The Bakery Industry and the Consumer Trends

Today, the World Bakery Market is estimated to be worth USD 407 billion. It has grown

at a CAGR of 3.93% over a last decade. Asia-Pacific is the fastest growing region with a

CAGR of 6.93 %. With the increased emphasis on snack foods, there has been a steady

rise in single serve portions. This trend is evident in the baked goods such as bread, rolls,

pastries and doughnuts, which have seen a growth of about 3 – 4 % per annum. Another

trend worth mentioning is the growing industrialization in the world bakery market, with

developed countries, barring European countries, seeing a steady swing away from

artisan bakers and towards more wrapped and specialty products in the categories like

breads, cakes and biscuits, which have now become an important fixture in modern retail

outlets. As a result of this, many industrial bakery firms now feature prominently within

the global food industry and the largest amongst them generate bakery sales of as much

as USD 5 billion a year. Yet one more trend, which is making waves in the advanced

U.S. market, is a growing preference for products providing health, convenience and

indulgence. Bread, staple diet of most of the U.S. population is an example of a baked

food that has witnessed significant innovations in the recent past. Most of the innovations

in this category were focused upon the development of healthy or functional variants

such as natural, functional, light or low carb and organic breads. For example, an organic

bread product in the U.S. enriched with green tea and goji berries (Goji has a very high

antioxidant level and is riddled with trace minerals and nutrients), is marketed for its high

antioxidant properties and healthful fiber and wholegrain content. Other innovations are a

light multigrain bread enriched with Omega 3 and linseed; a white bread with the

nutritional value of a wholemeal; a multigrain loaf with Inulin; and a special heart-health

supporting bread. Indulgence categories like cakes and pastries also displayed innovation

and differentiation with a mix of sophisticated and ethnic flavors as well as healthy

variants such as low/light, fat-free and sugar-free products.

In India, there are 85,000 bakery units, of which 75,000 operate in unorganized sector

occupying 65% of the market share. The per capita consumption of bakery products as it

stands today is 1-2 kg per annum, which compares very low with that in the advanced

countries, which is 10-50 kg per annum. The urban areas hog a major share of the Indian

Bakery, comprising 77.5 % of the total market, owing to 2 vital factors – rising

disposable incomes and time constraints in the working population residing in these

areas. The Indian Bakery Market is estimated to be worth Rs. 6,900 Cr., growing at a

healthy CAGR of 7 % per annum. Out of this bread and biscuits hold about 82% of the

share. The major players in these segments are Britannia, Parle, Bakeman, ITC Foods

Ltd, Surya Food and Agro Pvt. Ltd and HUL and the major brands are Britannia, Parle,

Bakeman, Priya Gold, Elite, Cremica, Dukes, Anupam and Horlicks. Another segment

worth mentioning is Cakes and Pastries, which is dominated by Monginis, a Cake brand

based at Mumbai. Monginis is more than 100 years old brand belonging to 2 Italian

brothers by the name Mongini. It was taken over by Khorakiwala family in 1960s. The

brand has over 500 exclusive cake shop franchisees spread across 37 cities in India.

These shops are catered to by 14 manufacturing facilities. Monginis also has packaged

cakes and cookies, which are sold through a well structured network of Super Stockists

and Stockists, catering to over 15,000 retail outlets across India. It also has ecommerce

portal selling cakes online. It basically caters to a gifting market, wherein if someone

wants to gift a cake to his / her near and dear one, all he / she has to do is to book it on

www.monginis.net and the cake gets delivered.

Some of the major consumer trends in the Indian Bakery Market worth mentioning are,

• With globalization and cultural integration, eating habits of the discerning urban

and rural consumer are fast changing. Changing consumerism is witnessing

Product innovations and retail formats are going to be great platforms for product

push in the near future.

• Bakery joints are slowly becoming popular hangout places. A typical trend is for a

variety of bakery snacks, top quality products and value for money.

• The present day consumer looks for new bakery products, better appeal, taste and

convenience from bakery foods. With a population of 1 billion plus, India has the

largest middle-income consumers, who demand varieties in food, clothing,

transport and improved living standards, also wish to eat out. Another fastest

growing segment in India, is Bakery Cafes and Restaurants, who cater fast foods.

• The bakery industry has become more organized in the recent past. It is following

the path of restaurants - as the industry has become more organized, chain

restaurants have taken over the market and standalone restaurants have found it

really tough to survive. Don’t be surprised to find a similar trend in the near future

in the bakery sector as well.

• The focus is now going to be on speed and versatility while addressing consumer

demands.

• Consumers are increasingly concerned about their health and are well aware of

the relationship between nutritious food and optimal health. Various concerns

have caused consumers to demand for healthier bakery products. The concerns

like, the growing media coverage on health, the rising incidence of health

conditions (obesity, diabetes and cardiac problems), concerns over physical

appearance, changing lifestyle and also soaring costs of healthcare. Some popular

trends in the market are the introduction of low/light, functional, natural and

organic products, as described below:

� Low / light bakery products are bakery products with reduced fat and

carbohydrates. With the growing incidence of obesity and popularity of

diets such as the Atkins diet; low calorie foods have gained immense

popularity.

� Wholemeal, multigrain and other such products are now gaining a strong

popularity and also support this healthy product development trend

through the provision of added fibre.

� In recent years, enhancement of the nutritional profile in bakery products

is a key trend that has gained a great deal of momentum. Manufacturers

are also trying to enhance the nutritional value of traditional bakery

products through the addition of functional ingredients, such as omega-3,

multigrain, probiotics, multivitamins and phytosterols.

� Increasing health awareness and concern over the consumption of artificial

ingredients has fuelled the demand for natural and organic bakery

products.

• In addition to healthier products, consumers also are purchasing products that

satisfy their taste buds. The taste enjoyment factor is vital in the marketplace, as

the large range in bakery products available provides a wide range in consumer

choice. With lifestyles becoming increasingly stressful, consumers may indulge in

food for comfort. On-site manufacturing of bakery products in bakeries and

supermarkets directly contributes to this trend, as it is well known that the smell

of freshly baked breads and other products is a strong motivational factor in

subsequent purchases.

• Indulgence/luxury products are becoming more pronounced as a key trend in the

bakery industry. Consumers increasingly seek for premium, gourmet and exotic

products to satisfy their desire to indulge. Cakes, pastries and biscuits are the

typical indulgent products within the bakery sector.

The future of bakery industry in India is indeed bright, as 70 - 80% of the market is

still being served by the unorganized segments of the market.