International Market

The Best Products Take Time

The Polish bakery NOWEL set its sights high in 2020 and, in the midst of the pandemic, invested in a line that transferred the concept of artisan bakery production into a fully automated process.

International content provided by baking+biscuit international, an F2M publication.

BY HELGA BAUMFALK

Family-owned NOWEL has been producing artisan breads in Poland since 1925. It currently serves retail chains across Poland and throughout Europe, now expanding its reach as far as the US and Middle East. In this exclusive Q&A from baking + biscuit international, Helga Baumfalk sits down with the Zajezierska family to discuss the most pressing issues hitting the Polish and European markets since the onset of the pandemic.

Helga Baumfalk: NOWEL’s main products are bread rolls. In the past, you have produced more than a billion bakery products annually. Have you found that the pandemic has changed your sales channels and regional markets?

Elżbieta Zajezierska: It would be difficult to identify an area of the economy that has not been affected by the pandemic. COVID-19 has redefined the existing perception of business and made several companies leave their comfort zone after years of stabilization. For us, the first wave of the pandemic last year was like a test of our procedures and readiness to make rapid and profound changes. Working closely together during the crisis situation has strengthened relationships with our business partners and improved our understanding of our common needs.

Michał Zajezierski: What is important to mention, despite the experience of the last year, is that we not only maintained production, but we also did not slow down the planned investments and expansion of production lines. In just a few weeks, we have created the first consumer brand in almost a hundred years, Home Bakery, featuring frozen and packed bakery products for home baking. It was an almost immediate response to consumer concerns, which was especially important for brands to do in the first months of the pandemic. We also invested in a new production line for premium stone-baked products. In February 2021, the products were launched in Lidl shops all over Poland with the ‘Baked on stone oven’ campaign. We were also able to open up new markets. Meetings took place from our desks, in the company office or from our home offices.

You produce bread rolls and bread with the ‘clean label’ promise and organic baked goods. Did sales in these two categories increase during 2020?

Karolina Zajezierska: Currently, almost all NOWEL products carry a ‘clean label.’ In some product ranges, we have taken it a step further and also stopped using enzymes. These baked goods are based on just three to four ingredients. On the one hand, this quality is our trademark, and on the other — increasingly — our consumers expect it, not only in Poland but throughout Europe.

Following these trends, each year we are increasing the number of organic products that we offer. However, we predict that despite the growing popularity of this group of products, it will remain a niche market. This is particularly due to high operational requirements in stores; retail chains must ensure there is no contamination between organic and non-organic products.

NOWEL is a manufacturer and a supplier to retailers, but it is not well known to consumers. Did the idea of launching a consumer brand come as a result of the pandemic?

Elżbieta: We have had plans for a consumer brand for some time. COVID19 has given new impetus to our efforts to launch Home Bakery. Will this product continue to be popular after the pandemic ends? Or will customers return en masse to the stores and choose fresh bread rolls straight from the oven? Time will tell!

Karolina: ‘Baked on stone oven’ is our second brand that is more visible to the customer. It is the brand under which our new products are sold all over Poland and on European markets. The products are the result of several months of work and tests. Our goal was to create an original bread flavor that we remember from our childhood or from our parents’ or grandparents’ generation. The intense, deep flavor and longer freshness of the baked goods result from a precisely determined maturing time and a multi-stage fermentation process. The products owe their crunchiness, golden-brown crust and rustic character to baking on granite volcanic stone from the Italian region of Val D’Ossola.

Up until now, you have achieved about 30% of your sales in exports to about 15 countries. Has COVID19 impacted on these figures?

Karolina: We have succeeded in maintaining the export share at a similarly high level. Seven further export nations were added in the past two years. Today, we are present with our products in 22 countries. We have noticed that customers are more open to new flavors.

From left: Michał Zajezierski, VP, NOWEL; Elżbieta Zajezierska, president, NOWEL; and Karolina Zajezierska, commercial director, NOWEL.

Photo courtesy of NOWEL

Buyers are more and more often looking for novelties and going beyond domestic suppliers, which significantly increases our export opportunities.

Does this mean you will focus even more on exports in the future?

Karolina: Strengthening NOWEL’s position on key European markets and further international expansion is our long-term focus and is consistently implemented in our development strategy. Our products can already be purchased on the largest markets in Europe as well as in the US and Canada. In the coming years, we want to offer our latest product lines, including ‘Artisan.’ We will also work on introducing NOWEL bakery products to other European countries as well as on strengthening our position in those already acquired.

From 2013 to 2019, NOWEL invested more than EUR 60 million [$68.65 million USD] in the development and acquisition of production equipment. How much did you invest in 2020?

Michał: We started with a very extensive investment plan worth EUR 22 million [$25.17 million USD], which we managed to implement despite the pandemic, largely thanks to good organization and exemplary cooperation on the part of bakery equipment suppliers. The first project was a line dedicated to the production of tin bread, mainly rye or wheat-rye, produced on the basis of our own sourdough. We implemented this project in cooperation with WP, Newcap, JBT and Diosna.

The second project is what I see as the crowning achievement of our bakery and, as far as I know, is something that is also unique on a global level. We have managed to translate the artisanal process of making bakery products into a fully automated industrial production.

Assuming the best products take time to develop their full flavor, we designed the line so that the entire production process — from the start of wheat acid fermentation, through the maturing of the dough and further processes — takes more than 40 hours. The products, which are made on natural wheat sourdough with a long maturing time (more than 12 hours), have a deep flavor, an open texture and stay fresh for a few days after the final baking. In reference to this line, we would also like to thank our partners, namely Mecatherm, Diosna and Rademaker for working with us to develop pioneer production solutions and for the proper management of the installation process during such a difficult period.

In the autumn of 2019, you opened a modern research and development center in Poland. Do you work with universities?

Michał: Yes, the center is also a platform for cooperation and exchange of knowledge with academic units. Together with them, we are conducting research and technological tests based on a completely new approach to bakery product consumption. This is a topic for our next meeting, but it will be a real revolution.

Before the COVID-19 crisis, the out-of-home market was considered extremely dynamic and almost unstoppable. The pandemic changed that. What is the situation in Poland?

Karolina: Indeed, during the first wave of COVID-19, after years of growth, food producers in Poland saw a slowdown of the economy. The introduced trade restrictions and the appeals to stay at home also had a significant impact on the bakery industry, both on the domestic market and in the context of exports. Economic uncertainty, as well as a big increase in interest in home baking, presented huge challenges. Fortunately, demand returned to normal relatively quickly. However, it is worth looking at the market situation in the long term.

The convenience sector had been growing very quickly before the pandemic. Polish people had fallen in love with stores that provided them with necessities and were located close to their homes. Now that consumers are accustomed to the difficult situation created by the pandemic, we may find the convenience sector is one of the growth drivers for many manufacturers. As shopping centers and supermarkets closed, small outlets and petrol stations expanded their ranges and took over parts of the basic supply, including bread. BP and Orlen also offer snacks. Although there was no scientific evidence that the coronavirus could be contracted through food, consumers were initially concerned about buying snacks and eating them without additional heat treatment. As a result, a significant part of this segment in Poland was at a standstill. However, after a period of hard lockdown, it was reintroduced. That was met with enthusiasm because, in difficult times, customers appreciated the convenience and the possibility of eating out.

Photo courtesy of NOWEL

How is the Polish bakery market currently developing?

Michał: In Poland, the consumption of bakery products per person has been declining for some time. However, the bake-off bread category has been gradually growing for several years. Of course, the pandemic will slow growth, but we do not expect changes in this aspect in the long term. It should also be emphasized that every year, the bakery industry in Poland is growing more and more intensively, mainly due to considerable investments in new technological solutions. As a result, the competitiveness of Polish companies

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on the international market is increasing significantly. What is more, the domestic market is becoming more saturated, which directly translates into an intense price fight. Each year, the Polish bakery market is becoming more difficult for companies, and the COVID-19 pandemic has further escalated the challenges.

Elżbieta: The Polish market is very competitive, also in terms of interindustry sectors. It is not only the producers of bakery products that fight for customers. The younger generation is not consuming bakery products as frequently, but choosing substitute products. A traditional breakfast, which would always be accompanied with a slice of bread or a fresh bread roll, often looks very different today. We are dealing with rapid growth in the sector of quick snacks and ready meals. Customers are also paying more attention to the variety of flavors and quality.

What are the main problems facing Polish bakery producers at the moment?

Elżbieta: The main challenge faced by food producers is the rising production cost. Climate change directly affects, for example, the costs of raw materials and energy prices are also rising. Companies are also paying more attention to sustainable development, including elimination of greenhouse gas emissions and reduction of waste. These actions are inevitable and urgently required to save the planet but are associated with higher production costs.

Commercial Baking has developed a cooperative agreement with the leading European / international baking journal baking+biscuit international from the publishing house F2M. This magazine is the English-language sister to the acclaimed German language journal brot+backwaren and is published six times per year with 5,000 hard copies delivered per issue and thousands reading the editions digitally.

Photo courtesy of NOWEL