For the students in the Red River College professional baking program, it must have been deflating to hear that they are about to enter an industry that has been declining.
But even though low-carbohydrate diets have bitten off a chunk of the baking and milling industry’s once-growing business, Canadian Wheat Board marketing manager Jim Thompson said North America’s flour industry is beginning to bite back.
“Wheat-based foods and baking companies really haven’t helped themselves,” Thompson told students during a visit to the wheat board Sept. 27.
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“They were slow off the mark and now they’re just trying to play catch-up.”
The true size of the challenge to the wheat, milling and baking industries was made obvious Sept. 22 when Interstate Bakeries, the largest wholesale bakery company in the United States, sought bankruptcy protection, blaming low-carb diets in part for its financial problems.
Low-carb diets cut out most white flour, rice, potatoes and pasta.
Interstate Bakeries, which makes Twinkies and Wonder bread in the U.S., suffered declining sales volumes for more than a year. That trend has been noted across the milling and baking industry.
Thompson said U.S. wheat flour consumption has been falling for four years, from 65 kilograms per person per year in 2000 to about 60 kg per year today.
Canadian per capita consumption has fallen less, dropping from 70 kg two years ago to 67 kg per year this year.
“The low-carb diets are taking the brunt of the blame for that,” said Thompson. “I’m sure there are other factors as well, but that’s the main one.”
Paul Hetherington, president of the Baking Association of Canada, said he believes the low-carb craze will not have the same impact in Canada as in the U.S.
“It’s just never materialized up here,” he said.
“When trends occur south of the border there’s a delay before they migrate, but we’re probably 18 months into this phenomenon (and consumption hasn’t slid as much).”
Media reports are now beginning to pay attention to potential problems with the low-carb diets, Hetherington said.
Interstate Bakeries introduced its first low-carb product in February, a tardiness that some analysts said made the company’s losses greater than they had to be.
Hetherington said low-carb products using flour are now becoming common in the grocery stores and that will ease future losses to the diets.
George Weston Ltd., which owns one of Canada’s largest baking companies, noted in its quarterly report on July 30 that its sales have been hit in one area because of the diet but strengthened in another.
“The consumer trend toward lower carbohydrate … products continued to negatively impact sales of traditional white flour based products during the second quarter,” reads the report, which noted a 5.3 percent, $57 million drop in sales from the year before.
“However, Weston Foods’ sales mix has continued to benefit from strong sales growth in the whole grain and premium product categories, including growth in low-carb products.”
Thompson said some North American companies ignored the diet when it first came to prominence, but they have begun to counter its impact with specially designed products.
He said the wheat board and the Canadian milling industry plan to launch an advertising campaign within a few months extolling the virtues of their products.
“It’s all aimed around turning around the negative perceptions around flour,” said Thompson.
