Fierce volatility in commodity prices over the past five years has dampened industry growth.
Melbourne, Australia (PRWEB) October 26, 2012
The Bread Manufacturing industry in Australia has been faced with challenges, beginning with the low-carbohydrate craze generated by the Atkins Diet in the early 1990s. For ten years, Australians cut back their carbohydrate consumption, which negatively affected demand for bread. However, the emergence of the health- and nutrition-conscious consumer, driven by timely and clever product innovation, has stimulated demand for bread and bakery products over the past decade. In 2012-13, industry revenue is forecast to increase by 3.1% to $3.01 billion. Over the past five years, revenue is estimated to have increased by an annualised 2.7%. The existence of a large number of small and medium-size establishments (such as retail and specialty bakeries), combined with mostly homogenous products and a high level of competition, has caused industry profitability to decline. According to IBISWorld Industry analyst Naren Sivasailam, “fierce volatility in commodity prices over the past five years has dampened industry growth prospects and squeezed profit margins”. However, the industry's major players have been able to post revenue growth due to the strength and longevity of their brands. Despite the use of labour-intensive production methods, the ratio of wages to revenue has declined steadily as the result of rising automation and capital investment across the industry.
The prospects of the industry, modest as they may be, do present some niche growth opportunities. The functional and fortified bread segment is expected to drive demand as consumers become increasingly time-poor and health-conscious. Wholegrain and fruit- or nut-infused variations of traditional bread and bakery products will also be popular. “The increase in demand for specialty breads will drive growth in niche and artisan bakeries over the next five years”, says Sivasailam. IBISWorld forecasts that industry revenue will grow over the next five years.
The Bread Manufacturing industry in Australia is typified by a medium level of market share concentration. The industry is dominated by its two largest players: Goodman Fielder and George Weston Foods (Food Investments). Concentration increased as a result of increased growth for some major players and an increase in merger and acquisition activity. However, increasingly uncertain operating conditions have caused the major players to scale down their operations, and the industry has returned to being more fragmented.
For more information, visit IBISWorld’s Bread Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry consists of establishments mainly engaged in the manufacturing of bread, as well as breadcrumbs, bread rolls, fruit loaves, and leavened bread. Bread can be leavened by the addition of baking soda, baking powder, yeast, or salt to produce a lighter product. Unleavened breads are those prepared without leavening agents (e.g. flatbreads are unleavened).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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