NAPLES, FLORIDA, U.S. — A robust update and discussion of the most ambitious product promotion program for baking in more than half a century was a highlight of the annual meeting of the American Bakers Association. Just ahead of a proposal submission to the U.S. Department of Agriculture for a grain-based foods checkoff program, Christine Cochran addressed the all-membership meeting of the ABA on April 7. The session was followed by a town hall meeting to discuss the checkoff program organized by the Grain Foods Foundation, which Cochran leads as executive director.
In January, the GFF announced its checkoff steering committee had agreed to submit a draft order to the USDA with hopes to launch a program in the second half of 2019.
In her presentation, Cochran updated the baking industry about where the initiative stands, and the town hall session offered a forum to speak both for supporters of the program as well as for those with questions or who opposed moving forward.
Cochran said the checkoff program was identified as a way to tackle a “challenge that would otherwise go unaddressed by any individual company.”
“We wanted to change the perception of bread, to increase unit sales, and we wanted to produce scientific research that would support the category as a whole,” she said.
To pursue this objective, the GFF has spent more than a year consulting with leaders of the baking and milling industries, communicating with executives of companies large and small, Cochran said. The decision to pursue a checkoff emanated from these discussions and the recognition that such a program represents the best option for the challenges facing the industry today.
“Why (a checkoff program)?” she asked. “It’s a mandatory program that allows the industry to address a shared problem at scale.”
The current structure of the GFF does not allow for such a large program or have mechanisms to ensure an equally shared burden, she said. Based on a review of 20 other checkoff programs, Cochran and an industry steering committee concluded a checkoff program has the potential to enhance the industry’s reputation and “give consumers permission to eat our products again.”
Delving into details of the proposed program, Cochran said an annual budget of $15 million is planned, of which 85% will be paid by bakers and 15% by millers. The program size is smaller than the $23 million the GFF tentatively put forward as its target earlier this year. To raise $15 million, 16¢ per hundredweight of wheat flour used to bake bread basket products will be paid into the program. Bakers will collect the millers’ contributions.
Breadbasket products are defined under the proposal as fresh and frozen sliced bread and unsliced bread, rolls, buns, bagels, naan, pita and other flatbread, English muffins and biscuits.
Products bought frozen by a supermarket or restaurant operator and baked off are included. Excluded products include those sold in the frozen section of the grocery store, such as frozen Texas Toast. Also excluded are organic products. Cochran said this exclusion is by law — bakers of organic bread may opt in but may not be mandated to participate. Certain small businesses also must be excluded.
In Cochran’s remarks and in the town hall discussion afterward, the threshold for inclusion emerged as a point of concern.
“The vision was to rally a focused group of bakers and millers,” she said. “We defined that as about 80% of the market. We weren’t quite sure what that was going to be, but we thought that was the right band.”
The steering committee estimated 80% of the market would be covered if companies that purchase 1 million hundredweights of flour for bread participated. When she began soliciting feedback on the million-cwt figure from bakers, Cochran received feedback that the figure was too high.
To arrive at a new threshold, the USDA told the committee to conduct an economic study that would help find what the Department calls a “natural break.”
“Knowing we needed to go lower from an industry perspective, and knowing that USDA wanted a strong justification, we commissioned research, and this (750,000 hundredweights) we believe is the natural break in the industry,” she said.
For their spend on the checkoff program, millers and bakers should expect a return on investment of between 5 times and 15 times, Cochran said.
“The more mature the program is, the lower that number tends to be,” she said. “The dairy program tends to be about $5 (per dollar invested). The younger programs tend to be higher. Somewhere in there is where we expect our return to be based on historical averages.”
As an example of a successful checkoff initiative, Cochran cited the mustache campaign of the milk program or the “It’s what’s for dinner” campaign of the beef program.
“These campaign initiatives really changed consumer perceptions,” she said.
For breadbasket products, decisions will need to be made on whether investments should be focused on changing consumer perceptions, retail programs, food service programs or scientific and nutrition research. Or, a mix of these options.
Updating the bakers on the timetable, Cochran said the steering committee is finalizing documents to be submitted to the USDA. These will be reviewed by the Department and then published for a 60-day comment period. Subject to the comments and possible changes to the program, the Department will determine whether the program should be launched for what is planned to be a three-year trial period, ahead of an industry referendum.
“At every step, we as an industry are engaged,” Cochran said. “We can make modifications. We are in control of how this will be crafted. Then we launch the program.
“This isn’t the dairy program that‘s $100 million. This is a program that we’re going to put out there for $15 million. We think it’s targeted and will produce results quickly. We think we can produce results on unit sales and consumer perception in that window of time.”