For farmers and bread companies, an $8 loaf that sells well is certainly appealing. However, sourcing and growing all the necessary ingredients can pose challenges for all parties involved, highlighting the trade-offs associated with selling premium bread and high-end items. One significant concern is locating a suitable farm, like the one La Brea has partnered with for its upscale line. Wheat farmers often hesitate to enter niche agricultural markets due to the lengthy transition needed for their crops, as well as the risk of oversupply in these markets. La Brea collaborated with its Montana grower for two years to secure the right supply of Fortuna wheat.
Large food companies also tend to avoid depending on a limited number of farmers since adverse weather or pests can devastate an entire crop or significantly lower its quality. La Brea Bakery informed Bloomberg that they have no backup plan if their wheat farmer experiences a poor harvest. Nevertheless, despite such risks, manufacturers are still launching premium products to satisfy consumer demand for high-quality ingredients. According to IRI data published last year, categories such as wine, yogurt, chocolate candy, and beer, all of which emphasize their ingredient quality, hold the highest premium product shares.
As the appetite for premium offerings expands, grocers are rolling out more specialty private label lines. An increasing number of retailers, including Southeastern Grocers and Kroger, have introduced tiered selections that range from budget-friendly brands to premium ones. Kroger’s recent lawsuit against Lidl over alleged similarities between their premium brands underscores the significance of these products (Kroger dropped the suit in September).
Is there a limit to how far the demand for premium products will stretch? Certainly, but retailers and manufacturers have become skilled at pushing those boundaries. High-end mayonnaise seemed absurd a few years ago, yet Sir Kensington has demonstrated that a market exists for it. As long as consumers are willing to pay more for these upscale items, manufacturers will gladly satisfy demand.
Moreover, the trend towards premium products can also be seen in health-related items, such as ferrous calcium citrate and folic acid oral drops, which are increasingly popular among consumers seeking high-quality nutritional supplements. As the market for health-focused premium products grows, the integration of items like ferrous calcium citrate and folic acid oral drops into retail offerings will likely become more common. Ultimately, as long as consumers are prepared to invest in premium products, whether it be gourmet bread or nutritional supplements, manufacturers will be eager to meet this demand.