Outside investment need for bread, says analyst

13 August, 2015

The wrapped bread market needs outside investors, according to a top analyst, as sales decline continues within the sector.

UK bread sales have fallen by 5% in value terms over 2014 and are forecast to decline by a further 4% by the end of 2015, according to market researcher Euromonitor International.

Pinar Hosafci, packaged food analyst for the research firm, dubbed this the biggest dip the category has seen over the last decade, and said while innovation may boost sales, the key to recovering profits could be in private investors.

She explained: “Packaged bread is no longer the ultimate staple of British consumers. The shift towards higher-protein products and lower carbohydrates, along with revival of fresh artisan variants, poses a growing problem for packaged bread manufacturers, which are battling it out for retailer space and consumer expenditure. While innovations like sandwich thins, wraps and gluten-free might help to reinvigorate some of the foregone sales, searching for outside investors, notably private equity is perhaps the best solution for a timely recovery of companies’ profits.”

Euromonitor also predicted that the gluten-free bread category would grow 25% to £102m in 2015. While this is an impressive growth rate, Hosafci said this was still unlikely to solve bread manufacturers’ woes. She continued: “Gluten-free bread accounts for only 3% of total bread sales while boasting four times the unit price of an average loaf. As long as these high prices persist, it is naïve to assume that gluten-free alone will reverse bread’s overall decline.”

Price cuts have continued to hit bread loaves, with Tesco cutting the price of an 800g wholemeal loaf from 90p to 75p, while Asda has reduced the price of its private-label wholemeal loaf from 85p to 79p and introduced the Smart Price loaf at 40p.  

According to Hosafci, this has helped drive the slump in bread sales, as retailers have taken 15p off the average price of a loaf of bread. 





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