Category Trend Analysis: Europe’s Big Bakery Markets

Bakery is among the most dynamic food sectors in the European Union (EU), strongly driven by frequent innovations and evolving consumer preferences.

By Rachit Kumar, senior consultant, food & beverages, Persistence Market Research

As Europe stays the top admirer of baked goods, bread and biscuits continue to gather traction due to maximum consumption – followed by other popular bakery products such as cakes, cookies, pastries, and pizzas. While traditional bakery has been enjoying significant sales in core European markets, manufacturers are now focusing on experimentation, innovation, and new product development (NPD), introducing a contemporary range of baked products that are whole wheat, whole grain, gluten-free, high-fiber, non-allergen, low-fat, and sugar-free. In a nutshell, Europe’s bakery is heading towards a healthier future.

Germany at the Top in Europe’s Bread Market

Of the top 10 bakery markets in the world, five are from EU. Germany has always been at the top of the list of bakery markets in Europe and ranks fifth with USD16.5bn in terms of value sales. Several opportunities are emerging for German bakery producers, including healthy bread substitutes, packaged bakery, and other new product launches. Germany will continue to be a highly competitive market owing to strong domestic production and economic food pricing. While Germany is the top bakery importer, Italy, the Netherlands, and Poland will collectively account for nearly 43% of Germany’s imports.

Italy, having registered around USD25bn in retail sales, is the sixth largest bakery market, and one of the top in Europe. Only two companies – Mondelez International Inc. and Kellogg Co. – have sold their products in Italy. France, Austria, and Germany have been the top three bakery suppliers to Italy and when combined, around 60% of the estimated market share has been accounted for by these three countries. Italy’s top bakery competitors in the EU include Germany, France, the UK, and Turkey. In terms of total bakery product sales by value, Germany and France are foreseen to outweigh Italy by the end of 2018.

Pre-packed and Oven-fresh 

Over 80% of all the products consumed in the EU are based on bread. Between 2012 and 2016, the industry’s bakery production reached from 66% to 69% of which around 32% was accounted by pre-packed products, whereas fresh finished and bake-off products contributed 19% and 15% respectively to the total revenue. However, identification of the bread as pre-packed, bake-off or fresh depends on what the part of Europe is being referred to, as there are significant variations in bakery markets of Eastern and Western Europe, and respective consumer behavior.

Pre-packed breads represent one of the most significant and focused segments in the Eastern part of Europe, primarily driven by surging demand within supermarkets. The supermarket trend is also developing prospects for sales of bake-off breads, as a number of supermarket owners are investing in their individual baking facilities. In the West part of Europe, the consumers have found a substitute for their diet and are now preferring ready meals, pizzas, frozen baked goods, and other instant foods – over breads.

Consumers, on one hand, are purchasing premium quality industrial breads and on the other hand, they are availing cheaper white bread sold on supermarket shelves. The latter has been identified to be a key factor responsible for the falling demand for artisan bakery products. Moreover, consumers nowadays are more inclined towards pre-packed, oven-fresh, bake-off, and non-perishable products – affecting the performance of artisan bakeries. However, looking at the promising pattern of fresh bread consumption in the Eastern part of Europe, bright prospects for freshly baked bread products cannot be overstated. Mass production by artisan bakers is expected to bring in a new fresh-bake wave to bakery markets in Germany, France, Italy, and Spain.

You can read more on this topic in our print magazine European Baker & Biscuit (Jul/Aug 2018)!