THE BRITISH BAKERY MARKET

Transcription

1 FACTSHEET No. 3 THE BRITISH BAKERY MARKET 1. INTRODUCTION 2. BAKERY MARKET OVERVIEW 3. BREAD 4. BAKERY SNACKS 5. ROLLS AND BAPS 6. BREADS OF THE WORLD 1. Introduction The Bakery market breaks down into 4 main categories: a. Bread b. Bakery Snacks c. Rolls and Baps d. Breads of the World Standard, industry-wide definitions have been used in this factsheet to include both products that are plant manufactured (wrapped) and those that are baked by instore bakers (ISB). The factsheet starts with an overview of the total Bakery market and then explores each of the 4 main categories in turn. Sources (unless otherwise stated): All Plant Wrapped products data source: Nielsen Total Coverage 52w/e 10th August 2013 All ISB In-store Bakery products data source: Kantar Worldpanel 52w/e 7 th July 2013 All growth figures show the latest 52wks year on year (YOY) percentage change (unless otherwise stated) Oct 2013

2 2. Bakery Market Overview Market Size The UK Bakery market is worth 3.6 billion a year and is one of the largest markets within the food industry. Total volume at present is just under 4 billion packs; the equivalent of almost 11 million loaves and packs sold every single day. 3,635m +4.0% 3,842m +0.3% +3.7% -0.7% +5.2% +3.0% Figure 1. Total Bakery Sales, 52 weeks Plant manufactured (wrapped) products account for almost three-quarters of all Bakery products sold in the UK. Figure 2 shows the splits between the 4 categories. Bread is the biggest sector accounting for 54% of value sales, but it is other categories, especially Breads of the World, that drive growth in the total Bakery market. Figure 2. Bakery Sales by Category& YoY Growth, 52 weeks Oct 2013

3 The trend in Plant Bakery is towards branded products. Two-thirds of plant-made wrapped products are branded, fueled by branded manufacturers bringing innovative new product development to market and continuing to invest in advertising. Market trends Over the last 5 years the market has been focused on promoting its products to consumers with a combination of value-added loyalty driving promotions, impactful signage in stores and offering shoppers competitive prices. In more recent times, the UK recession has made consumers reassess their budgetary constraints and their food waste. The versatile and filling nature of many bakery products has been ideal to helping consumers be more economical when managing their food shopping (especially families). Bakery remains an essential part of most consumer diets, with virtually every household buying into it. Consumer trends Consumption trends in bakery are largely driven by external factors that are common across most food categories. These can be broken down into 4 main areas: - a) Changes in the UK population b) Concerns over healthy eating c) The need for convenience d) The desire for variety and increased awareness of other cuisines a) Changes in the UK population In terms of the UK population there have been 3 main changes: 1. There has been significant growth in the proportion of single and two person households. The Office for National Statistics (ONS) predicts that two-thirds of the overall projected increase in households in England by 2031 will come from one person households #. This has driven a need for smaller pack sizes and single serve portions, which has been aided by the 2009 deregulation of prescribed bread weights. Since then the bread category has seen a number of new smaller weight loaves launched. 2. The changing ethnic mix of the UK population means that dietary restrictions are becoming increasingly important. 3. We have an ageing population; ONS project that by per cent of households will be headed by those aged 65 or over #. This, along with the rise in smaller households, has driven interest in smaller loaves, as well as healthier products. # Source: ONS Households Projections to 2031 Report (Mar 2009) Oct 2013

4 b) Concerns over healthy eating Health issues are seldom out of the press leading to an increased consumer focus on nutrition, digestion, allergies, obesity and many other health related topics. Bakery manufacturers have been proactive in addressing consumer demand for healthier products, driving innovation in positive health, dietary and organic products and tackling issues through initiatives such as lowering salt levels in bread and introducing bakery snacks that are lower in fat. After the recession in 2008/9 the growth of health as a purchase driver halted, as budgetary pressures & practical concerns became more important to consumers. Today consumption for health reasons accounts for nearly 16% of bakery consumption occasions. c) The need for convenience Convenience is an important purchase driver. Many consumers seek out snackingon-the-go solutions, meal replacements and easy preparation meal solutions. With toasting as the number one snack preparation method and sandwiches dominating lunchboxes, Bakery has been well positioned to take advantage of this trend. d) The desire for variety and increased awareness of other cuisines Travel and exposure to other cuisines is driving an internationalisation of consumer tastes, fuelling the growth of continental and ethnic products, and especially sandwich alternative products such as wraps, bagels, pittas and new thin rolls which have been introduced from the USA in the last couple of years. Bakery outlook Due to the versatility and widespread appeal of bakery products, the outlook for Bakery is strong. Although the bread sector is a mature category with some shrinkage in volume, total bakery category value growth is coming through from manufacturers innovating and consumers diversifying their purchase repertoire. Along with strong growth from the more dynamic categories of Bakery Snacks and Breads of the World, this creates a strong platform for future value growth in this market. 3. Bread Category definition and key sectors Despite competition from newer and faster growing bakery categories, bread remains the staple item in the UK diet. Bread is an excellent source of carbohydrate, energy, vitamins (especially B vitamins), protein and calcium; white bread is a major source of calcium in the diet. Bread is also one of the nation s main sources of fibre. Bread also makes an excellent carrier for other nutritious ingredients e.g. seeds Oct 2013

5 Bread is purchased by 99% of households in the UK and this figure has remained broadly static for several years. The average UK household buys just over 70 loaves per year and spends an average of This works out at an average of 1.03 per loaf (Source: Kantar WorldPanel). In common with other food markets, more bread is being sold for consumption outside of the home. As with the other bakery categories, the bread category can be split into 2 areas: 1. Wrapped Sliced Bread is baked by plant bakeries and is the biggest sector. Latest retail market figures indicate that plant Bread accounts for approximately 89% of value sales of the bread category. 2. ISB (in-store Bakery) Bread is bread that is baked in-store. There are 2 methods for ISBs: Scratch Bakery using raw ingredients Bake Off, a method using dough which is part-baked and delivered as ambient or frozen, to be finished off in store. Most major grocery stores have an in-store bakery and they can also be found in small grocers, butchers and other small shops, garage forecourts and restaurants. Wrapped Sliced Bread and ISB Bread have different roles in the market. o ISB Bread has a shorter shelf life, is generally crusty, is more of a treat product and is more likely to be consumed at weekends. o Wrapped Sliced Bread is more of an everyday purchase, with a longer shelf life, typically 5 to 6 days. The pre-sliced format offers greater convenience for consumers. NB Following the removal of the UK derogation from European rules on nominal quantities in April 2009, bread sold in the UK can now be any weight as long as it is clearly labelled. Previously it had to be sold in multiples of 400g (or below 300g). History and context of Bread within Bakery Bread has been a staple food for humans since 7000BC and there are now more than 200 varieties of bread sold in the UK. Between 1950 and 1980 bread volume declined as a result of changing eating habits and growing competition from a wide range of new foods from around the world. In the 1980s there was some stabilisation to this decline and by the early 1990s sales started to increase again due to increased consumer awareness of the health benefits of bread and increased variety on offer. In the mid 1990s there was another short downward spell. In the early 2000s, low carb and fad diets spelt a downward period in volume sales. There was a brief revival as people returned to bread but in the last 10 years volumes have once again shrunk, largely due to the increased popularity of alternative bakery products within the Bakery Snacks & Breads of the World categories, such as Wraps, Pitta bread, Bagels, Croissants & Brioche to name a few Oct 2013

6 The last five years has also witnessed strong growth for free from bakery products such as gluten and wheat free breads. These products have seen double digit growth although they still account for less than 2% of bread sales. Category size and growth Total Bread 1,957,450, % 1,813,946, % Wrapped Bread 1,746,216, % 1,618,278, % ISB Bread 211,234, % 195,668, % Figure 3. Bread Category Size & Growth, 52 Weeks YoY Bread sales are worth just over 1.9bn in the past year, making it one of the largest grocery categories in the UK. Wrapped bread accounts for the vast majority of sales, accounting for 89% of products. The category is currently enjoying modest value sales growth (+1.9%), although increased price is behind the majority of this growth as volumes slip 3.1%, driven by Wrapped bread (see Figure 3). Wrapped Bread 1,746,216, % 1,618,278, % White & Healthier White 1,016,591, % 897,196, % Wholemeal & Brown 233,706, % 217,189, % Seeded & With Bits 194,410, % 142,641, % Slimming & Diet 53,399, % 67,400, % Small Loaves 248,108, % 293,849, % Figure 4. Wrapped Bread Sub-Sector Size & YoY Growth, 52 weeks Looking at Wrapped sliced bread sales by Sub-Sector, we can see that the volume decline affects the majority of sub-sectors, with some modest growth for Seeded and for smaller loaves (reflecting the consumer trends towards health, older & smaller households that we saw earlier). These two sectors are also responsible for driving value growth within the category, up 6.1% & 5.4% respectively. In absolute volume terms, White bread is driving the decline due to its sheer size within the category White & Healthier White loaves account for 55% of all bread sold and 64% of the decline in Wrapped Bread in the past year. Within this, there is some positive news as Healthier White has seen a slight increase in volume of +0.1%. This, coupled with recent price rises across the market has seen overall white bread grow 0.6% in value terms. Wholemeal and Slimming & Diet are both seeing some sales decline, with a loss in both value & unit sales. Despite being a mature market, pockets of value growth are possible due to the macro trends of health, convenience, drive to reduce food waste and the early signs of a return to premiumisation post recession Oct 2013

7 Market supply Due to the short shelf life, the majority of the bread sold in the UK is produced here. The 3 main manufacturers (Allied Bakeries, Premier Foods & Warburtons) account for nearly three-quarters of the Wrapped Sliced Bread sold. Consumer trends The versatility offered by standard white and wholemeal sliced loaves means there will always be a place for these everyday staple products at key meal times like breakfast and lunch. However, with the continued growth of personal disposable incomes and greater consumer awareness, it is likely that the markets for premium quality loaves, continental and ethnic breads will continue to grow (see section 6). Therefore, the key opportunities for market growth will be through trading consumers up to higher value products offering health, premium or convenience benefits. 4. Bakery Snacks Category definition and key sectors The Bakery Snacks market is the 2 nd largest Bakery category and includes traditional bakery products such as hot cross buns, crumpets and muffins through to more contemporary products such as brioche. The changing lifestyle trends over the last few years and the macro trend of convenience has resulted in these products being bought throughout the day as a snack although the breakfast occasion is still vital. Many of the products are purchased on impulse in store, with secondary displays and promotional offers key to drawing shopper s attention to the product ranges. Category size and growth Total Bakery Snacks 711,335, % 823,324, % Wrapped Bakery Snacks 553,084, % 578,346, % ISB Bakery Snacks 158,251, % 244,978, % Figure 5. Bakery Snacks Sales & YoY Growth, 52 weeks 711m worth of Bakery Snacks were sold in the latest year. Many Bakery Snacks are seasonal and consumed during key events e.g. Hot Cross Buns at Easter or pancakes on and around Shrove Tuesday. Again, as with bread, the majority of Bakery Snacks sold are wrapped. (See Figure 5) There are at least 30 commonly established sub-sectors within wrapped Bakery Snacks. Figure 6 details the splits and growth between the top 11 sectors (which account for over 85% of Bakery Snacks sales) Oct 2013

8 Actual Growth % Actual Growth % Wrapped Bakery Snacks 553,084, % 578,346, % Crumpets 90,648, % 126,224, % Croissants 61,600, % 52,339, % Brioche 59,899, % 43,140, % Hot Cross Buns 46,114, % 42,716, % Scones 39,472, % 38,297, % Pancakes 36,065, % 52,058, % Fruit Bread 31,153, % 26,640, % Malt Loaf 30,633, % 34,991, % Pain au Chocolat 28,546, % 23,712, % Fruit Teacakes 26,763, % 31,444, % English Muffins 20,535, % 29,112, % FIGURE 6. Wrapped Bakery Snacks Top 11 Sectors Sales & YoY Growth, 52 weeks Based on packs sold, the largest sub-sectors within wrapped Bakery Snacks are Crumpets, Croissants, Pancakes & and Hot Cross Buns. There are three key drivers to purchase; Practicality, Health and Enjoyment Consumer research shows that shoppers begin the week with good intentions with a healthy focus but as the week goes by, enjoyment drivers take over hence indulgent snacks fit the weekend profile and could pose further opportunities for NPD that can be targeted to specific consumption occasions. Consumer trends The market has been in continual growth year on year as exciting new products are launched into the marketplace and more focus is put into this area by retailers and manufacturers. In the last few years more and more shoppers have bought into the sector which is driving this growth. This sector appeals to consumers increasing demand for variety, practicality and enjoyment. There are therefore opportunities to develop more and more contemporary offerings that would fulfil consumer s snacking needs and drive heavier repertoire purchasing. 5. Rolls and Baps Category size and growth Total Rolls 497,187, % 696,924, % Wrapped Rolls 219,088, % 247,254, % ISB Rolls 278,099, % 449,670, % Figure 7. Rolls & Baps Sales & YoY Growth, 52 weeks Oct 2013

9 The Rolls and Baps category is the third largest Bakery sector and is worth just under of 500m a year. Nearly 700m packs are sold every year which is equivalent to over 1.9m packs of Rolls sold every day. (See Figure 7) The Rolls and Baps market is currently in growth, with volumes up 2% YoY driven by strong gains within the ISB market which has offset a slight decline within Wrapped Rolls. ISB baked rolls account for 65% of the packs and approximately 55% of value sales. Wrapped Rolls 219,088, % 247,254, % White 157,842, % 175,383, % Wholemeal 36,256, % 44,193, % Seeded 16,052, % 17,926, % Healthier White 6,444, % 7,650, % Flavoured 2,354, % 1,944, % Slimming & Diet 138, % 156, % Figure 8. Wrapped Rolls Sub-Sector Sales & YoY Growth 52 weeks Rolls are purchased by 90% of GB households and this has been relatively static over the last few years (the average UK household buys around 32 packs of rolls a year and spends 22.52; Source: Kantar WorldPanel). Within both Wrapped and ISB Rolls, white rolls are by far the most popular choice, accounting for over 70% of Wrapped rolls sales. Rolls and Baps usage continues to be key for the lunchtime occasion and feature as a popular choice within children s and men s lunchboxes. Rolls are predominantly used as carrier for fillings and thus are in competition with Bread usage occasions. Unlike in the Bread market, Private Label holds a majority share of the market however this has come down somewhat over the last 5 years as branded players have started to increase their presence within Rolls through innovative offerings and packaging. In the past year, Private Label now accounts for approximately 50% of Wrapped rolls sales. Rolls and Baps sales peak in the summer months as the barbeque season kicks in and also perform well around key events, for example World Cups and 2012 s Diamond Jubilee celebrations. This sector is capable of satisfying a variety of consumer needs from standard rolls ideal for preparing lunchboxes to more premium offerings that fit with the light evening meals and informal snacking occasions. Consumer trends Practicality is a key driver in this sector to fulfil consumers need for a quick and easy food carrier as part of lunch/lunchboxes throughout the year and barbeques in the summer Oct 2013

10 6. Breads of the World Category size and growth Breads of the World 469,565, % 507,340, % Wrapped BOTW 375,488, % 377,592, % ISB BOTW 94,077, % 129,748, % Figure 9. Breads of the World Sales & YoY Growth, 52 weeks Breads of the World is the smallest but fastest growing of the categories within bakery and accounts for a significant 469m of sales. The majority of these sales come from wrapped products (75%). (See Figure 9) Looking at wrapped Breads of the World in isolation, this category is seeing strong growth of +14.4% in value sales versus the previous year. This growth is being driven by Sandwich Alternative products especially Bagels & Thin Rolls (See Figure 10) Wrapped Breads of the World 375,488, % 377,592, % Sandwich Alternatives 221,948, % 218,506, % Wraps 90,206, % 79,101, % Bagels 64,171, % 51,154, % Pitta 43,901, % 66,612, % Thin Rolls 23,669, % 21,637, % Meal Accompaniments 84,319, % 101,027, % Part Bake 52,739, % 63,087, % Naan 31,580, % 37,939, % All Other (Continental & Speciality breads) 69,220, % 58,057, % Figure 10. Wrapped Breads of the World Sector Sales & YoY Growth, 52 weeks Consumer trends 84% of all GB households have bought at least one type of Breads of the World product illustrating how high market penetration is for this category. Volume growth is being driven through shoppers purchasing products more often, with the average household buying 16 times a year, up 3.6% on a year ago. Increased awareness of new product types through travel and TV cookery shows coupled with consumers desire to experiment with new varieties of taste are helping to grow this category, which is also benefitting from new product innovation. We also see some evidence of consumers switching into this area from bread as they search for more interesting alternatives to a sandwich to liven up lunch times. The versatility of certain products such as wraps also take away the need for specific meal occasions and should ensure continued growth potential in this area. Source (unless otherwise stated): All Plant Wrapped products data source: Nielsen Total Coverage 52w/e 10th August 2013 All ISB In-store Bakery products data source: Kantar Worldpanel 52w/e 7 th July Oct 2013