Demand for healthy and specialty breads will thrive, despite volatile commodity prices.
Los Angeles, CA (PRWEB) October 18, 2013
Changing consumer preferences regarding nutrition and falling demand during the recession have hampered growth in the Bread Production industry over the past five years. Popular diets, such as the Paleo and gluten-free diets, have caused consumers to moderate their consumption of this industry's products. Producers have responded by introducing more nutritious products to attract health-conscious consumers. During the recession, demand for bread products from key downstream markets, including supermarkets and convenience stores, declined as per capita disposable income eroded. While the decline was mitigated by the necessity of bread, many consumers traded down to private label products for cost savings. In addition to lower demand, this trade down caused industry revenue to fall at an average rate of 0.3% during the five years through 2013.
Along with changes in demand for bread during the recession, the Bread Production industry has had to keep up with America's diverse and ever-changing palate. According to IBISWorld Industry Analyst Hester Jeon, “Manufacturers have developed products to cater to consumers' growing demand for low-carbohydrate foods, whole grains and gluten-free products.” Companies have successfully attracted these health-conscious consumers by introducing products such as low-calorie “sandwich thins” and gluten-free products. IBISWorld estimates that the growth of premium products and higher per capita disposable income will boost revenue by 1.7% in 2013, to total $38.1 billion.
“The industry also faced rising input costs over the past five years; wheat and sugar prices have risen, resulting in tighter profit margins,” says Jeon. Skyrocketing input costs decreased profit margins for firms that were unable to charge higher prices to downstream markets in 2008. Furthermore, input costs are expected to increase in the next five years, eroding firms' profit margins.
In the five years through 2018, consumers will continue to become more health conscious. In response, companies will continue to innovate and introduce nutritious bread. Similarly, increasing health concerns in neighboring countries will drive growth of industry exports. Also, portable products will be designed to appeal to on-the-go consumers. As a result of meeting changing consumer trends, revenue is projected to grow in the five years to 2018. Despite increasing revenue,
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IBISWorld industry Report Key Topics
Firms within this industry manufacture fresh and frozen bread and baked goods, including cakes, muffins and croissants but excluding cookies and crackers. Retail and commercial establishments sell these products to downstream supermarkets, convenience stores and food-service providers. Many bakeries also sell their products directly to the public.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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