CEO explores opportunities as flour demand wanes

NASHVILLE, TENN. — While many popular foods have spent time vilified in fad-inspired public opinions and diet trends, flour-based foods stand out over time as a favored target and have been subjected to a barrage of attacks in recent years. From the Atkins and gluten-free diets to classification as ultra-processed food by make America healthy again (MAHA) advocates, the industry has faced no shortage of challenges. Sheryl Wallace, chief executive officer at Denver-based Ardent Mills, dove deeper into this situation and shared some insights during the National Grain and Feed Association annual meeting about how her company, which is the largest flour milling company in North America, is navigating the current disruptions.

“The headlines are powerful,” Wallace said. “Every day we continue to see signals that are hard to ignore. Demand has softened, and we continue to see the trends, and it’s showing up in how the system is actually running.”

Wallace shared troubling statistics about the industry, including how flour consumption was at multi-year lows, which has resulted in the shuttering of several flour mills across the country, including six Ardent Mills operations in recent years. Large global and domestic crops have pressured wheat prices while input costs remain inflated, and bankruptcies across rural America were accelerating at unprecedented rates, Wallace said. Some of the sharpest setbacks have occurred within the past couple of years.

“Coming out of COVID, times were good,” Wallace began, saying she fondly remembers the days when everyone was at home baking and Taylor Swift was nurturing sourdough starters. “Loan rates were high, margins were strong, and that attracts investments and bills. Unfortunately, things have changed a little bit.”

She said wheat and grain-based foods remain a critically important part of the global food system, with roughly half of the wheat produced in the United States being used for domestic food production. But shifts in consumer expectations around the nutritional value of food, both intrinsically and economically, are impacting flour demand.

“For the last three years, our Ardent Mills market insights team has had a representative group of 10,000 people across the US, and they occasionally will reach out to them and ask them about their consumption trends, their perceptions, what are they buying, and that gives us a very unique, high-tier perspective of the evolving consumer trends,” Wallace said.

She cited three factors as the primary drivers behind lower flour demand in recent years: consumer preferences in health trends, policy regulation in the MAHA movement, and affordability. She added that GLP-1 medications were “a big part of this story,” especially as expanded insurance coverage, public acceptance and easier application methods are increasing their usage.

“It’s certainly influencing caloric consumption, portion sizes, and reductions across carbs, alcohol, and indulgent categories, but what I will share with you, it is not just GLP-1 users,” Wallace said. “Consumers in the population at large are moving away from refined grains, and that is leading to an act of disruption.”

Wallace said this disruption is indicative of a broader sign that consumers have reached a caloric consumption peak.

“Across all food and categories, we’re now on a downward trend,” she said. “I sum it up this way. The pie is shrinking and the slices are getting shifted and redistributed. So those slices toward protein and fiber are getting bigger. And those slices toward grains and refined grains are getting a smaller piece.”

Rather than accept the smaller slice, Wallace said this is an opportunity for the grain-based foods industry to listen to what the consumer wants and meet them where they are.  

“The average consumer today is seeking eight wellness and lifestyle attributes in a single product,” she explained. “In the end for them, it’s about making every bite and every dollar count.”

She described one process called “benefits stacking,” which adds more of the nutrition that consumers are seeking, like protein and fiber, to existing products.

“I think this is one where we, as an industry, have an incredible opportunity to show up and to be a part of the story,” she said, imploring that companies continue to invest in R&D and innovation to develop these types of products.

She said the desire for these types of nutritional enhanced products stretched across all income brackets.

“We’re seeing a trust in trends,” she said. “They are trading up. They’re looking for premium products, better-for-you health, no matter where they are in the social economy, trying to get the best bang for their buck and the best value for the better-for-you health.”

Wallace said defending against certain policies may help meet the consumer on both the nutrition and economic fronts.

“Health and Human Services and MAHA have shaped things,” she said. “Everything such as the FDA, Dietary Guidelines, state-by-state approaches to regulation and policies, food labeling, SNAP, school lunch programs, and they have very strong opinions around health and safety. Sometimes, without science-backed studies.”

Wallace said she believed one of the roles of the grain industry was to promote science-based and evidence-based outcomes.

“We also want to engage constructively and listen to the voices out there, understand the perceptions and some of these trends that are having a profound impact,” she said, also adding that it was important to “support ingredients transparency, but also the appropriate regulation for approvals.”

One of the regulatory weights underpinning costs was around MAHA policies, dictating label requirements and the elimination of certain ingredients. Wallace referred to a study conducted in three states that showed these MAHA-backed regulations led to a 12% increase in food prices, which was sharply higher than the national average rate for annual food inflation, which is currently less than 3%.

“There are now nearly 30 states that have varying degrees of regulation and labeling requirements,” Wallace said. “It’s adding confusion to definitions of healthy or safe. It adds complexity to the supply chain around claims and labeling, reducing operational efficiency. They’re reshaping how food is prioritized and funded, and that is having a meaningful impact.”

Wallace concluded her presentation with a reminder that the industry has gone through challenges before, and she feels confident that it will survive the current disruptions as long as the industry works together to listen to the consumer, continue developing innovative approaches to meet current demands and supports science-based solutions and regulations.

“Maintaining trust in the ag and food system has never been more important, and how we show up and respond together is how the system will adjust and how we will be successful,” Wallace said. “Every generation faces disruption, times of scarcity and abundance, industrial revolutions and reinvention. And every generation has benefited. And as there is one thing that I know about our industry across grain and milling, feed and food, is this. We’re humble. We’re resilient. We’re innovative. And we’ve got grit. We will get through this time better than before and how we entered it. We’ve done it before and will do it again.”