Bread & Cake Producers Struggle With Changing Consumer Tastes

The rise of the supermarket in-store bakery is causing problems for the bread production and cake and pastry manufacturing industries, which are struggling to hold on to market share. Value-conscious customers are gravitating towards the private-label offerings of supermarkets, while consumers concerned with health and quality are increasingly purchasing high-margin products from artisanal bakeries. Mass-producing operators will have to rely on new product lines and smarter business models to effectively reach customers.

The battle for market share in the bread production industry is intensifying. The rise of the supermarket in-store bakery has been a massive challenge for bread producers, who have recorded modest growth of an annualised 2.1% over the past five years. Revenue is expected to total $2.6 billion in 2014-15. For customers that are primarily concerned with value, in-store bakery products are low-priced while also appealing to the customer’s desire for freshness. Additionally, both major supermarkets offer $1.00 loaves of private-label white bread in a bid to grab the attention of budget-conscious shoppers.

Meanwhile, shifting consumer preferences are also harming bread producers at the other end of the market.  Rising health consciousness is driving consumers to seek organic, wholegrain, seeded or gluten-free options. Furthermore, the popularity of cooking shows and celebrity chefs has brought quality and freshness to the forefront of consumers’ minds, even for household basics such as bread. Many customers are willing to forgo the cheaper supermarket loaf in favour of high-margin, specialist products from artisanal bakeries. Mass producers of bread have only recently started to respond to this trend, and are now beginning to focus on producing premium, innovative products in an effort to take back market share from bakeries. In May 2014, Goodman Fielder’s Helga’s brand released three low-carbohydrate bread options geared towards health-conscious customers.

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