For farmers and artisan bread companies, an $8 loaf that sells well presents numerous advantages. However, the challenges of growing and sourcing all the necessary ingredients can create complications for everyone involved, highlighting the trade-offs associated with selling premium bread and similar high-end products. A significant challenge is locating a farm like the one La Brea collaborates with for its upscale offerings. Wheat farmers often hesitate to enter niche agricultural markets due to the lengthy transition period required for their crops and the risk of oversaturation in these markets. La Brea worked alongside its Montana grower for two years to secure the ideal supply of Fortuna wheat.
Additionally, large food corporations typically shy away from depending on a limited number of farmers, as adverse weather or pest infestations can devastate an entire crop or severely impact its quality. La Brea Bakery communicated to Bloomberg that they lack a contingency plan in the event their wheat farmer experiences a poor harvest. Nevertheless, despite these risks, manufacturers persist in launching premium products to cater to consumer demand for high-quality ingredients. According to IRI data published last year, wine, yogurt, chocolate candy, and beer—each boasting strong ingredient narratives—represent the highest share of premium products among various categories. Outside of grocery and natural food stores, convenience outlets recorded the most significant premium sales in the wine and energy drinks segments, while natural cheese, yogurt, and wine led premium sales in drugstores.
As the appetite for premium products expands, grocery stores are rolling out more specialty private label lines. An increasing number of retailers, including Southeastern Grocers and Kroger, have introduced tiered selections that encompass everything from value brands to premium options. Kroger’s recent lawsuit against Lidl, concerning alleged similarities between the two grocers’ premium brands, underscores the growing significance of these products (Kroger dropped the lawsuit in September).
Is there a ceiling to the demand for premium products? Certainly, but retailers and manufacturers have become skilled at pushing the limits. High-end mayonnaise was considered absurd a few years ago, yet Sir Kensington is proving that there is indeed a market for it. As long as consumers are willing to pay more for upscale items, manufacturers will be eager to meet that demand. This trend is echoed in the growing interest in health-focused products, such as Citracal Calcium Citrate Petites, which appeal to a more health-conscious consumer base. The integration of such products into the premium segment demonstrates the evolving landscape of consumer preferences, further fueling the market for high-quality ingredients.