Globally speaking, the future of baking is … China. That shouldn’t be a surprise. What also emerges from a look at worldwide trends is the similarity of bakery and snack market conditions in most developed countries. In still-developing regions, it’s another story.
Gluten-free, a category with deep roots in Italy, is now sprouting in France and the rest of Europe, while convenience rules the roost at breakfast just about everywhere. Single-serve packaging styles are proliferating all across the globe as well. And in most developed markets, sliced pan bread continues its long, slow twilight retreat.
American bakers won’t find the top-line items in most other countries to be all that different, but each market has its own wrinkles.
It’s a small world
Per capita bread consumption declined or stagnated during 2012-13 in 65 of the 80 markets tracked by Euromonitor International, London. “There is a flatter level of consumption in America and Western Europe,” said Lamine Lahouasnia, Euromonitor’s head of packaged food. “People are eating less bread.”
“The second challenge is what is happening in the Middle East and Africa, but the reason is different,” he continued. “Consumption is declining because the government subsidies of wheat flour are being cut. Economic sanctions also affect baked foods in places. For example, Iran had to halve its flour subsidy.”
So, where’s the good news for bread? “Asia Pacific is a shining star, although bread is not yet an everyday product there,” Mr. Lahouasnia observed. “But even with the competing staples, interest in Western cuisine — and bread — rises every time KFC opens another store in China. And Turkey ranks No. 1 in per capita bread consumption in the world.”
There’s good news in specialty categories. “Organic and high-fiber are growing worldwide, compared with the 1% growth seen overall for baked foods,” observed Ewa Hudson, head of health and wellness, Euromonitor International. Mr. Lahouasnia added, “It’s important, however, to state that in most markets around the world, gluten-free accounts for no more than 2.5% of total sales.”
When bakers can take the value-added route, they benefit. Certain styles stand out: added-protein, ancient grains, super-grains, whole grains, high-fiber and even vegetable-supplemented items. “Manufacturers need to be value-driven rather than volume-driven,” Mr. Lahouasnia said. “They must try to get more value from the product. These trends may be difficult for the baking industry to take on, but the results will be items for which bakers can charge two and three times more.”
Younger individuals are different from their elders in their tastes in baked foods and snacks. “If anything, the younger populations are going against baked foods for reasons of diet and weight control,” Ms. Hudson said.
Consider the examples of Australia and New Zealand. Tom Kennedy, current president of the Australian Society of Baking, briefed Baking & Snack about trends there. “Over the past five-year period, the change in breads has been the significant move away from white bread and rolls, particularly pre-packaged to the artisanal, healthier and gluten-free breads and rolls,” he said. “Bread is still popular with older Australians, but younger Australians are more adventurous and looking for other options, particularly when it comes to breakfast on the move.”
Taking the BRICS road
Despite the food fight going on between Russia and most of the NATO Pact and a general slowing in China, the BRICS nations — Brazil, Russia, India, China and South Africa — possess today’s hottest economies. There’s still plenty of momentum among them.
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 US 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. “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 lb 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.
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 breads with are in high demand. There’s one blip on the radar, however: Food industry observers report high popularity for the Harvey-Banting diet, the original low-carb, high-fat diet.
Along the way
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 this 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.
“Compared to Western Europe, the growth in the Russian bakery and confectionery [pastry] market is still above average,” observed Dirk Waclawek, editor-in-chief, Backtechnik Russia, Osnabrück, Germany.
S.M. Nosenko, president, 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.
The bakery market is alive and well in Australia and New Zealand (ANZ), sprouting at or just above 5% (compound annual growth rate), reported Mr. Kennedy. Increases in bread are just slightly lower and cake a bit higher. The 2013 bakery market was estimated to be $5.5 billion. “The largest growth area is in artisan breads, which are strongly supported in the in-store bakery and retail street bakery sectors,” he said. “This is due to the consumer’s desire for authentic taste and a perceived better freshness.”
Euromonitor’s research agreed: “As a result, 2013 was the first year in which unpackaged, artisanal bread outsold packaged, industrial bread in Australia.”
Specialty goods do particularly well. “There is constant and active replacement of white breads by a number of healthier options of whole grain, variety grains, ancient grains, fruits, etc.,” Mr. Kennedy said. “And there is steady growth in Asian-style bakeries … based on the changing and growing Asian demographics in Australia, particularly in regional areas.”
Like other Western countries, Australia has a weight problem: An estimated 80% of its population is considered overweight. The concern has, however, strengthened the position of flatbread and wraps, as well as better-for-you, on-the-go breakfast options such as healthy breakfast biscuits.
Gluten-free has entered the scene in a big way. Mr. Kennedy described it as the “inspirational leader in this field,” with 21% of all 2013 new product launches makinggluten-free claims. Additionally, ANZ’s baking industry is active in voluntary salt reduction programs for packaged bread.
Although feeding the growing cafe culture in Australia means more volume for indulgent baked items such as macarons, the news isn’t so good for stand-alone pastry shops. “The growth of donut and muffin specialist shops has virtually stopped over the past five years,” Mr. Kennedy said.
Blazing healthy paths
The commercial bakery market in Japan is complex to say the least. After many years of deflation and recession, the country’s economy is improving and consumer confidence returning. Interest in healthy eating is reshaping wholesale bakery offerings, according to Chiaki Watanabe, a reporter for Panka Shinbun, Tokyo. Life expectancies are lofty: 80 years for men and 86 years for women. “This is one of the reasons that health consciousness is high in Japan,” she said.
Catering to health-conscious consumers, a leading baker succeeded in producing good-tasting bread made with bran in 2013, observing that bran is effective in retarding blood sugar increases. “Although this bread could not be said to be a smash hit, it became the center of attention with many repeat sales,” Ms. Watanabe reported. A different bakery succeeded in producing bread with a rare form of sugar that also aids in controlling blood sugar. Yet another brought out bread made with prune paste substituting for fats and oils.
Sliced white pan bread sales are slowly receding in Japan. Many supermarkets price bread as a loss-leader, but the advent of premium breads, such as Golden Bread offered in 340-g (12-oz) portions and priced at $2.50, changed this picture. “It went on the market in April last year and sold 25 million meals in six months,” Ms. Watanabe said.
Because of Japan’s legacy in rice, the government encourages more rice consumption. This opened up a new variety: rice bread. “Japanese breads are mostly made from imported wheat flours, but the price of this flour has increased substantially,” said Kiyoko Kubomura, principal, Kubomura Food Advisory Consultants, Tokyo. The preference is for springy, soft, fluffy breads, she explained. “And it must have good nutritional value, and rice bread fits this nicely.”
Rice bread is made from a mixture of wheat and rice flours and finds a good market in school lunch. Because of childhood allergies, Japanese researchers are working to produce 100% rice flour bread, omitting the wheat component altogether. “In 2010, the National Food Institute developed a 100% rice flour bun,” Ms. Kubomura said. Glutathione aids fermentation, and potato flour controls staleness and improves texture.
Bread consumption is increasing in South Korea, growing in retail sales value by 5% in 2013, according to Euromonitor. Changes in the dining habits of consumers are responsible, “Local consumers are becoming familiar with having bread at breakfast to replace their traditional meal style,” the research company reported. “And they consider cakes and pastries as more like refreshments.”
Consumers in Singapore are shifting their buying habits to favor healthy, functional baked goods such as whole grain, low-GI and gluten-free breads, although they still prefer white bread, Euromonitor noted.
Climbing health peaks
In Europe’s well-developed bakery market, gluten-free is making a strong stand. It’s huge in Italy but getting big in France, too. “Gluten-free is becoming very popular,” said Eric Kayser, artisan baker, Maison Kayser, Paris. His business is among France’s leading producers of artisan products and now operates 100 bakeries in 22 countries. “We began making certain gluten-free products in one of our shops in Paris, and it has been very popular,” he said.
“The traditional styles stay the most popular,” Mr. Kayser continued, “but today, people have begun to look for other products that they have seen elsewhere in the world. Everything is more fast-paced now. With the internet, easier travel and easier exchange of information, people can discover new trends and new products with much more ease.”
Euromonitor confirmed his experience. “There’s been a rise of gluten-free in many countries,” Ms. Hudson said. “In France, it’s showing strong growth, but Germany is a more developed market for this segment.” Italy leads the way in bakery and pasta, and one company sells 30% share of all gluten-free foods in the country.
A report from Dallas-based MarketsandMarkets pegged Europe’s gluten-free sector at about $1 billion in 2012, with France representing 14.1% of the total.
Even in Germany, the country that makes more varieties of breads than any other single nation in the world, change is happening. “In the last few years, we have seen a wave of people in developed countries such as Germany wanting natural products,” said Catherine O’Connor, senior analyst at Canadean. “Lactose, gluten and wheat have become increasingly untrendy ingredients among the health-conscious, and products free from these have seen a rise in popularity.”
Still, the average German consumes 731 bakery and cereals items per year, one of the highest among the major EU nations, Canadian noted. The most popular item, bread rolls, makes up half of the German bakery market.
Scandinavian consumers exhibit a marked taste for high-fiber products. “That subcategory is getting interest,” Ms. Hudson observed. “It’s larger than gluten-free worldwide at about 6% of the market.”
Leave it to the British to swim upstream. Rich, buttery brioche — completely absent from the commercial bakery market in Great Britain a decade ago — now ranks as the fastest-growing part of the morning goods category.
For those seeking additional insight into the ever-changing world of baking, it will be on view at the next iba, the international bakery trade fair set for Munich on Sept. 12-17, 2015.