Rising dough: Continuing product innovation is keeping baked goods in high demand.
London, United Kingdom (PRWEB) September 03, 2013
The Bread & Bakery Goods Production industry has entered a period of adaptation as one of its major companies bit the bullet and cut its output capacity. Premier Foods reported intense competition and substantially inflated wheat prices as its justification, reflecting the two defining impacts on the entire industry over the five years through 2013-14. Poor weather caused equally poor harvests, driving the global price of wheat up to an almost unsustainable level. At the same time, the bread and baked goods market has become saturated with a proliferation of offerings aimed at every consumption type and consumer, with supermarkets using low price and fresh options to steal market share.
Fortunately, bread and baked goods remain in high demand by the majority of Britons. According to IBISWorld industry analyst Patrick Ross, “Despite minor impediments caused by low-carbohydrate fad diets such as the Atkins Diet, bread remains firmly entrenched in about 99% of UK households as a staple grocery”. However, changes in consumer lifestyles and increased awareness of health and nutrition brought changes to the industry's production landscape. The emphasis on healthy eating has caused a move away from traditional sliced white bread to wholegrain and seeded varieties that have less sodium and higher fibre. In the five years through 2013-14, industry revenue is expected to increase at a compound annual rate of 2.0% to £7.2 billion. Revenue is anticipated to grow by 0.6% in the current year.
Over the next five years, the industry is forecast to grow at a slower pace, as competition remains in deadlock and operators compete for an extra slice of market share. Producers will be preoccupied with raising enough money to allow them to invest in product research and development. Ross adds, “Busy lifestyles, health and convenience concerns will continue to determine new product introductions and the type of strategy producers follow”. Own-brand products and healthy alternatives will continue to present a threat. Commodity prices are expected to show less volatility over the next five years, although the price of wheat is expected to increase overall. This is expected to hinder profitability during the period.
The Bread & Bakery Goods Production industry is estimated to have a medium level of market share concentration, with the top four players generating 55.5% of industry revenue. The UK market is dominated by industrial or plant-manufactured products that are expected to account for more than three-quarters of all bakery products sold in the country. Concentration is being restricted by the increase in own-brand supermarket produce. Almost every supermarket has its own in-store bakery. The recessive economic environment has encouraged shoppers to step away from branded produce, creating a stalemate between own-brand and branded products in the bread market. This has ensured competition is high, and encouraged participants on both sides to innovate and achieve cost efficiencies. Major companies include Associated British Foods, Warburtons and Premier Foods.
For more information on the Bread & Bakery Goods Production industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
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