solution MECATHERM will be very happy to help you preparing your business case and manage your project from A to Z THANK YOU FOR YOUR ATTENTION

Food

How frozen process changes the bakery market?