Heavy discounting of everyday bakery products in North American and Western European supermarkets has motivated bakery manufacturers to develop premium products that command better margins - a trend that will help the global bakery market grow to a value of $407bn (£204bn) by 2010.

According to a new report on the world bakery market from US research company Global Industry Analysts (GIA), major multiple grocers throughout Western markets have used bakery products as loss leaders to increase the volume of their overall sales in recent years. "This trend prompted bakery products manufacturers to adopt the strategies of deep price discounting in key baked goods categories, such as bread and, as a result, profit margins per unit diminished," said GIA. "To tackle this situation, manufacturers in North America and Western Europe developed new varieties of value-added products that attract premium prices."

The world bakery market will grow at just under 4% a year in the coming two years, predicted the report, with fastest growth expected to come from Asia-Pacific, at 7%.

With an estimated 2007 share of 48.15%, the bread/rolls segment forms the largest product category in the global bakery products market, but the morning goods market is forecast to witness the fastest growth of 5% a year.