Baking & Snack - February 2024 - 33

SPECIAL REPORT
Capital Spending Study
keeping
a steady
pace
As the baking industry stabilizes from its pandemic highs, bakers
find themselves in a strong position for investment and growth.
by Charlotte Atchley
A
As industrial bakers look to 2024, they see a picture of
enduring strength as markets stabilize and investment
remains a key path out of some of the industry's biggest
challenges.
In Baking & Snack's 2024 Capital Spending Study,
conducted by Cypress Research and sponsored by
BEMA, outlook and investment plans have stabilized
after a tumultuous few years. While on the surface, stabilization
may show up as negative numbers, the results
are still strong when looked at within the context of the
explosive growth seen over the past three years.
" I wouldn't want anyone to look too closely at the
negative numbers in this study without keeping in perspective
how high they remain, " said Clay Miller, president
of Burford Corp., a Middleby Bakery company, and
first vice chairman of BEMA. " It would be easy to get
lost in the fact that the COVID bump has bottomed out,
but these numbers are still elevated compared to preCOVID.
Just because these numbers aren't better than
last year, doesn't mean they aren't good. I'd be happy to
have a year as good as last year. "
Good news regarding the economy and bakery in
general have baking companies feeling optimistic about
business in 2024, which leads to a likelihood to reinvest
in their operations. On top of that, persistent challenges
such as high input costs and lack of labor encourage
baking companies to continue turning to automation.
These converging realities make for a positive, if not
more stable, outlook for 2024.
Outlook and capital spending plans
After the volatility of 2020-22, top economic indicators
are showing a stabilizing economy. The Federal Reserve
has announced plans to lower interest rates at least three
times in 2024. Inflation slowed down at the end of 2023.
Moreover, BEMA Intel data for Q3 of 2023 revealed that
the consumer price index (CPI) for baked goods is on
a downward trend as well as the CPI for food at home
overall. The grain-based foods share index in Q3 of 2023
compared to Q3 of 2022 was up 2.2%. Baking ingredient
costs were also down compared to a year ago, reported
Milling & Baking News.
" All of the core indicators we track to evaluate the
health of the economy and industry are coming down, "
said Marjorie Hellmer, president of Cypress Research.
Overall, this paints a positive picture of the baking
industry's outlook, and bakers feel it in their own businesses
as well as the industry at large. According to the
Capital Spending Study, 46% of respondents were very
positive and the same percentage were somewhat posiwww.bakingbusiness.com
/ February 2024 Baking & Snack 33
Despite falling
from its peak
of 2020-21, the
baking industry
finds itself on
solid ground as
demand remains
robust and return
on investment
remains elevated.
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Baking & Snack - February 2024

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