Bakery Bites: Unwrapping Sustainable Packaging

Initiatives already in place by major US players may set new standards for the industry as soon as 2025, providing domestic and foreign packaging manufacturers market guidance and leading remaining bakeries to contemplate sustainable packaging as a business imperative.

Bakeries Pledge Sustainable Packaging Targets

Whether pushed by demanding consumers, local regulations, marketing strategy, or as part of a broad ESG agenda, bakeries all over the world have committed to more sustainable packaging.

Bimbo Bakeries USA is likely the most remarkable example. Back in 2019, the largest baking company in the US committed to using 100% sustainable packaging (i.e., recyclable, reusable, or compostable) for its entire product portfolio by 2025. According to the company, this includes alternative packaging materials such as plastic bags, individual wrappers, and cardboard boxes for more than 21 brands of bread, buns, bagels, English muffins, sweet baked goods, and snacks.

This sustainable packaging pledge is part of a comprehensive global commitment by parent company Grupo Bimbo to convert its entire portfolio's packaging to sustainable formats in the 32 countries the company operates in by 2025. Additionally, Bimbo pledged to reduce GHG emissions (scopes 1, 2, and 3) via complete conversion to renewable electrical energy, investments in regenerative agriculture, rational use of water, and fleet electrification.

Flowers Foods – America's second-largest player – has also pledged to convert all packaging to recyclable, reusable, or compostable materials by 2025, while introducing 20% recycled material into packaging.

We Aren't There Yet, Despite Some Pockets of Innovation

Bakery suppliers were the stars of the International Baking Industry Exposition (IBIE) in September. The event, held every three years in Las Vegas, brought a post-pandemic reality, and the talks on the aisles differed materially from the previous (2019) edition. Besides the pandemic and demand shifts in the bakery aisle, supply chain issues and galloping inflation were on everyone's minds and a part of their discussions.

As we perused aisles and exhibitors' booths in the largest bakery tradeshow in the world, there were a few showcases of new packaging materials, including wraps, trays, and bread clips. But, overll, the amount of packaging innovation was underwhelming compared to other industry trade shows (ExpoWest, for example), and the emphasis on sustainable packaging material was far and few between. Players mentioned the challenge of adopting these often more expensive materials in an industry already facing higher prices for commodities, ingredients, energy, transportation, and labor. A lack of global brands with European exposure (and thus exposure to more strict environmental regulations) and startups, that often use sustainable packaging as a brand differentiator, also contributes to the current state.

Sustainability is clearly on their minds, though. In addition to the partially fiber-based bakery bags with a clear plastic window, we saw bread bags made of bio-based plastics and post-consumer recycled content. We even saw plastic bags with printed fiber patterns to give them a natural look.

Bread clips are likely the next packaging items to go green: Kwik Lok and KLR brought samples of their fiber and compostable plastic-based bread clips as an alternative to the traditional single-use plastic. Some came in at a higher cost, while others were at cost parity. On top of the material cost, switching out packaging machinery also presents a barrier to adoption. Notwithstanding, a case can still be made for its use on premium products such as organic bread, considering their higher margin and relevant consumer appeal.

There were also examples of sustainable functional bakery packaging, including ovenable baking trays that are also compostable. The development of new coatings allowed the fiber-based trays to be both ovenable (withstanding temperatures up to 420 degrees Fahrenheit) and industrially compostable. Novacart has supplied this to the European market for years and has only now brought it to North America. Natrellis, a joint venture between Sonoco and Tellus Products, manufactures ovenable and microwaveable trays from sugarcane fiber in the US.

Along with wheat farming and transportation, packaging remains a challenge for the industry to have its products recognized as a green staple.

The current environment requires extra caution for cost in a business driven by competitiveness and facing shrinking margins. However, ESG cannot be divorced from each player's strategy. In the long-term, it may become a must-have considering the actions taken by the leading US bakeries, representing the first step towards mass-market adoption. The ongoing top-down movement by leading players will gradually boost demand – and consequently supply – for upgraded sustainable packaging. It will help set new standards in the industry and potentially generate economies of scale and lower prices.

Improving the sustainable packaging offerings remains an opportunity for the bakery industry to capture the attention of more demanding and affluent consumers. US players can look beyond their borders in search of initiatives and suppliers. A lot of innovation is coming from Europe, and Canada is at the forefront of adoption. Current and potential upcoming regulations on single-use plastic packaging will push the industry to evolve. Canada and California signed into law single-use plastic reduction by 2022 and 2032, respectively. Though neither specifically targets bakery packaging, we believe they serve as guidance for the category and might gradually drive other states to follow suit.

Potential extended producer responsibility mandates may also help re-prioritize companies' sustainability initiatives. Hence it is crucial to be proactive rather than reactive on sustainable packaging. The fresh baked category and its short oven-to-table cycle requires less barrier performance from packaging compared to shelf-stable items, and it is ripe for sustainable packaging innovation and the increased consumer appeal it can generate.

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This article follows the authors' visit to IBIE Baking Expo 2022 in Las Vegas on September 17-22, 2022.