WEBINAR TRANSCRIPT

Loretta Kelly: Welcome, everyone. I'm Loretta Kelly, Director of Strategic Marketing for Blue Diamond's Global Ingredients Division. Thank you for joining us today as we unpack the latest market trends and insights impacting the food and beverage industry.

Blue Diamond's Global Ingredients Division is the industry's first choice for value-added almond ingredients. That's because we understand what you need from an almond supplier - not just the highest quality almonds and almond products, but a true partnership. Only Blue Diamond offers you applied almond expertise. That's how we leverage our knowledge and experience to help you use our products to enhance yours. Our market, product and consumer insights can help you find new ways to use almonds to drive consumer appeal on the label and demand for your product.

Blue Diamond offers an unparalleled array of almond forms and varieties, from sliced, diced, slivered or whole almonds to almond protein powder, almond flour, and almond butter. And for virtually any application, we provide unmatched product knowledge and service. Our focus and resources ensure that the features and benefits of almonds shine through. And that helps you derive more value from your purchases with us.

Thank you again for being with us today. And remember that you can submit your questions for the live Q&A in the chat box on the side of the screen. Now, please join me in viewing today's webinar.

Stephanie Doan: Hello, and thank you for joining us. I'm Stephanie Doan.

C.J. McClellan: And I'm C.J. McClellan. We've all witnessed dietary changes, especially over the last two years due to the pandemic. Whether that's indulging in comfort foods or a movement toward healthier eating, 85% of consumers have reported changing their habits during the past two years.

For today's webinar, we are going to demonstrate how replacing ingredients can help you deliver baked goods that offer an eating experience comparable to their traditional counterparts while also meeting the demand for healthier products. We will address free-from's role in better-for-you bakery products, the ways in which the category continues to grow, and how you can bring innovative ideas and more in-demand products to your consumers.

Let's start with number one: the role of free-from in the better-for-you bakery category. Free-from foods and drinks align with some popular diets and have been designed to exclude one or more ingredients that consumers might have either an intolerance or allergy to. That includes things like gluten-free, dairy-free, fat-free and sugar-free, as well as broader categories like GMO-free, carb-free and allergen-free. What's interesting is that 84% of consumers perceive foods with claims like these as healthier and less processed. Meeting two of the largest trends in natural foods, Mintel reports that half of American consumers say they'd prefer to eat fewer processed foods, and 43% believe that free-from foods are healthier.

There are also diets that combine or expand on those categories like veganism, keto, paleo, and even sustainably produced (as in free from waste). All three of these categories are growing fast. In fact, the total market size of free-from foods was valued at $90 billion in 2018, and it's projected to reach over $161 billion by 2026. That's more than 7% year over year.

Now, if we apply those free-from desires against the comfort food habit we discussed earlier, it makes sense that demand is rising for indulgent baked goods that offer healthier features. In terms of these better-for-you baked goods, they can provide one or many claims. But gluten-free and plant-based are the areas where we see the most growth.

Important to note is that consumer interest in gluten-free foods has quadrupled in the last ten years. And 43% of U.S. consumers believe a gluten-free diet is healthier. With this growing demand, new product launches in the bakery category are increasing. Many of these are formulating away from gluten-based ingredients and toward almond ingredients.

Vegan claims are growing too. In fact, the market for vegan food could reach over $31 billion by 2026. From simple to complex free-from formulations, the time for you to bring true innovation and fresh thinking to your baked goods is now.

With such a rich opportunity, let's dig in by looking at number two: how the better-for-you bakery category is growing. In a word? Explosively! Innovation in these spaces is bringing us food ideas from keto bread and cookies to high-protein, low-carb cakes‚ offering consumers more ways than ever to target the precise diet they want.

Also important to note are the ages of these consumers. Younger buyers simply want to be able to choose more plant-based foods. But older consumers say they're worried about harmful ingredients.

This type of diverse demand can mean endless application possibilities for food formulators. So how can we formulate to meet these dietary demands? Well, that takes us to number three. To speak more on that. Here's Stephanie Doan, our manager of product innovation.

Stephanie Doan: Thanks, C.J. The two biggest areas we're currently focused on in the better-for-you bakery space are keeping label ingredients simple and recognizable, and offering ingredients with functional health benefits. These are both important concerns to a large majority of consumers. In fact, 65% associate clean eating with health and more than two thirds already use products with a functional benefit today.

But crafting better-for-you products that consumers will actually enjoy can pose real challenges to food formulators. That often includes making tradeoffs, all of which can impact taste, color, texture and/or mouthfeel.

And when it comes to baked goods specifically, eliminating fat and sugar can have a huge impact on the enjoyment of the end product. So finding a healthy, functional solution is essential.

Blue Diamond almonds and almond ingredients can help. They're natural and gluten-free, and they come in a variety of versatile forms like almond flour, almond butter and almond protein powder.

Almond flour specifically provides the texture consumers expect from traditional baked goods and great flavor for gluten-free and keto bakery formulations. Plus, it retains moisture and contains healthy fats, which help create tender cakes, soft brownies and chewy cookies.

Almond protein powder doesn't have the typical gritty texture of plant-based proteins, and it can help dilute the "beany" or "earthy" taste that other plant-based products can bring. And its fine granulation allows it to integrate seamlessly with other ingredients. But let's not forget traditional forms like slivered or diced almonds, which can offer a value-added texture and taste, as a topping or an inclusion, while at the same time elevating the health attributes of the indulgent bakery products consumers crave.

Formulations that leverage almonds can help you create better-for-you products that appeal to the consumers who adhere to keto, vegan and other specialty diets, as well as those just looking for a healthier alternative. In fact, another trend we're seeing is foods that combine multiple free-from claims, making flexible ingredients like almonds even more important.

And consumers love them. Almonds are an immediately recognizable ingredient, and they're perceived as a superfood because of their protein and dietary fiber content, along with their essential vitamins and minerals.

C.J. McClellan: That's right, Stephanie. Blue Diamond has spent more than 110 years growing almonds and the almond marketplace. And our network of growers and supply chain partners is ready to assist in solving your taste and texture challenges with versatile almond ingredients.

Stephanie Doan: With proprietary processes and equipment that allow us to maximize quality and consistency, and an expert R&D team committed to helping you enhance taste, texture and clean labels, we're ready to deliver on our commitment to innovate solutions that bring better-for-you bakery products into consumers' homes for a long time to come.

C.J. McClellan: Thanks for joining me and Stephanie today. We hope you found these powerful insights and our applied almond expertise helpful.

Loretta Kelly: Wow. What a great webinar. Welcome back, and thanks for joining us. I'm Loretta Kelly, Director of Strategic Marketing, and you've just seen our webinar on Enhancing Better-for-You Baked Goods. I know it was extremely insightful for me, and I learned a lot of new things about the trends that are happening in the market. This is a topic I love. Anyone who knows me knows I love baked goods: A croissant, a cupcake, even like a gluten-free donut. Those are just some of my favorites.

We're going to roll right into our Q&A panel right now. Today, we have three panelists: Stephanie, Laurie and C.J. I'm going to give them a chance to introduce themselves, but how about you guys give me your name, your title and your favorite gluten-free baked good. Stephanie?

Stephanie Doan: Good morning, Loretta. Yes, my name is Stephanie Doan. I am the Manager here of Product Innovation and product development at Blue Diamond Growers. And I absolutely love a gluten-free cookie - [I'm] partial to a shortbread or sugar cookie. But I don't mind having a chocolate chip cookie every now and then as well. So...

Loretta Kelly: That's great. I love a gluten-free cookie, too. How about you, Laurie?

Laurie Colin: Hello, everyone. Hi, I'm Laurie Colin. I am the Senior Technical Business Development Manager here at Blue Diamond Global Ingredients Division. Wow. I am torn between two of my favorite gluten-free products: If I want to be healthy, one of my favorites is actually a gluten-free keto bread that I have created that I bake almost on a monthly basis.

But if I really want to indulge myself? A brownie. You cannot beat a gluten-free brownie. I can - I just love how chewy and moist they are. So, yeah, that's, those are my two favorite ones.

Loretta Kelly: All right, we've got a brownie, a cookie. We have a donut. C.J., how about you let us know?

C.J. McClellan: Mine? I have spent a lot of my life in the bakery industry, so I don't discriminate against any baked good - I love them all. But I would also have to choose, I think, a donut because there are so many different varieties and so many different things to choose from. So you can switch it up regularly, and it kind of keeps me on my toes. And I found a couple bakeries here in California that have very good gluten-free donuts. So that would be that would be mine.

 Loretta Kelly: Well, thank you. I love that list of gluten-free baked good items we have and the fact that Laurie has created her own gluten-free bread. So we've got a donut, we've got brownies, cookies, bread. Those are the options that people have.

I think that - let's give a give everybody a chance to also tell us about their favorite gluten-free baked goods. So if you would just submit that in the Q&A panel. And while you're there, you could submit some questions for one of our technical or marketing experts to answer. But before we get started, let's go ahead and look at some questions.

So how about we start with the first question that was submitted: What are the top trends that have increased the overall interest in better-for-you bakery?

C.J. McClellan: And I can hop in initially on this one. The pandemic had a huge effect on the food and beverage industry and the baking industry, and it continues to impact those industries and the way consumers shop. For instance, you know, the shift to digital and ordering groceries online and the availability of information, but it also impacts what consumers are looking for and expecting from the foods they purchase and the foods that they are going to incorporate into their lives and diets and the diets of their families.

So a few big trends that I think impacted it recently - and I think will continue to impact it - are that there's this focus on function or, really strengthening the link between the foods and ingredients that we're eating and how they play into or support our daily activities and the things that we're doing. And I think we're all being drawn to those foods that highlight that tie between the two - the ingredients and the outcomes - and really what it's doing for us and the function that it's providing.

Of course, one thing that we've all heard about is the plant-based alternatives and the increasing incorporation of those plant-based ingredients into our diets and into the products that we eat. I think it's been a trend that's progressing for the last several years and one that we don't see stopping anytime soon.

And then I think another one that I think we will all be aware of is just this focus on value. You know, simply: we all want consumers all want to feel like we're getting value out of the money that we spend and the money that we're spending on our food items, especially with recent inflation and the cost of everything going up. So I think any way that we can provide that extra value and make consumers feel like they're getting, you know, the most, the biggest bang for their buck out of the foods that they're purchasing.

I think those are three of the big umbrellas. And I think it would be really interesting to see how that all continues to play out. But I really think that one of the biggest ones that will continue to see the focus on is food that supports well-being and the health priorities. And I think we already see people taking notice of that in the bakery industry.

There's a grocery store here in California called Wrigley's that has even started putting in-store bakery shelf tags, informing its customers about the health claims or the health benefits of the baked goods in their in-store bakery, one that just says like nutrient dense and explains kind of what vitamins, minerals, dietary fiber is included in those foods. So I think we'll start seeing more of that. And I think that all bakery manufacturers have that opportunity to capture and be a part of that by creating more better-for-you products.

Loretta Kelly: That is really cool. I definitely like that whole connection between what we put in our bodies and the functionality that it provides. You know - do you think the pandemic had anything to do with that? I remember definitely during the pandemic we always would… people would bake banana bread like crazy, right? Like, and there was a lot of baking that was going on during the pandemic. And so do you think that that whole transition was really helpful when it came to creating more better-for-you bakery interest?

C.J. McClellan: I think - and other panelists, feel free to chime in, too­ - I definitely think it helped spur that increase. The pandemic inspired more than half, or the majority, of consumers to begin to research the ingredients that were going into their foods and the ingredients that helped boost their immune systems or help provide that function. So I think it definitely spurred the - or encouraged consumers to think even more about those health benefits and the better-for-you products, and the better-for-you bakery products, that they could they could be eating.

So I would say absolutely it spurred it. I don't think it was the only thing that spurred it. I think having access to the information and having it readily available also has encouraged consumers to research more of the foods that they're eating and the ingredients that are going into the foods and what it might be doing to their bodies or to their digestive systems and things like that.

So I think there's probably several things that added into that. But the pandemic definitely spurred it from my view.

Stephanie Doan: Yeah, and I'll add on to that, C.J. I think what we've seen is also a drive for transparency in ingredients as a result of the pandemic. You know, as consumers, as you noted, are baking at home, they're understanding what goes into their foods and therefore, they're wanting their labels to be more transparent, open, simple and just better-for-you all together. So less processed.

Laurie Colin: All right. So I'd like to add to that as well. So in addition to basically consumers really looking into the ingredients, consumers have really become more aware of the connection between fiber and gut health. So they have done quite a bit of research and now it seems like a lot of bakery manufacturers really are beginning to understand that there's a connection between digestive immune health and the fiber.

So I believe that that was another aspect that brought forward with the pandemic: people really being more aware of the link between gut health, immune health and fiber.

Loretta Kelly: I would definitely agree with that too, Laurie. It is definitely something that - the connection between gut health, fiber and immunity continues to be this like triangle that is pushed forward, especially as the pandemic rolls on. Right?

What are some of those challenges that formulators are having when they're running into making or producing better-for-you baked products? What do you think, Stephanie?

Stephanie Doan: Thanks, Loretta. And you know whether you're formulating for a gluten-free or sugar-free, plant-based or, as Laurie alluded to, you're trying to add more protein or fiber, I think formulators are definitely going to find challenges within their first couple rounds of formulations. Those challenges are likely in texture, especially as you eliminate some of those essential ingredients and try and add in some of those very water-loving ingredients like proteins and fibers.

I mean, they may find that they're going to have gritty texture, off flavor and potentially sunken cakes or things that don't rise. There's a real balance that you've got to play with formulations and trying to get the water and the texture and everything to function in synergistically, which makes baked goods very challenging, especially as you're as you're monkeying with some of those crucial ingredients.

C.J. McClellan: And I'll add on to that. All of those things that Stephanie was just mentioning are really what build that consumer experience when they're eating the baked good. And we know from research and from many different studies that that eating experience is critical in consumers making a repeat purchase. So when, you know, they're looking for something, they're willing to branch out and, you know, maybe try and do better-for-you baked good or to, you know, try a new baked good that they've maybe not tried before, but they want it to kind of rival the baked goods that they've had or the baked goods that they're used to and that eating experience that they're used to.

And when, you know, the taste, the texture, the flavor, that eating experience isn't there or isn't, you know, rising to meet their expectations, then you're not going to get that repeat purchase. So it is just very critical that all those points that Stephanie was mentioning are met with the correct ingredients and the ingredients that can provide that experience.

Loretta Kelly: Oh, I'll just remind everybody to feel free to let us know your favorite gluten-free baked good in the panel on the side, in the Q&A panel, and you can also submit your favorite questions again for our technical and quality - technical and marketing experts. It seems like we have a question that came in.

So can you tell me more about your almond protein powder and let us know how it works in gluten-free baked goods? Laurie, you think you can help?

Laurie Colin: Sure! Umm, that is a great question. Our almond protein is actually one of my favorite ingredients. It is an ingredient that I actually have incorporated into my keto gluten-free bread that I bake on a basically monthly basis. In gluten-free products and better-for-you bakery, this is where our almond protein truly shines. It is - it provides functional properties that help to overcome challenges that are sometimes encountered with other ingredients.

It has some - it is an off-white powder. It's an off-white powder that has minimal impact on the color and the appearance of baked goods. And it has a slightly sweet, neutral flavor with no astringent or bitter flavors. And it has a minimal impact on taste and allows most flavors to shine through without the need for flavor enhancers or flavor maskers.

But [in] addition to that, it has wonderful moisture binding and gelling properties, and it really helps to work with that crumb structure of gluten-free products. So again, our almond protein, in my opinion - like I said, it's I'm a total bakery nerd. Basically, my background is in bakery. I did product development for many years and I have the opportunity to basically play with it here in my test kitchen. And it's again, it's one of my favorite ingredients for a gluten-free and the better-for-you baking applications.

Stephanie Doan: And I'll add on to that, Laurie. You know, we have found that a small portion of almond protein powder for those formulators who are removing sugar, for example, it does have a subtle, sweet taste to it, but it also helps browning which of course, you know, is if you remove that sugar or even reduce it in baked goods, that… that reaction is essential for what we expect. And sometimes we find that almond protein powder can help with that reaction. So another key reason for why you may want to try it in your baked goods.

Loretta Kelly: Thanks for that. What are some of the characteristics of baked goods that consumers are not willing to sacrifice?

Stephanie Doan: I'll go ahead and start with that one as well. Baked goods generally, as we've all alluded to our favorites, are things that we enjoy. And if you're going to have a cookie and sacrifice the calories, you want it to look, taste and function like a cookie. And so therefore, consumers very much are expecting the same taste, they're expecting the same texture, and they're expecting it to look like a cookie. So if you have a sugar cookie that is supposed to, you know, kind of lay flat and be able to be frosted, a gluten-free cookie should also lay flat and be able to be frosted. It should hold your chocolate chips and it should taste delicious.

And that I think no matter - as the market today, we've seen some amazing products come into the gluten-free space. It's getting more and more competitive. And successful products are going to need to meet those consumer expectations because I don't think those are going to go away as we merge deeper and deeper into the better-for-you baking space.

Loretta Kelly: I definitely agree with that. I find that almond flour and almond protein powder really help with that structure and texture that you want in the gluten-free baked goods. And that sometimes is missing when you take gluten out. So I think that's really, really exciting and that I definitely agree with that.

Are there any other characteristics that you think baked goods that consumers are not willing to sacrifice?

Stephanie Doan: I believe - well, I'll turn it over to Laurie or C.J., but I believe that, you know, it should come with enhanced, nutritional characteristics if possible. So as we get into the better-for-you space, if you are just a gluten-free cookie, that's great. But if you also have some nutritional characteristics… and, to your point, I love almond flour for that reason: it provides a very nice, clean slate; it's subtly sweet. But it comes with the nutritional characteristics that we pointed out in the video that we just saw in that it has inherent vitamin E and good fats and protein and fiber that can come along with enhancing your products. So I think consumers are going to be looking for those enhanced benefits and nutritional properties as they indulge in their new better-for-you baked goods.

C.J. McClellan: And I can add on, at least from my experience, what I'm looking for as a consumer. And it's definitely all those things that Stephanie just mentioned. I'm looking for something that, you know, gives me that permissible nudge to have the baked good, but also is giving me that eating experience that feels like premium and delicious and indulgent. So I need that combination of the two - looking to still have my treats, looking for it to taste and feel like my traditional baked good, but give me that little nudge that feels like something's permissible about it. Like it's giving me that health benefit or the function that I need to carry through my day, whether it's a little more protein or, you know, some added vitamins or fiber or something like that.

Loretta Kelly: Well, we have one more question left: Do you believe the interest in personal health and wellness will continue to grow, especially in future generations?

C.J. McClellan: I will take that. I would definitely say yes. I think that that is something that consumers and we, as just society or as a nation, as a world, are focused on. We're all trying to figure out the best ways, especially after the pandemic, to incorporate those healthy items into our lives and to improve our health, the health of our bodies, the health of the world, the health of all of those around us.

And I think that you're continuing to see that increase, and I think that doesn't show any signs of stopping. And I think if you look at even some of the social media platforms and the younger generations, like on TikTok, you're seeing a big focus on plant-based recipes or you see the recipes coming out in the little videos and everybody's trying them and they're getting so much popularity that I - I don't foresee it stopping any time in the near future.

Laurie Colin: I will add to that. Yes, that, definitely. Not only because of our own awareness of our health, but also the other trend - that is, definitely, people are becoming more aware is health of the planet. And as the better-for-you, plant-based products continue to increase, that awareness is also going to drive this sector of the market also growing as well.

Loretta Kelly: Well, I definitely have found some great recipes on TikTok. We've all tried some different ones out there. But in the meantime, I encourage everybody to go out and try a gluten-free item or make one at home with some almond flour or almond protein powder.

For now, we are going to wrap up. If you're hungry for more food and beverage insights, visit our Ingredients page at bdingredients.com, and check out our podcast, Grown in California. The next podcast is going to be double-clicking on this topic here today and answering the rest of your questions that have been submitted in the chat on enhancing better-for-you bakery products using almond flour, almond protein powder and other wonderful almond-based ingredients.

For now, we're signing off. Thanks.