Markets: Room to Grow for Packaged Bread

After more than two pandemic years, packaged bread is still on the rise, while fresh bread seems to have lost its momentum. 

Up until 2019, the quasi-global preoccupation was to reduce single-use packaging, especially in plastics. Many countries were adopting reforms to reduce the amount of plastic waste generated by the food industry, which, by trade, must rely heavily on packaging. 

The COVID-19 pandemic changed everything. For fear of contamination, consumers, as well as producers and governments, favored single-use packaging again – plastic became the guarantor of food safety. More than two years into the pandemic, we know that the actual risk of food-borne transmission of COVID-19 is extremely low. How does consumer behavior reflect that and how does it affect the market?

The COVID-19 Impact

A 2021 study by research company Gira on the impact of the pandemic on the European bakery market showed that, while there was a 8% drop in overall bakery consumption in 2020, packaged products experienced over 5% growth compared to 2019. This happened for two reasons, the report says: protective packaging has given consumers reassurance but, also, in many countries, packaged bakery products have also been favored by supermarkets, “as fresh bakery counter staff have often been assigned to other departments and many in-store laboratories have closed, at least temporarily.” The clear winner in the packaged ambient products category was packaged bread, which has seen double digit growth during the first lockdown. 

Before the pandemic, packaged bread was at the center of two opposing forces: the desire for less packaging waste for environmentally-conscious consumers and the need for clear ingredient information for health-forward consumers, which could only be printed on packaging. Demand for packaged bread grew at 3.7% CAGR between 2017 and 2021, according to a Future Market Insights (FMI) study, and, with the boost brought on by the pandemic, the market is valued at USD42.4bn in 2022. 

In the United States, fresh bread also saw a record performance: per IRI, Chicago, the fresh bread and rolls category grew 6.1% to USD15bn in sales for the first year of the pandemic. However, that didn’t last. A Rabobank report from 2022 estimates global growth of the fresh bread market in 2020 at 7.5%, which was promptly lost the following year. Consumers rather turned to more complex bakery products, such as bagels, muffins, doughnuts, frozen pizza and savory snacks because they “replicate the restaurant experience at home and provide comfort.”

Drivers for Packaged and Fresh Bread

There is a series of consumer preferences that influences bread in general, may it be packaged or bulk. 

Health-forward Consumers 

Consumers are focusing on health and wellness factors increasingly across all food and beverage categories, including packaged bread. They require “simple, real ingredients” they can recognize, as this helps them feel safe in relationship with their food and, especially for parents, with the food they feed their children. Recent research conducted by Japanese scientists Tsutom Miyata and Hiroki Wakamatsu showed that packaging and labeling strategies can help consumers make informed decisions and reassure them of product’s safety. That is, making sure they have access to a comprehensible ingredients list, safe storage information and clear expiration date. This is a trend that heavily favors packaged bread, which can both explain and signal the healthy values the consumer wants.

You can read the rest of this article in the May-June issue of European Baker & Biscuit magazine, which you can access by clicking here

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