As consumers’ lifestyles are changing, their consumption habits follow suit, influencing 2020 food trends – bakery included. The UK is set to drive growth in Western Europe and is likely to be followed by the Nordic countries, Euromonitor International research shows.
By David Ingemar Hedin, consultant, Euromonitor International
Baked goods are poised to return to growth in Western Europe, a shift led by consumption patterns in the UK. As consumers are turning away from previously popular low-carb diets, premium craft baked goods are on shopping lists, with demands for new natural food additions that include seeds, ancient grains, or legumes. To meet this trend in the UK, Allied Bakeries’ Kingsmill has launched a white bread with high-fiber claims, which also includes added vitamins and minerals.
Similar shifts indicate this phenomenon is occurring in the Nordic countries, although the recovery here is yet to show. At the same time, research on gluten-free diets has recently been published in the media in the UK and in the Nordics, results suggesting links between this diet and cancer due to higher rice intake – which naturally contains arsenic. Consumers are also considering the association between gluten-free diets and a higher risk of type 2 diabetes.
Growth for unpackaged bread is yet to mature in the following years, while growth in the bake-off unpackaged bread segment has long impacted Danish packaged bread. Meanwhile, traditional rye bread, a staple for school lunch sandwiches, continues to decline. Danish bakeries, therefore, should follow the example of Warburtons and Premier Foods, which are using health-positioned innovation and flatbread to build on the momentum that consumers are once again interested in health benefits of bread.
Turkey, Spain, and Italy will likely remain on a declining path in 2020 due to a negative bread perception. Some consumers link high bread intake with poor digestion and weight gain, which leads them to avoid it. Bakeries in these countries can benefit from strategies employed in the Nordics and the media narrative generated there, since the reasonings behind consumers’ turning away from bread are very much similar.
Income does not significantly affect preferred food attributes, according to Euromonitor International data. There is a slight overrepresentation of high earners preferring organic food, but that follows from a higher price point.
Sustainability is an important factor in new consumer priorities, including foodstuff purchases; however, it’s interestingly related to their age groups. Consumers mainly see meat and dairy as the culprits of climate change within food. Therefore, bread manufacturers may feel they avoid scrutiny. However, low category focus on sustainability is an opportunity to stand out from the competition and build long-term trust with a wide consumer base.
Our 2019 survey results for Europe saw a majority of 60,455 respondents agree or strongly agree with the statement “I try to have a positive impact on the environment through my everyday actions”. When analyzing the data, we could see an overrepresentation of women to men (61% to 54%) and of Baby Boomers to younger generations (64%, Generation X 58%, Y 53%, Z 44%). The younger the respondents, the more likely they were to disagree or strongly disagree with that statement. Sustainability then is presumably a way to connect with grocery decision-makers (mostly women) in purchase strong households (income tends to increase with age).
We see the occasional startup using this lack of sustainability focus in baked goods as an argument to get into retail, especially if that is a positioning that the retailer is seeking for itself. It should not be overestimated. Being sustainable is not the same as being successful and reaching par will not win new customers. To really catch consumer interest there needs also to be a firm focus on the core added value of the product in communication.
Packaged flat bread is set to earn a bigger market share over its unpackaged correspondent, in Eastern Europe, where it will grow by 7.7% in the forecast period 2019-2024, while the latter will only expand its volume sales by 2% in this timeframe. By comparison, Western Europe sees an important growth in popularity of packaged flat bread, which will see a 20% volume increase through to 2024; unpackaged flat bread is not among favorites but steadily grows at 3.7%.
Packaged leavened bread is close to a standstill all over Europe; while it is set to grow by 1.9% in the packaged segment, the unpackaged counterpart sees a negative evolution of -1% in Eastern Europe. Meanwhile, in Western Europe, it registers a decline of -0.3% for the packaged segment and a growth of 3.1% for unpackaged leavened bread.
The following five years are hot for frozen baked goods in Eastern Europe, with the highest growth of all bakery product categories, at 38.9% – which translates into a CAGR rate of 6.8%. Western Europe’s markets are frozen-food mature but will still enjoy a growth of 6.7% in volume over the forecast period.
Table 1: Volume growth for bakery goods in Europe
|Category||2019 – 2024 % – Eastern Europe||2019 – 2024 % – Western Europe|
|Packaged Flat Bread||7.7||20.7|
|Unpackaged Flat Bread||2.0||3.7|
|Packaged Leavened Bread||1.9||-0.3|
|Unpackaged Leavened Bread||-1.0||3.1|
|Frozen Baked Goods||38.9||6.7|
Source: Euromonitor International
Opportunities for Growth
The Middle East and Africa will see the biggest volume growth for the forecast period. The significant growth in sales anticipated here is driven by the overall population growth. Bread is often subsidized and is perceived as an absolute staple for meals as well as snacks. The Middle East and North Africa are the only regions where the consumption of flat bread surpasses that of leavened bread. Two of the most common varieties are khubz and chapatti, which are eaten as main dishes.
Bread with novel ingredients make an interesting segment but still a niche, with only added seeds being mainstream products. Improving bread’s positioning by adding novel ingredients is a hot topic in the business, as these ingredients help improve the products’ nutritional profile, alter the texture and color, make the bite juicier and add a hue of novelty for experience seekers. In regions where artisanal bread is popular due to freshness or price, package bread needs to optimally leverage its ability to stand out through the messages and information it carries on its packaging. The list of novel ingredients that can be added is long and includes anything from carrot to insects, squid ink, cinnamon, red wine or plant proteins, nuts dried fruit, olives, avocado, basil, cheese, kefir, and sourdough. There have been several successful introductions, although none has yet left a significant lasting impact. According to our tactical tool VIA, looking at online assortments of bread in 40 markets, these products are still a niche, with much potential remaining.
Northern European consumers are opening up to reconsidering the value of bread as a healthy component of a balanced diet. To seize the shift in consumer attitude, packaged bread companies need to communicate added health value on the packaging and in promotion campaigns. The EU-approved list of 222 health claims is the ultimate inspiration guide for allowed claims – wherein many minerals and vitamins, added naturally or by fortification, can be associated with communicable health benefits.
The challenge for product managers is to offer retailers new positionings and formulations that make it easy to present bread as a new and interesting assortment to consumers.