FAPC-111

Refrigerated/Frozen Doughs, Batters and

Bakery Products: Industry Status and Trends
Rodney B. Holcomb Patricia Rayas-Duarte
Agricultural Economist Cereal Chemist

Introduction In a 1997 report, FIND/SVP (1997a), a market research

Some of the fastest growing segments of the food pro- company for consumer products, indicates that biscuit dough
cessing industry are frozen and refrigerated dough and bakery accounts for 41 percent of refrigerated/frozen dough product
products. The items included in these processing categories sales. Biscuit dough sales are expected to have an increase of
include canned refrigerated biscuits, canned refrigerated crois- 6.5 percent annually, with forecasted sales of $2.2 billion by
sants and sweet rolls, frozen breads and rolls, and frozen sweet the year 2000. The popularity of refrigerated biscuit dough
goods and pastries. Additionally, this category includes those products is apparent in the number of facings (units on a shelf)
refrigerated and frozen dough products that are used in the in a supermarkets refrigerated counters dedicated to various
manufacturing of other items or used in institutional food kinds of biscuits.
services, the best example of which is pizza crusts. These The wide range of dough products demanded for both
and other items have grown in popularity due to their ease institutional purposes (e.g., retail delis, restaurants and fast
of preparation, similarity to homemade products, and the food outlets) and for direct sales to consumers suggests room
time and cost savings these items provide to restaurants and for market entry by one or more new firms. Fewer than 15
other institutional outlets. marketers compete in frozen and refrigerated dough prod-
Wheat producer groups in North and South Dakota, ucts on a natioal level, and most dough market segments are
Minnesota, Kansas and Oklahoma have shown a particularly dominated by fewer than five players.
high interest in refrigerated and frozen dough markets. The The top four firms in this industry are Rich Products
number of varying products, the potential for market growth Corp., Country Home Bakery, Inc., Hazewood Farms Bak-
in all dough areas and the current lack of competition have eries and Pillsbury Co. These firms only control 24 percent
suggested opportunities for producers to get involved in of the overall market for all refrigerated/frozen dough and
refrigerated/frozen dough processing as a means to collect a bakery products, indicating less entry resistance than most
larger share of the profits between the farm gate and the retail segments of the bakery industry (Lou and Wilson, 1998).
store. This report provides market and industry overviews for However, the technological requirements for refrigerated/
refrigerated and frozen dough products and bakery items. frozen dough processing, along with the generally higher
costs of handling refrigerated/frozen products, result in high
Market Trends market-entry costs.
Possibly the largest growth area for value-added wheat- Population growth in the southwestern United States,
based products includes such items as yeast-raised and chemi- combined with the growing national demand for dough
cally (baking powder) leavened doughnuts, sweet rolls, cakes products, provides for market proximity. Because refrigerated/
and other pastries. Rolls and sweet goods are predicted to show frozen dough products are less perishable than other fresh
annualized market growth of 9.6 percent and 16.8 percent, wheat-based products (e.g., flour and bread), the timing of
respectively, between 1993 and 2000 (Faridi and Faubion, product transports is not as crucial. However, even frozen
1995). One factor influencing the increased demand for rolls dough products have limited storage life. Frozen storage of
and sweet goods may be the various forms in which they can more than 60 days will generally kill off all yeasts in dough
be purchased by consumers and easily baked at home such as products, thereby preventing the dough from rising when
refrigerated, frozen, par-baked and brown-and-serve. thawed and baked (except pre-proofed frozen dough).

Oklahoma Cooperative Extension Service Division of Agricultural Sciences and Natural Resources
Industry Statistics and Trends in late 1999 and early 2000, were classified according to a
The U.S. Department of Commerce, Bureau of the Cen- new system. This coding system, called the North American
sus, is probably the best source of secondary information Industry Classification System (NAICS), is to become the
on the nations manufacturing and processing activities. The common industry measurement system for the U.S., Canada
Census of Manufactures has been performed on the 2 and and Mexico. Classifications of items beyond the old two-digit
7 years (for example, 1982 and 1987) since 1967. In the SIC level may be different for some industries; therefore, the
late 1970s, the Census Bureau also began performing annual data used for this overview includes the 10-year span leading
surveys of most of these activities (Annual Survey of Man- up to the 1997 census (i.e., 1987-96).
ufactures). These surveys, which estimate business activity Frozen bread and bakery products are reported in two
based on a sampling of firms (as opposed to a complete cen- different categories. Frozen bread and dinner roll items are
sus), act as a way of filling in the gaps between census years. combined with all other bread-like products under the cat-
By doing so, they allow for rough year-to-year comparisons egory of SIC 2051, Bread, Cake and Related Products.
of industry activities. The time needed to compile and verify Unfortunately, SIC 2051 and its five- and six-digit SICs are
data, aggregate data for the many categories, generate tables not segmented by fresh and frozen. Therefore, none of the
to present results and print these two government publications reported information for this category could be used in this
is extensive, usually taking about two years. industry overview. However, all non-bread frozen bakery
Starting with the 1967 census, all industry activities were products are combined and listed under SIC 2053, Frozen
reported according to a Standard Industrial Code (SIC). The Bakery Products, Except Bread. This category includes all
more precisely defined an activity, the more digits contained yeast-raised and chemically leavened doughnuts, sweet rolls,
in the SIC code. For example, Food and Kindred Products cakes and other pastries, which have previously been alluded
manufacturing was listed as SIC 20, Dairy Products was to as the fastest growing segment of the refrigerated/frozen
a more closely defined segment of SIC 20 manufacturing dough and bakery products industry.
listed as SIC 202, and Ice Cream and Frozen Desserts was Frozen and refrigerated dough and batters are aggregated
a sub-sector of SIC 202 manufacturing listed as SIC 2024. with prepared flour mixes by the Census Bureau. Because
However, the results of the 1997 census, which were released detailed information on more defined industry segments is

Table 1: Adjusted Value of Product Shipments ($ millions,

1992 dollars) for Frozen Bakery Products, Except
Bread (SIC 2053), 1987-96*.


















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not publicly reported, this report relies on the combined in- of Manufactures series, the Annual Survey of Manufactures
formation for mixes, dough and batters. SIC 20415 represents series does not report the number of establishments, thereby
Flour Mixes, Refrigerated and Frozen Dough, and Batters, disallowing a comparison of average shipments per establish-
but only those products made by grain millers using their own ment across years.
flour. SIC 2045 is titled, Prepared Flour Mixes and Dough, As shown in Table 1, shipments of frozen non-bread
but these are products made from purchased flour, not flour bakery products realized some negative volatility before ex-
from an establishments own milling operations. In fact, all of periencing considerable growth in the 1990s. From 1987 to
the mixes and dough listed under SIC 2045 are also sub-listed 1996, industry growth in real terms was 48.1 percent, most of
under SIC 20450, Flour Mixes, Refrigerated and Frozen which occurred after 1991. Conversely, SIC 20415 shipments
Dough and Batters, which represents those products made declined by 17.2 percent over the 10-year period. This may
by establishments that are not flour millers and must therefore be in part due to companies such as Pillsbury, which chose
purchase the flour used in their processing activities. to divest themselves of their flour milling operations. In the
The Census Bureaus annual series includes a volume case of Pillsbury, flour-milling operations were sold off and
titled, "Annual Survey of Manufactures: Value of Product resources were redirected to more profitable ventures, such
Shipments." This volume provides only the values of product as refrigerated/frozen dough products. Large flour millers like
shipments, but it does so for most industries at the five-digit ADM, which bought the Pillsbury mills, to date have not
SIC level. A comparison of SIC 2053 product shipments from entered these value-added markets.
1987 to 1996 is shown in Table 1, while SIC 20415 and SIC Those establishments outsourcing for the flour to make
20450 product shipments are reported in Table 2. The dollar mixes and dough increased the total shipments of mixes and
figures have also been adjusted for inflation using the Gross dough by 25.4 percent from 1987 to 1996. The majority of this
Domestic Product (GDP) price deflator, with all amounts be- growth did not occur until the early 1990s, and the switch-over
ing reported in 1992 dollars. These numbers serve as indica- from SIC 20415 to SIC 2045 by an industry giant like Pills-
tors of year-to-year real shipment growth. Unlike the Census bury could be responsible for some of that growth. As stated

Table 2: Adjusted Value of Product Shipments ($ millions, 1992 dollars) for Flour
Mixes and Refrigerated and Frozen Dough and Batters, 1987-96*.





















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earlier, the growth in these products shipments is expected variable measurement of industry activity that is greatly af-
to continue at an increasing annual rate through 2000. fected by non-industry macroeconomic forces (e.g., interest
Table 3 gives a better picture of industry trends for fro- rates).
zen non-bread bakery products. The information on valued Table 4 shows similar industry information for flour mixes
added by manufacture, cost of materials, value of industry and refrigerated and frozen dough and batters manufactured by
shipments and new capital expenditures are from the 1987 non-millers (SIC 20450). The Annual Survey of Manufactures
and 1992 Census of Manufactures and the appropriate Annual series reports this detailed information only to the 4-digit
Survey of Manufactures: Statistics for Industry Groups and SIC level, so similar information for SIC 20415 could not
Industries issues. It must be noted that industry shipments be ascertained. Because most of the volume and values asso-
and the aforementioned product shipments may differ due ciated with SIC 2041 are due to various types of bulk flour, it
to the inclusion of byproduct sales and possibly some clas- would be difficult to distinguish any trends in refrigerated and
sification adjustments made by the Census Bureau during the frozen dough manufacturing using 4-digit SIC data. However,
span between publication release dates. an analysis of SIC 2045 can be provided because SIC 2045
As was apparent in the review of product shipment values, consists of only one 5-digit SIC code, SIC 20450.
the frozen non-bread bakery products industry began grow- Although declines were noted in 1989, 1994 and 1996, the
ing rapidly following 1991. The value-added component value added segment of SIC 20450 has generally increased
of those shipments (i.e., the portion of the products value by a moderate rate from year to year. Throughout the 10-year
associated with the manufacturing process) increased by 105 period, the amount of value attributed to the manufacturing
percent from 1991 to 1996. process increased by 41.8 percent, while the value of industry
This added value may be attributed to various new product shipments during the same period increased by 41.9 percent.
offerings and the increased demand for conveniently prepared New capital expenditures for SIC 20450 processing facilities
doughnuts, cakes and pastries. As the value obtained from have been much more sporadic from year to year compared
processing rose during this time period, so did new capital to non-bread frozen bakery items, but the data suggest this
expenditures for processing facilities, although this is a highly industry, like SIC 2053, is in an upswing.

Table 3: Adjusted Industry Growth Measurements ($ millions, 1992 dollars) for

SIC 2053, Frozen Bakery Products, Except Bread, 1987-96.*
















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Implications References
The processed foods industry has grown in recent decades Faridi, H. and J.M. Faubion. Wheat End Uses Around the
due to the demand for convenience in food preparation and World. Presentation to the American Association of
the efficiencies in manufacturing resulting from recent tech- Cereal Chemists, St. Paul, MN, 1995.
nological advances. From 1987 to 1996, the shipments for FIND/SVP. MarketLooks: Frozen and Refrigerated Dough
non-bread frozen bakery items (SIC 2053) have grown at a Products. FIND/SVP Market Looks Report ML0004,
rate greatly exceeding that for all food and kindred products February 1997a.
manufacturing (SIC 20), 95.3 percent to 39.9 pecent, respec-
tively. Refrigerated and frozen dough and batters (SIC 20415 Lou, J. and W.W. Wilson. Value-Added Wheat Products:
and SIC 20450 combined, which includes prepared mixes) Analysis of Markets and Competition. Agricultural
have not grown at a similar rate (20.8 percent over the 10-year Economics Report No. 386, Department of Agricultural
period), but most of the growth realized by this industry has Economics, North Dakota State University, April 1998.
occurred since 1992. U.S. Department of Commerce, Bureau of the Census. Annual
The growing markets for easily prepared bakery items at Survey of Manufactures: Statistics for Industry Groups
home and in institutional markets will continue to drive growth and Industries, 1988-1996 issues. Washington, D.C.: U.S.
in these industry sectors. The diversity of products in these Government Printing Office, 1990-98.
categories, combined with low market shares for competing
U.S. Department of Commerce, Bureau of the Census. Annual
firms in the various product categories, should continue to
Survey of Manufactures: Value of Product Shipments,
serve as incentives for market entry by new firms for at least
1988-1996 issues. Washington, D.C.: U.S. Government
the next five years. Acquiring the technology to produce these
Printing Office, 1990-98.
products, along with the capital to support the development
of processing facilities, are the greatest deterrents to entry at U.S. Department of Commerce, Bureau of the Census. Cen-
this time. An additional factor deterring industry entry may be sus of Manufactures, 1987 and 1992 issues. Washington,
the availability of qualified, experienced equipment operators D.C.: U.S. Government Printing Office, 1989 and 1994,
and plant managers. respectively.

Table 4: Adjusted Industry Growth Measurements ($ millions, 1992 dollars) for

SIC 20450, Flour Mixes, Refrigerated and Frozen Dough and Batters
(from purchased flour), 1987-96.*
















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