Smaller retailers have expanded their hold on the industry, by opening additional stores and improving their purchasing power over wholesalers
Melbourne, Australia (PRWEB) June 27, 2014
At first glance, Bread and Cake Retailing in Australia seems to be struggling. Industry revenue is expected to post compound annual growth of just 0.4% over the five years through 2013-14 due to increasing competition from operators in other industries. However, revenue has grown consistently since 2011-12. Many retailers have altered their product offerings in response to increasing competition. According to IBISWorld industry analyst Brooke Tonkin, “rising demand for premium products that attract higher prices and profit margins has driven industry performance over the past three years.” This premium trend will continue to benefit the industry in 2013-14, with revenue forecast to increase by 1.2% to $795.5 million.
Fluctuations in domestic wheat and sugar prices have influenced the industry's performance over the past five years. These are key inputs for bread and cake manufacturers and therefore the price fluctuations have affected purchase costs for bread and cake retailers. However, “demand for premium, organic and dietary specific products, which attract higher profit margins, has enabled retailers to enjoy gradually rising profit margins over the past five years,” says Tonkin. Shifting consumer trends have altered the retail landscape over the past five years. Contrary to many industries, the largest bread and cake retailers have not performed as well as their smaller counterparts over the past five years. Stronger growth is forecast for the industry over the next five years. Growth in disposable incomes will contribute to increasing demand for premium and high-value products. The industry will continue to be challenged by supermarkets, cafes and coffee shops over the period.
The Bread and Cake Retailing industry displays a low level of market share concentration. This is due to the industry's high level of fragmentation, with the majority of industry revenue being earned by smaller, independent retailers. The industry's largest player is Retail Food Group, which controls Donut King and Michel's Patisserie stores. The next two largest players in the industry are Breadtop and the Cupcake Bakery. Industry concentration has fallen over the past three years. This is largely due to the reduction in Michel's Patisserie store numbers, which decreased the chain's sales revenue and market share. Although Donut King has posted moderate revenue growth over the period, this has not been enough to counteract Michel's Patisserie's poor performance. The collapse of the Cupcake Bakery in 2014 further decreased industry concentration. Consequently, smaller retailers have expanded their hold on the industry, by opening additional stores and improving their purchasing power over wholesalers.
For more information, visit IBISWorld’s Bread and Cake Retailing report in Australia industry page.
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IBISWorld industry Report Key Topics
Retailers in this industry sell a range of bakery items including bread, cakes, pastries and biscuits. Industry players may operate independently or as part of a franchise network. Products are made off-premises, purchased from wholesalers or supplied by franchise parents.
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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