Frost + Sullivan: Health trends drive bakery industry

London / UK. (fs) The multi-billion food and beverage industry is comprised of several markets, including; bakery, beverage, confectionery, dairy, processed foods and others. According to market analysts from Frost + Sullivan, the food and beverage industry is primarily driven by consumer health trends. Presently, the food and beverage industry is in a dynamic phase, marked by a high degree of competition. As product development within the food and beverage market moves towards a focus on health and nutrition, the growth and development of food manufacturers in the market depends on having prudent strategies in place, which can be applied globally. In effect, this has created a highly competitive market place, which fosters growth of participants with a clear vision of «growing with their customers».

The Bakery industry is an important segment within the European food and beverage industry. The major product markets within this industry include bread, morning goods, cakes + pastries and biscuits. Manufacturer penetration is high within the European bakery industry is the reason for the ongoing consolidation. Furthermore, the considerable strength of retailers in the market has pressurized and greatly reduced the profit margins of European bakery manufacturers. Though the nature of the industry offers limited scope for growth, changing consumer trends have recently been very important in the bakery industry, which has resulted in a number of potential growth opportunities for manufacturers. Increasing consumer demands for healthy, convenient and tasty food has stimulated the bakery manufacturers to differentiate and innovate baked products, in order to capitalise on these trends.

Health

Consumers are increasingly concerned about their health and are well aware of the relationship between nutritious food and optimal health. Various concerns have caused consumers to monitor their dietary habits closely. The growing media coverage on health, the rising incidence of health conditions (obesity, diabetes and cardiac problems), concerns over physical appearance, changing lifestyle and also soaring costs of healthcare have all contributed to the demand for healthier bakery products. In addition, the aging baby boomer population has had a specific effect in increasing the demand for healthy foods. Some popular trends in the market are the introduction of low/light, functional, natural and organic products, as described below:

• Low / Light Bakery Products: These are bakery products with reduced fat and carbohydrates. With the growing incidence of obesity and popularity of diets such as the Atkins diet; low calorie foods have gained immense popularity. Capitalising on this trend, manufacturers are developing products, with smaller portion sizes. Wholemeal, multigrain and other such products are now gaining a strong popularity and also support this healthy product development trend through the provision of added fibre.
• Functional Bakery Products: In recent years, enhancement of the nutritional profile in bakery products is a key trend that has gained a great deal of momentum. Manufacturers are also trying to enhance the nutritional value of traditional bakery products through the addition of functional ingredients, such as omega-3, multigrain, prebiotics, multivitamins and phytosterols.
• Natural and Organic Bakery Products: Increasing health awareness and concern over the consumption of artificial ingredients has fuelled the demand for natural products. Bakery products that contain all natural ingredients are likely to thrive in this competitive market. Organic bakery is yet another category gaining impetus in recent times, and the products are clearly labelled to draw attention to their organic nature. Outlet markets have also diversified into regional food stores and health food stores, in addition to supermarkets.

Convenience

Convenience has emerged into a critical factor determining product acceptance. Convenience foods are necessary in the market because of the contributing factors of changing eating habits and busy lifestyles, where the pressures on time availability has resulted in increased on-the-go consumption. Also, the growing demand towards consumption of healthy snacks has increased the demand for convenience products with combined health benefits and good quality. In response to this trend, bakery manufacturers have launched products with single portions and smaller packs. The convenience trend has also increased consumer interest in easy to prepare bake-off products, where part-baked or frozen dough is used. With the hectic lifestyle and time constraints, bake-off products offer consumers the benefit of ease of preparation.

Pleasure

In addition to healthier products, consumers also are purchasing products that satisfy their taste buds. The taste enjoyment factor is vital in the marketplace, as the large range in bakery products available provides a wide range in consumer choice. With lifestyles becoming increasingly stressful, consumers may indulge in food for comfort eating purposes. On-site manufacturing of bakery products in bakeries and supermarkets directly contributes to this trend, as it is well known that the smell of freshly baked breads and other products is a strong motivational factor in subsequent purchases. Indulgence/luxury products are becoming more pronounced as a key trend in the bakery industry. Consumers increasingly seek for premium, gourmet and exotic products to satisfy their desire to indulge. Breads such as naan are increasingly accepted in foreign markets, reflecting the increasing globalization of products in world markets. Premium bakery products offer superior taste experience and are usually rich in fat and calories. Cakes, pastries and biscuits are the typical indulgent products within the bakery sector, and their desirability means that products such as pain au chocolat and Danish pastries have crossed regional boundaries inside Europe.

Opportunities for Ingredient Manufacturers

In addition to propelling the bakery industry, these consumer trends have also opened up opportunities for the ingredients manufacturers. The growing health trend in the bakery market has encouraged bakery manufacturers to incorporate ingredients with superior quality properties. For example, consumer concerns in the usage of trans-fats has increased the demands for trans-fat free emulsifiers such as Nutrisoft 55. The increased skepticism over the fat contents of products has paved the way for enzyme innovations such as CakeZyme that reduce the use of fat. Salt reduction is another category increasing in importance, in the wake of consumer concern over high salt intake, and products such as Sensarite Bsalt have now been developed. Such innovative and value-added ingredients are superior and are well-received by the bakery manufacturers in the industry.

Conclusion

The dynamic consumer trends are likely to drive growth in the European bakery industry. Despite the maturity of this industry, the market drive towards consumer health trends will play a pivotal role in developing and sustaining success in the bakery industry. The onus today is on the speed and versatility in addressing consumer demands. Product identity and differentiation are focal interest points. Branding is now a common phenomenon to enhance product identity. The successes of an ingredient manufacturer in catering to such a mature industry hinges on its ability to not only innovate, but also to sustain this innovation through the provision of value-added support in other areas such as product development and positioning.

Source: Frost + Sullivan, founded in 1961, has 26 global offices with more than 1.500 industry consultants, market research analysts, technology analysts and economists. The company´s mission is to research and analyze new market opportunities for corporate growth. Frost + Sullivan is the world leader in growth consulting and the integrated areas of technology research, market research, economic research, corporate best practices, training, customer research, competitive intelligence and corporate strategy.