Bread follows the BRICS road

by Laurie Gorton
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On their way to bigger economies, the BRICS nations are eating plenty of bread, according to recent research surveyed by Baking & Snack for its exclusive examination of global bakery trends in its September issue.

Brazil, Russia, India, China and South Africa bring plenty of momentum to the bakery market.

By 2018, China’s baking and cereals market will reach $47 billion, becoming the second most valuable in the world, according to Canadean, a London-based consumer goods market research firm. Only the U.S. baking market is worth more, but China is already the largest in volume.

 And there’s plenty of room for that market to grow: Per capita consumption in China is still low: 92 eating occasions annually vs. the 400-plus of Western Europe. The Chinese prefer cakes, pastries and sweet pies, a combined category that accounts for 44% of sales.

The faster pace of city life plays the key role here, with new urban dwellers seeking on-the-go products.

“Manufacturers should take advantage of this trend and produce bakery and cereal items that serve as an energy boost for busy Chinese who skipped breakfast or need a snack break at work,” said Veronika Zuhpanova, an analyst at Canadean. Single-serve and multipacks fit these needs well.

China watchers differ, but most agree that the country’s economy is slowing following the blistering pace of the past decade. Bakeries, however, are expected to see continuing double-digit growth in value sales, according to Euromonitor. The company noted the rapid expansion in bakery outlets, thus raising brand awareness and widening geographic penetration.

South Africa is the continent’s biggest economy, ranked as upper middle income by the World Bank. Bread consumption amounts to 88 lbs per capita, according to recent figures, and demand is growing. The bread industry was deregulated in 1992. In 2003, the national government mandated fortification of wheat flour with vitamin A, thiamine, riboflavin, niacin, pyridoxine, folic acid, iron and zinc.

Consumer demand now drives South Africa’s bakery market, and there’s been a decline in consumption of corn, the dietary staple of most of the native population. Bread accounts for the bulk of sales of baked goods because it continues to be a basic for most households regardless of income, according to Euromonitor. About 80% of the bread sold in South Africa is made in commercial wholesale bakeries. In more affluent areas of the country, better-for-you bread is in high demand.

There’s one blip on the South African food radar, however: Industry observers report high popularity for the Harvey-Banting diet, the original low-carb, high-fat diet first described in 1863, which some consider the great grandfather of the Atkins Diet.

Food preferences in Brazil are shifting quickly as consumers’ purchasing power increases. More sophisticated products with health-and-wellness appeal are gaining popularity.

“The goal is to eat healthier by consuming fewer calories and more functional foods,” Euromonitor recently reported.

Although Brazil’s demographics skew young, the favored bakery and snack food types are similar across all ages, according to Canadean. There are a few key marketing differences. For example, better-for-you tactics directed at parents of children emphasize nutrient fortification to support growth and development, while the messages targeting older consumers tout whole grain and fiber enrichment.

Euromonitor confirmed the double-digit projections for the bread and cake markets in India. Pushing this along is the rapid expansion of modern retail outlets across the country.

“Increasing disposable income levels of consumers, rapid urbanization, the need for convenience and lack of time in urban households helped drive demand for breads, cakes and pastries during 2013,” it said in a recent study.

New Delhi-based Niir Project Consultancy Services coupled the changes in bakery demand with improving lifestyles in India, especially with the emergence of the new middle class.

“Consumption of bakery products was not in the Indian culture; however, with changing eating habits of the people and with rising Western influence on food consumption patterns, bakery products today have got takers from all age groups,” it reported.

Fortification has entered the market, too, and it appeals to the health-conscious Indian consumer. Niir estimated the Indian baking industry will reach $7 billion in the next five years.

Bread’s image in Russia is slowly changing, noted Euromonitor, predicting a slight decline in total volume terms during 2013 as eating patterns change. This transformation comes because Russians have better incomes and voice more health concerns, leading them to alternative products. Bread is beginning to be perceived as a high-calorie product, and the trend among health-conscious consumers, as well as consumers concerned about their figures, is to eliminate it from their diets.

“All natural” is only now emerging as a food trend in Russia, according to industry observers. Granola bars are quite new to this market but are gaining traction.

Ironically, bread faces increased competition from pastries, Euromonitor reported. The trend is aided by the country’s strong tradition of drinking tea, with pastry a common accompaniment.

S.M. Nosenko, president of ASKOND, Russia’s association of the confectionery industry, confirmed that opinion. Pastry products account for 48% of the confectionery market’s 2.8 billion tons sold in 2013, he said. Despite a dip of almost 2% in 2010, Russia’s pastry market boomed 2.4 to 6.1% annually in the years following.

“The surges are caused by export share increases of 67% in the period of 2009 to 2012,” he said.
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