Latest Research: Global Bakery Highlights and Prospects for 2011-2016
Retail value sales of bakery products are expected to rise on the back of higher commodity prices and stronger demand in emerging economies.
2011 will be a year dominated by wheat and corn-driven rises in commodity prices, which will hamper the growth of bakery products in volume terms. International manufacturers are adjusting to this trend by highlighting the added value of their brands. In doing so, they are trying to compete with private label offerings, perceived as low in price and gaining in quality and sophistication every year.
Bakery product sales are expected to grow by 1.6% in retail value in 2011 (constant 2011 prices/fixed 2011 exchange rates), 1.4 percentage points up on the growth registered the previous year. Retail value sales are projected to reach US$462 billion in 2011. Part of this growth can be explained by the increase in input costs, especially corn and wheat, which are set to push bakery product global unit prices up by 2% in 2011.
Western Europe and Latin America are predicted to remain the largest bakery product markets, accounting respectively for 32% and 20% of global retail value in 2011. Latin America will be one of the strongest performers, with bakery products growing by 4% in retail value (constant 2011 prices/fixed 2011 exchange rates). Brazil’s strong economic growth in 2011 will underpin demand for high added value in key bakery categories. Retail value sales of packaged/industrial bread, for instance, will grow by 11% in 2001, driven by strong innovation activity among local manufacturers and stronger awareness of functional benefits among urban Brazilian consumers.
Biscuits is the category predicted to register the strongest growth, rising by 2.4% in retail value in 2011(constant 2011 prices/fixed 2011 exchange rates) at world level. Global demand for biscuits in 2011 will be underpinned by strong sales growth in Latin America, where sales are expected to grow by 4% in retail value.
Baked goods are expected to grow globally by 2% in 2011, a performance underpinned by strong demand in Latin America, which will see sales rise by 4% in retail value. Breakfast cereals will be the weakest category in terms of growth, with sales predicted to grow by just 1% in 2011. Global demand for breakfast cereals in 2011 will be hampered by sluggish growth in Western Europe, where sales are expected to decline by 0.4%.
Bakery product unit prices are predicted to be the highest in Australia (US$6.30 per kg) and North America (US$7.40 per kg). The strongest increase in prices is set to take place in the Middle East and Africa, where a 13% rise is projected. Other than the above-mentioned commodity-driven inflation, prices will be driven by the current premiumisation trend taking place in countries like South Africa and Saudi Arabia.
Artisanal bakery products continued to account for almost half (48%) of total retail value in 2010. Kraft was the market leader, commanding a 3.1% retail value share in 2010. Private label share stood at 7.2%, 0.2 percentage points down on the previous year.
Innovation and consumption trends
2011 is expected to see an increase in demand for functional properties among middle-class consumers in emerging countries. In late May 2011, for instance, Indian manufacturer Parle Products launched a “fortified” biscuit brand targeted at young mothers. The line, which is fortified with vitamins, minerals as well as protein, calcium and iron, is marketed as ‘ideal for young mothers who are ‘constantly concerned about the health of their children’. In Mexico, local bakery manufacturer Bimbo offers vitamin and iron-fortified white bread for hamburgers. The line, targeting children, is focusing on middle-class parents in urban areas willing to pay a premium for lines offering convenience and health benefits.
Breakfast cereal sales are projected to grow by 9% in constant retail value over the 2011-2016 period, compared with the 5% growth registered between 2006 and 2011. Demand for breakfast cereals will be driven by a strong sales performance in Eastern Europe and Asia Pacific, with sales projected to grow by 18% and 21%, respectively, between 2011 and 2016. Demand for breakfast cereals is predicted to be particularly strong in rapidly growing economies like Poland. Sales of these products in the latter are predicted to rise by 34% in retail constant value over the 2011-2016 period. Such growth will take place on the back of strong economic recovery and higher disposable incomes in big cities in the coming year. Polish GDP is projected to grow by 16% in real terms over the 2011-2015 period, according to Euromonitor International’s Countries & Consumers database.
Baked good sales are forecast to rise by 6% in constant retail value over the 2011-2016 period compared with the 4% growth recorded between 2006 and 2011. Baked good sales will be driven by the expanding consumer base for bread in Asia Pacific. Unpackaged/artisanal formats in the latter region are projected to grow by 18% in constant retail value over the 2011-2016 period, according to Euromonitor International’s projections.
Biscuit sales are forecast to expand by 11% in constant value over 2011-2016 compared with the 9% rise recorded between 2006 and 2011. Demand for biscuits will be driven by urban growth in emerging economies like India, where sales are projected to grow by over 50% in constant retail value over the 2011-2016 period.