British consumers are tucking into more breakfast cereals and smoothies. At the same time, the supply of bread from plant bakeries to the retail trade, including branded lines, own-label goods and bake-off products for in-store and craft bakeries, has been increasing by 4% per annum in value terms. Brand investment and innovation by the leading brands is also fuelling market growth, to the detriment of own-label.
However, there is now less tendency for consumers to buy loaves on a daily basis; almost half the adult population claims not to consume a lot of loaves, according to Mintel’s latest category report (see British Baker, 23 March, pg 3), which includes retail sales of plant bread, not including morning goods.
Heavy users (once a day or more) have become medium users (two or three times a week), cutting back on their at-home bread intake - either for health reasons, because they’re choosing alternatives or eating out more.
Despite strong sales in premium white loaves, the decline in white loaves overall is responsible for much of the dip in consumption, although this is also because more consumers are buying sandwiches out-of-home. At 79%, white loaves are still the most popular type, ahead of brown (wholemeal/Granary) loaves at 67%. However, while white loaf aficionados are cutting back, brown is being eaten more frequently. The standard white sliced loaf has steadily been losing ground to the premium product and now accounts for only 39% of white loaf sales and 23% of total sales by volume.
Despite a fall in volume sales, the value market in retail for brown/wholemeal/Granary loaves has grown at 3.7% year-on-year, while speciality loaves grew by 1.8%.
Indeed, the average spend on a loaf of bread rose by more than 10% from 2004 to 2006 - an indication that consumers are increasingly willing to trade up, particularly to premium own-label loaves such as topped and ethnic variants. They also want to know more about a product’s ingredients and origins, which means the demand for organic bread in retail is growing, along with regional products.
Speciality breads are in demand, too, and popular new product areas include tear-and-share loaves, filled and topped ciabatta and focaccia, and tortillas and wraps, pitta and naan.
There is also new interest in part-baked and frozen bread formats, while the demand for the 400g loaf is increasing, although not for small-slice sizes.
While consumers want variety, they also want loaves that are better for them. Health is one of the biggest drivers in the category, which has resulted in good sales for white-plus loaves - white bread with added fibre - brown and wholemeal/wholegrain bread, and those with healthy ingredients, such as seeds, or added benefits such as Omega 3 and folic acid.
Younger people are often most keen to try speciality bread, as well as alternatives at lunchtime, such as salad, soup and sushi. This might be why there has been a slowdown in the ready-to-eat sandwich sector, while low-carb diets (a trend which is dissipating), might also be a factor. However, Britons still spend £3.5bn buying 11 billion sandwiches a year, according to research by the British Sandwich Association. Convenience and variety help to explain the sandwich market’s success, as well as the fact that, now, the price differential between making your own and buying has got smaller.
There is also a continued decline in making sandwiches at home to eat elsewhere, but this has not dented plant bakers’ sales; they saw their value share of the market increase from 75% in 2002 to 79% in 2006.
Warburtons, Hovis and Kingsmill are the three best-selling brands, with a combined market share of 57% by value, up from 49% in 2002. Through a recent extension to its number of production and distribution units, Warburtons has increased its geographical coverage and has taken first ranking among the brands. It has also captured the growing small/half loaf market and claims to sell seven in 10 of all small branded loaves.
Hovis has increased its market share, with the help of new lines such as Best of Both. However, the Kingsmill brand continues to suffer and Allied Bakeries has been relaunching its products in an attempt to reverse the decline.
But while plant bakers thrive, the 1,600 or so in-store bakeries within the grocery multiples and co-ops now account for only 16% of sales, down from 18% in 2002. They have been losing share to plant-produced bread, yet their products continue to be popular, which seems to contradict the sales trends, says Mintel. This could be because there is less focus on bread and more on rolls and other morning goods at in-store bakeries, while consumers might be put off by bread’s limited shelf life and lack of packaging or potential queues.
Craft bakers are also feeling the pinch; unable to compete on price, these 5,000 or so bakers continue to lose market share to the large retailers. Craft bakers account for a declining proportion of loaf sales, with 5% of value, but they do survive, having learnt to diversify and expand, the report states.
In future, the continuing fall in loaf consumption, combined with increasing production costs and hence product prices, could inhibit demand for higher-priced premium and branded products, says Mintel.
But the research company believes there is no reason to forecast a drastic drop in volumes. The challenge will be to get more people buying loaves in-store more often, by driving the trend towards different breads for different occasions. n