This is story related and can't be missed.
Make sure to equip each character with a towel.
Beware, spoilers below.
After speaking with the old woman in the south of Noble Verahansha 3 times (and trading your perfume from Mazooca) she will tell you the 'X' on your map is the bakery. Head east and you'll come to the bakery. Go in and speak to the large baker standing in the center. You'll get nowhere with him, and your party will suggest going to the inn to rest. Go to the inn next door and stay the night.
In the morning head back to the bakery and talk to the head baker again, and you'll receive a loaf of bread. Exit the bakery to trigger the next scene. After some dialogue you'll head back into the bakery for this boss battle.
He has 5000 HP and has water based attacks. He also spawns with 4 - 5 smaller bakers. Your towels will be quite helpful here as he and his minions can do a fair amount of damage. For this battle we'll start with everyone gathering. Get Edessot up to 2 gather, and Zellini up to 3 gather. Have them cast fireball and lavafall until the flunkies are dead. During this, attempt to get others up to gather 2, and have Alina heal as necessary. Once the flunkies are dead you can have everyone focus on using their strongest attack on just the baker (possibly switching around gather so Hoston can use Kohona Cleave). Heal with Alina as necessary, and the rest of the battle should be fairly straightforward; he has no attacks that can hit everyone.
Alternatively for this battle, you can ignore the smaller bakers and focus just on the main baker; defeating him will cause the smaller bakers to flee. This strategy makes the battle take much longer, as you're required to heal more often with Alina, and may have to bring in Kruller to heal as well. If you choose to go this route, you may want to use some gather increasing items to make the battle go swifter.