The growth in supermarket convenience-store formats is paving the way for more impulse and top-up bake-off and finished goods. However, heavy promotions could devalue the category and, as inevitably happens when new launches occur, long-established key products become commoditised.

"The past few years have seen quite a lot of promotional activity in retail bakery, creating a danger of commoditising the sector," confirms Kate Raison, marketing director at bake-off supplier Bakehouse. "It’s more important than ever that we introduce products at the more premium end of the market, and consumers seem comfortable with that."

This could lead to in-store bakery (ISB) ranges being segmented in the same way that other bakery categories have been tiered, with super-premium lines that generate great visual appeal sitting alongside core lines.

Raison says: "To drive category growth, it’s important to attract a younger demographic while maintaining existing consumers. Premiumisation is crucial to maintaining category health in the long term." She notes that Tesco has already established a premium tier of ISB products, with its cinnamon rolls, cookies, muffins and Belgian buns. Similarly, Waitrose and M&S are selling individual pastries, priced up to 99p.

Meanwhile, fewer than a quarter of consumers buy Danish pastries and penetration is in moderate growth, offering an opportunity to attract new consumers to the category. For example, the Danish pastry market is growing by 5.5% year-on-year in value terms, with market growth driven by rising pack prices and more frequent purchases.

Bake-off croissants have also enjoyed growth over the past year, outstripping a declining plant-produced offer. According to TNS figures [52 w/e 20 May 2007], the ISB sector is racing ahead at nearly 17% growth, while plant declined by more than 3%. The latter still makes up the vast majority of take-home croissant sales, however, at 84%.

Raison says the boost is due to the suitability of the product to the growth in the supermarkets’ convenience store spin-offs and are therefore prominently featured.

Mini-indulgences lead the way

Elsewhere, in the food-to-go sector, savoury pastry sales dropped across the board, with only sausage rolls seeing a year-on-year rise, alongside a rapidly expanding non-Cornish pasty market.

On the other hand, sweet-finished goods such as muffins, cookies and brownies all enjoyed growth, with the latter seeing the biggest percentage rise at 36%, according to market analyst Nielsen [52 w/e 14 July 2007].

Within the cake market, moist, American-style bakery products are driving the category. The small cake market is showing huge growth, up 39.8% year-on-year, fuelled by increased snacking and families eating as individuals rather than as a unit.

Growth in thaw-and-serve, which figures most prominently in the ISB sector, is outstripping the ambient cake sector. This is valued at £395m and growing at 11% year-on-year (Nielsen, December 2006). Within that sector, many newer and more cosmopolitan products are driving growth, such as brownies and muffins, while multipacks of mini items have boosted the category over the past year.

"These mini indulgences also indicate the consumer’s need for everyday treats," says Maggie Dagostino, marketing director of Dawn Foods. "People would rather have something small and delicious than something large and disappointing. These products command a premium price, so they need to deliver on taste, finish and authenticity. Many ISBs have increased their ranges over the past year and consumers now experience much more of a ’cake shop’ feel in the store, with a huge variety of products on offer."

Overall, it’s obvious that freshness, quality, variety and breadth of range are key. To keep pace, stores may need to bring in thaw-and-sell to tally with 24-hour trading and compensate for a decreasing skills base within the industry.n

Sweet pastry/Danish take-home market

Category LevelYoY change

Penetration 26.3%+1.6%

Volume+ 3.0%

Expenditure £31.7m+5.5%

Price/pack 73p+2.4%

Croissant take-home market

Category LevelYoY change

Penetration 29.6% +0.2%


Price/pack 89p-0.8%

Source: TNS Worldpanel 52 w/e 20 May 2007


=== Four key trends in the sector ===

1 Greater use of super-fruits and organic/healthy ingredients, allied to kitchen cupboard simplicity and freshness

2 Greater awareness of ethics and sourcing, although this trend needs to be set in the context of a category where labelling doesn’t feature prominently

3 Greater use of opportunities to communicate messages via point of sale

4 Changes in the price of wheat, butter and other dairy products - this will remain a major issue for retailers and manufacturers in the coming year