Bread consumption continues to fall, but more consumers are choo-sing branded products, premium loaves and speciality breads, says a new Mintel Bread report.

The report shows the decline in bread sales has accelerated (-14% since 2001) to 1.8 million tonnes, while the market grew 14% in value, or 9% in real terms, to £2.1bn in 2006. Mintel forecasts slower volume decline by 2011 of about 9%, while it predicts that the category will grow in value by 11% in the next five years, to reach £2.4bn.

This will be fuelled by a continued rise in the popularity of premium bread products and a decline in economy and standard bread.

The success of the premium over the standard loaf has bene-fited branded manufacturers as it has helped reduce own-label domination of the sliced bread market, Mintel says.

The growth in consumer demand for premium and speciality products still has momentum and NPD in this area has the potential to add value to the market, says Mintel. But increasing costs and product price rises may curtail demand.

Price rises in wheat flour - and energy in particular - are being passed onto consumers and Defra estimates that the price of bread-making wheat rose by 10.7% during the 12 months to August 2006. At current prices, the average retail price paid per kilogram of bread has increased by 34% over five years, the report says.

Mintel has predicted an even more competitive 2007 between the three leading producers, with Allied Bakeries planning a return to strength of the Kingsmill brand and, potentially, more activity from own-label. This is likely to be fought with NPD and promotions, and could have an effect on prices.

Meanwhile, the issue of adding folic acid to loaves is set to remain a hot topic as some bakeries fear that export sales may be affected if they are forced to fortify flour, says the report. The Food Standards Agency will make its recommendation in May.