Baking & Snack - February 2021 - 27

SPECIAL REPORT
Capital Spending Survey

Bakers plan to hit the accelerator in 2021 as pent-up demand for capital spending of equipment rises.

by Dan Malovany

©applezoomzoom - stock.adobe.com

N

Now that 2020 is over, baking industry executives are
looking to spin the wheels and leave last year in the dust
when it comes to investing in the future of their companies and their operations.
That's the primary takeaway from Baking & Snack's
2021 Capital Spending Survey that gauges how decisionmakers plan to spend their hard-earned money upgrading facilities or adding equipment.
For the past five years, various iterations of the annual survey have reflected a steady, if not accelerating,
growth sentiment when it comes to capital spending.
Despite the detours, speedbumps and everything else
that has happened during the past 12 months, most baking executives involved in determining their companies'
capital spending expect the long-term growth trend to
continue. Many of them also plan to put the pedal to the
metal as they hit what they hope will be a more open
straightaway going forward.
" If you look at last year's capital investment projections and plans, the industry was in a growth period before the pandemic, " noted Marjorie Hellmer, president
of Cypress Research, the Kansas City, Mo., firm that has
conducted Baking & Snack's capital spending studies for
more than two decades. " What the data are showing this
year is a continuation of that growth trend and an accel-

eration of investments amid companies whose priorities
include expansion and identifying additional options to
generate more profit. "
Specifically, the 2021 study outlines projections for
even higher levels of investment in 2021 than 2020
spending.
Bakers reported that in 2020, their companies spent
an average of 8.4% of annual revenue on capital projects.
Ms. Hellmer said bakery manufacturers have earmarked
an average of 10.8% of company revenue for 2021 capital
investments, which signals a clear pent-up demand for
upgrading and expanding their operations.
But let's look at another key data point that further
highlights this acceleration in this exclusive industry
study in partnership with BEMA. In the current survey,
respondents were asked how companies' actual 2020
overall capital investments compared with 2019. Despite
the 2020 pandemic and its impact on the economy and
bakery operations, the survey revealed that 45% of midto large-sized baking companies actually increased their
capital expenditures over 2019 levels while 21% held
them steady and 34% decreased spending.
When asked for 2021 projections compared to 2020
investment levels, the percentage of those planning to
boost their spending rises to 52% while 36% plan to keep

www.bakingbusiness.com / February 2021 Baking & Snack 27


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Baking & Snack - February 2021

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