The bakery sector has become more unpredictable, with successful firms likely to slip quickly from being ’winners’ to being ’losers’, according to new research from business analyst Plimsoll.
The research company has divided the 960 bakery sector companies surveyed into ’winners’, ’losers’, ’chasers’ and ’sleepers’ on the basis of their financial strength.
Chasers are succeeding, but jeopardising their financial strength, and ’sleepers’ are missing out on new opportunities but are safe financially.
The bakery sector’s large number of ’chasers’ - 275 out of 960 surveyed - indicated a high level of confidence among bakery sector firms, Plimsoll’s senior analyst David Pattison told British Baker.
However, the sales growth that these chasers could achieve by investing was probably only sustainable for a couple of years, he said.
He warned that with many bakery products being a discretionary purchase, any slow-down in the economy could mean problems.
In particular, the good profits that sleepers were making despite falling sales were unsustainable, said Pattison: "The risk is in the long term." Sleepers were often family-owned, he added.
Pattison said that Plimsoll’s 2006 analysis of 960 bakery companies, which he claimed included more than 90% of the sector and included ingredients suppliers, independent bakers and big chains, found "remarkable inconsistency in the companies’ commercial and financial behaviour".
Many companies had apparently changed their strategy since the last such survey a year ago, said Pattison. "What our analysis highlights this time is the speed at which strategies change."
Plimsoll’s winners, losers, chasers and sleepers categories were roughly equal in size. Of the 283 winners in 2005, only 139 kept their position this year, although 117 of last year’s losers were once again losers.