Insight from FEDIMA - European bakery and pastry ingredients manufacturers Annual Industry Update in the 2024 edition of the Baking Europe Ingredients Market (BEIM) Report.
The European Union is a frontrunner in studying and regulating of Artificial Intelligence (AI). In practice, statistics show that in 2023, 30.4% of large EU enterprises and 8% of all EU enterprises used artificial intelligence technologies in their activities[1].
The market size of AI in the global food and drink industry is set to cross USD 9.68 billion in 2024 and touch USD 48.99 billion by 2029, growing at a 38.3% compound annual growth rate[2]. In the bakery industry, the global market for AI is expected to reach USD 1.7 billion by 2027[3].
AI is revolutionising the way we work thanks to its wide range of applications, and it is already making its way into different segments of the food industry, including the bakery sector.
Whether it is demand forecasting, recipe development and optimisation, personalised customer service, inventory management, quality control or food waste reduction, AI is set to bring huge benefits to the efficiency, customisation, and sustainability of the baking industry sector.
While European bakeries, large and small, are just starting to test the waters with AI applications in their day-to-day, a picture can already be painted of how bakers in the United States are making use of this technology.
In March, the American Bakers Association (ABA) surveyed its members on the use of AI in the commercial baking industry, collecting the experience of 80 commercial bakers and suppliers.
Read more in our Q&A with ABA’s Eric Dell, where he shares highlights from the survey, insights into how emerging technologies are changing the bakery sector, and more.
Q1 – What business functions are US bakery companies currently using AI on, or planning to?
ABA: A significant majority (nearly 70%) of companies have adopted or plan to adopt AI solutions in some capacity, including via pilot programs, in the next year. AI applications in marketing and sales, supply chain management, and manufacturing are the business functions where baking industry businesses are currently seeing the most significant activity.
Q2 - What are the main value drivers for a baking industry business to implement AI?
ABA: Increased efficiency and productivity are a top priority for the baking and supplier businesses in the study, and a field where AI is considered beneficial. Bakers are utilizing AI to address continuous operations to prevent downtime, but also to eliminate repetitive tasks and enhance predictive maintenance.
Q3 – What are the financial benefits of using AI?
ABA: One of the promising financial impacts of AI is its potential to allow bakers to cut costs in supply chain management, manufacturing, and customer service. When it comes to revenue generation, our members see the most significant gains in marketing and sales functions while still anticipating a moderate revenue increase in the areas of manufacturing and supply chain management.
Q4 – What are the biggest challenges and worries to implementing AI in bakery businesses?
ABA: AI could be a great asset to the baking industry, but as a relatively new technology there are still uncertainties that businesses are navigating. The number one challenge that businesses highlighted is the lack of skills in the workforce when it comes to using this technology.
Uncertainty also prevails in terms of the return on investment, and on the maturity and accuracy of this emerging technology. The AI-related risks to baking businesses are also clearly identified in the study, with the vast majority of businesses identifying cybersecurity as the greatest concern and change resistance as a close second.
Q5 - What frontline roles do your members expect to be more difficult to fill over the next three years because of AI adoption?
ABA: The U.S. commercial baking industry employs more than 789,000 people with even more career opportunities available for future team members. However, the ongoing workforce shortage in commercial baking is poised to escalate, with employers struggling to occupy roles and an aging workforce headed toward retirement. At the current rate, the industry will have 53,500 unfilled jobs by 2030.
This is especially concerning given that ABA’s job shortage study found that nearly 85% of new baking industry jobs in 2030 will fall into the categories of production, engineering and maintenance, and distribution. With baking businesses expecting maintenance, production, and engineering roles to be the most impacted by the implementation of AI, it is imperative that the industry makes strides to position itself as the destination workplace for current and future talent.
Q6 – What are your suggestions to European bakers that want to start integrating AI technology in their business?
ABA: Companies who want to harness the possibilities of AI and integrate their businesses first should engage stakeholders from across their organization to evaluate implications for all facets of the business.
They should also consider the human dimension. AI can be a tremendous asset for employee recruitment, retention, and training. But it also requires careful upskilling for the existing workforce.
Conclusion
What has become clear in recent years is that the integration of AI into the baking industry brings exciting possibilities for innovation, efficiency, and improved customer experiences. This can be by improving the development of recipes and management of inventory and supply chains, by modernising marketing and customer service practices, as well as by giving businesses the chance to analyse data more effectively in order to adapt their priorities and decisions. As baking evolves to meet our changing environment, AI becomes a valuable tool for bakeries to stay competitive and deliver delicious treats and staple foods crafted by combining tradition and technology.
[1] Source: Eurostat (online data code: isoc_eb_ai)
[2] Source: Mondor Intelligence, AI in Food and Beverage Industry Size
[3] Source: Gitnux Marketdata Report 2024, AI In The Bakery Industry Statistics