Supermarkets have extended their private-label offerings, to the detriment of manufacturers
Melbourne, Australia (PRWEB) January 09, 2015
Changing consumer trends, volatile commodity prices and a saturated market have characterised the Cake and Pastry Manufacturing industry in Australia. Rising input prices and intensifying external competitive pressures have posed some serious challenges to the industry over the past five years. For example, supermarkets have extended their private-label offerings as part of their ongoing push into the fresh food market. In addition, the move towards artisanal and gourmet foods has increased competition from retail bakeries, which have posed a threat to branded manufacturers in other parts of the baked goods sector. According to IBISWorld industry analyst Arna Richardson, “in response to these challenges and sweeping changes in consumption needs and preferences, industry operators have relied on innovation and new products to stimulate demand in an otherwise stagnant market.” Over the past five years, industry operators have promoted a widening range of products on the basis of health, wellbeing and convenience. Despite these measures, industry revenue is expected to contract at an annualised 1.3% over the five years through 2014-15, as heightened competitive pressures and restrained household disposable expenditure have taken a toll on the industry.
Over the five years through 2019-20, the industry will slowly evolve in line with its changing operating environment. New products, including lower sugar, low-fat and gluten-free alternatives and those containing added functional ingredients, will continue to be rolled out as the industry focuses on specialised, higher margin products. In view of intensifying competitive forces in traditional distribution channels, including the grocery channel, “the industry is expected to increasingly focus on food-service providers and convenience stores as preferred channels for purchases of pies and cakes,” says Richardson.
The Cake and Pastry Manufacturing industry is characterised by a low level of concentration, reflecting the existence of a large number of small and medium operators. This is despite the existence of some larger manufacturers with global connections including George Weston and Sara Lee. Concentration also varies between product segments. The cake segment tends to be less concentrated, as numerous niche players exist and production tends to be labour-intensive. Pies, however, command higher brand and customer loyalty and are therefore more concentrated, with the major players competing for market share. Typically, the industry's larger firms tend to specialise in mainstream products, targeting the low to mid-price range of the final market. Smaller firms tend to concentrate on specialty products requiring short production runs and lower volumes. Despite the presence of smaller firms, manufacturing is moving toward larger scale, concentrated production.
For more information, visit IBISWorld’s Cake and Pastry Manufacturing industry in Australia report page.
This industry consists of companies engaged in the manufacturing of cakes, pastries and similar bakery products (including frozen products) from either a factory-based premises or home. It does not include those companies that produce and sell their products direct to consumers on the same premises, such as retail bakeries and supermarket instore bakeries.
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IBISWorld industry Report Key Topics
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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