Outlook Hits Historic Lows (Image Credits: Unsplash)
The baking industry confronts its most pessimistic forecast in over a decade, yet companies plan to sustain capital spending levels into 2026.[1][2]
Outlook Hits Historic Lows
Results from the Baking & Snack Capital Spending Study revealed sharp declines in confidence. Only 30% of bakers reported a very positive outlook for their own companies in 2026, a drop from 53% the previous year.[1] Industry-wide positivity fell to 72%, the lowest since tracking began in 2013.[2]
Fifteen percent anticipated worsening performance, up from 5%. Expectations for improvement hovered at 30%, while 55% foresaw stability. This marked the weakest company outlook in six years, contrasting sharply with prior optimism.[2]
Economic Pressures Fuel Caution
Rising raw material costs topped concerns at 62%, followed by trade uncertainties at 55% and inflation at 43%.[3] These factors shifted focus from earlier labor issues. Tariffs exacerbated raw material pressures, prompting varied responses in spending plans.
Trade uncertainties led 43% to increase investments, while 21% planned cuts. For raw materials, 52% boosted spending against 25% who reduced it. Inflation similarly polarized decisions, with 45% raising outlays.[1][3]
Capital Plans Show Resilience
Forty-four percent of bakers intended to raise capital investments for 2026, matching nearly the 45% from the prior year. Focus centered on upgrades rather than expansion: 32% planned equipment enhancements, steady from 31%.[1]
Primary areas included maintenance and parts at 74%, automation systems at 73%, facility upgrades at 58%, and expansions at 45%. Packaging led equipment priorities (74%), followed by software/AI (62%) and robotics (55%). Goals emphasized quality (55%), flexibility (52%), labor savings (52%), and safety (50%).
- Maintenance/replacement: 74%
- Automation/systems: 73%
- Facility upgrades: 58%
- New lines/expansions: 45%
Experts Stress Necessity of Action
Panelists at a Baking & Snack webinar underscored the imperative to invest despite headwinds. Chris Isom of Coperion noted deferred projects now demand attention: “You can’t stay still for an extended period of time. You have to do something.”[1]
Kerwin Brown, BEMA president and CEO, highlighted resilience: “Bakers are going to do what they need to do for their businesses.” Marjorie Hellmer of Cypress Research observed that economic factors impacted plans less than expected given the outlook.[2]
| Factor | Increase Spending | Decrease Spending | No Impact |
|---|---|---|---|
| Raw Materials | 52% | 25% | 23% |
| Trade Uncertainties | 43% | 21% | 36% |
| Inflation | 45% | 28% | 27% |
Key Takeaways
- Outlook plummeted, but 44% still plan capex increases focused on efficiency.
- Tariffs and costs drive mixed responses, yet investment endures.
- Automation and AI emerge as priorities for competitiveness.
Bakers prioritize multi-benefit projects to counter pressures, signaling adaptability in uncertain times. As Kerwin Brown put it, challenges demand boldness and innovation. What strategies will your business pursue amid these trends? Tell us in the comments.
