While current concerns strongly drive spending behaviors of price-sensitive consumers, bread will increasingly be perceived as healthy again, as it champions popular ethical claims such as free of artificial preservatives, locally-sourced, or no artificial colors. Private labels thrive, leading in several types of ethical labels.
“No Added Sugar” is the best-performing ethical label for the past three years in Western Europe, a particularly sensitive topic to the baking industry. The search for products perceived as natural has propelled “No Artificial Additives” among the top claims as well, according to Euromonitor International data. Consumers are growing reluctant of anything “artificial”: the market share paints this picture with well-performing labels that are deemed free of anything artificial, from colors, flavorings, to preservatives or sweeteners.
Private Label Rules
Private label is king across these categories, leading in several types of ethical labels, from responsible palm oil sourcing schemes, to free-range, no artificial sweeteners, locally-sourced and GMO-free. To look into opportunities for bakery products within private labels, concerning both successful channels and product ranges, a large part of the discussion has to focus on the market for bakery products post-coronavirus. Hygiene, health, affordability and home-bound-friendly will frontline consumer spending decisions.
PLMA’s new virtual show, to be soon held replacing the in-person “World of Private Label”, will highlight some inspiration and reflect the industry’s response to the pandemic. Bakery and confectionery make up an important part of the private label’s market share. Among the best performing categories are tortillas, doughs, biscuits and pre-baked goods. Held from December 1-4, the 2020 Online “World of Private Label” will be divided into designated product category show days. Products presented by PLMA’s online exhibitors will include fresh, frozen and refrigerated foods, dry grocery and beverages.
In addition, PLMA’s “Salute to Excellence” Awards highlight this year’s innovation in own-brand products, selected by industry professionals, including chefs, former retailers, academics, nutritionists, journalists, and packaging specialists. Freshly awarded 20 such acknowledgments, Germany’s retailers are a prime source of inspiration for bakers as well. Key features considered by the judges included natural and organic ingredients, environmentally conscious agriculture, responsible aquaculture, and protection of nature and preservation of the environment, PLMA announced.
Poundland is among the retailers highlighted by the organization, for adding a free-from range to its food offering in 16 stores across the UK. It will include gluten-free savory and sweet snacks, breakfast cereals, bakery products and pasta, among others. The move comes as the retailer accelerates the roll-out of its expanded chilled and frozen food offer to 60 stores, with more planned.
Within the bakery market, there is expected to be an immediate uplift in the sale of packaged versus unpackaged products given the focus on hygiene. This could already be observed, with a steep increase in the previous months, as the pandemic took hold over Europe. Private label, which has a strong presence in the unpackaged space through in-store bakeries, could see sales here decline if it cannot offer more packaged products. In the long-term, however, demand is expected to normalize.
In Belgium, the private label market share has increased slightly in volume, but decreased in value, indicating a somewhat greater price pressure. The share is highest in the categories fresh, frozen and bakery/biscuits. The strongest risers were children’s biscuit mixes.
In another example, the Dutch market share is highest in fresh, delicatessen and bakery/biscuits, with a lower share in frozen foods compared to most other countries.
Ethics and Health Make Good Ingredients
Consumer habits may shift, but they do not fundamentally change easily. According to Euromonitor International, the ethical labels with the highest retail value sales in baked goods in Western Europe in 2019 were: no artificial preservatives (EUR5.3bn), vegetarian (EUR3.4bn), locally sourced (EUR3.2bn), no artificial colors (EUR2.3bn), and vegan (EUR1.2bn). Over the last five years, there has been a stronger focus on cleaner ingredients lists and the removal of artificial ingredients, local production and health, particularly in packaged bread.
This broadly aligns with the shifts in the rest of packaged food where the continued health focus is shaping ethical label types. For example, no artificial claims are second most important in snacks after natural claims and in dairy the third, after local sourcing and vegetarian claims, Euromonitor finds.
East Meets West
Health and indulgence trends in Western Europe are more developed than in Eastern Europe. This is evident by not only the variety of products but also the variety of health and ethical claims that are being marketed on products. In Western Europe, you can find claims around responsible ingredients sourcing to organic to halal and kosher on baked goods brands. In Eastern Europe, marketing claims are largely focused on health with clean labeling, high fiber and gluten-free most prominent, according to Euromonitor.
Another factor to consider is cultural tradition around the consumption of bread and the channels in which they are typically bought. In markets such as Greece, France, Spain, Italy and Portugal, bakeries remain an important sales channel and therefore will continue to drive growth of unpackaged bread. On the other hand, in markets such as Norway, Sweden and the UK, there is a stronger reliance on packaged bread formats bought through supermarkets and discounters. Therefore, the success of products will depend on how well they can tap into existing channels and/or how well they can differentiate themselves within them.
Trishna Shah, Food & Nutrition consultant, Euromonitor International, contributed to this article.