With bread remaining a staple of the British diet, Asian Trader discovers how retailers can profit from the bread and bakery market.
It’s hard to imagine a world without bread – our nation has loved bread and bakery as far back as anyone can remember.
Bread is the most consumed food item in the country, bought by 96% of UK households according to Kantar Usage and Nielsen Homescan.
At £3bn (Nielsen), bread is one of the largest categories in grocery, a key a driver of retail footfall and one of the most important categories for retailers and the consumer.
Though fresh bread is an essential staple for millions of families in the UK, the UK bakery market is facing declining volumes. However bread returned to value growth in early 2017, gaining 2.0% over the year to March 2018 (Nielsen).
“As a category we need to meet ever changing population and household needs,” commented Zoe Taphouse, Category Director at Allied Bakeries. “With 75% (Nielsen) of bread sales attributed to branded bread, Allied Bakeries is playing a crucial role in meeting these changing consumer demands.”
There are three big consumer trends that are driving the bread market in 2018. These are private label growth, as retailers look to differentiate from each other; premiumisation, as consumers look for better quality and craft style breads; and health, where we are seeing growth in both seeded and healthier white breads, driven by shoppers looking for healthy alternatives that still taste great both for themselves and their families.
“We’ve seen a big trend towards more premium products in various categories – the rise of craft beer and Fever Tree tonic water are just two examples, as consumers look to replicate out of home quality at home,” added Taphouse.
“Now it is bread’s turn, as consumers increasingly want the great taste of fresh bread, every day.”
Sales of premium bread have grown +8.2% YoY according to Nielsen.
Evening consumption is one of the drivers behind this. Consumers are more willing to indulge in the evening, as the focus moves from health in the morning to taste in the evening. Sandwich consumption at the evening meal occasion is up 16%, helping to drive premium bread growth (Kantar).
Capitalising on the growth in premium, Allinson’s launched a premium range of craft-style loaves, with distinctive paper packaging designed to tap into the artisanal bakery boom.
Inspired by the spirit of the brand’s founder, Thomas Allinson, the range bridges the gap between in-store and wrapped bread by providing the shelf life of wrapped bread but the taste cues of in-store bakeries.
Available in three variants, 10 Seeds & Grains, Olive & Rosemary and Honey & Wholemeal, each loaf comes in an unsliced 410g cob format.
Allinson’s premium range of a 650g loaves are designed to meet the needs of smaller households, who get through less bread than families.
Allinson’s 650g has enjoyed a value sales uplift of 73% YoY and volume uplift of 55% YoY, significantly ahead of category (Nielsen).
One or two person households account for 65% of all UK households and this number is set to increase by a further 3.8% (ONS). They represent a significant part of the population who will typically have greater disposable income and greater product flexibility.
“With many products tailored to the family audience, products are currently not developed with the smaller households in mind,” added Taphouse.
As health means different things to different consumers we are seeing a range of segments in growth across ‘healthier bakery’, including 50/50 bread that offers hidden wholegrain and seeded breads which consumers perceive as offering taste and health; sparking a shift away from wholemeal bread in particular.
In September, Kingsmill 50/50 Vitamin Boost was added to the range. The newest addition to the Kingsmill family, Kingsmill 50/50 Vitamin Boost provides a daily source of seven vitamins and minerals. The loaf offers the taste of Kingsmill 50/50 with a boost of vitamins and minerals.
Kingsmill 50/50 Vitamin Boost contains iron and vitamin B6, which contribute to the normal function of the immune system, calcium and vitamin D for healthy teeth and bones, and niacin and vitamin B1 for energy release.
Two slices of Kingsmill 50/50 Vitamin Boost provide 30% of the reference intake of iron, vitamin B6, thiamin, niacin and vitamin D and 38% of the reference intake for calcium and folic acid.
Kingsmill Super Seeds, launched last year and available in 800g and 400g varieties, is an everyday seeded option aimed at families. Made with a variety of seeds, including linseed, sunflower, poppy and pumpkin, it is not only a source of fibre but thanks to the linseed, is also a great source of Omega 3 alpha-linolenic acid, which helps to maintain healthy levels of cholesterol.
Allied Bakeries’ Burgen brand is well placed to capitalise on the growth of both seeded and premium loaves and meets a number of current on-trend needs.
For example, Burgen Soya & Linseed is high in protein and fibre and a source of calcium (a daily serving of 2 slices provides over 20% of the reference intake of calcium).
A brand new look for Burgen on pack copy to further build clearly pulls out Burgen’s unique health claims: high in omega 3, high in protein, high in fibre, high in calcium and suitable for vegans.
The total wrapped bakery market is seeing growth with 3.3% increase in value sales YOY (Nielsen).
The main driver of growth within this category is non-bread products, which have grown by 4.3% in unit sales and 5.6% in value sales YOY.
The key products driving this growth are sandwich alternatives and rolls which saw an 8.5% increase in sales due to the hot summer.
Warburtons holds the top spot as the number one bakery brand (Nielsen) in the UK, having launched a range of quality new products, including our speciality and premium products, Thin Bagels, Thoroughbread and our seeded ranges which have all seen growth in the last year.
The ‘premiumisation’ trend continues to be a key driver in the bread and bakery category as it gives consumers the opportunity to trade up and buy more premium loaves alongside their everyday purchases.
Warburtons responded to this trend with the launch of its craft range, offering two brand-new, hand crafted loaves; White with Sourdough, and Multi Seeded.
With volume sales for Warburtons premium craft style bread growing by 21% YOY (Nielsen), the launch of the new craft range marks a great opportunity to drive growth in the category and meet changing consumer needs.
The growth of seeded bread and more premium varieties is also very positive for the category, with both segments offering consumers a reason to pay more. Warburtons Seeded Batch and Pulses and Seeds loaf both offer consumers an easy way to incorporate added protein into their everyday diet without compromising on taste.
Sandwich alternatives such as wraps and have experienced 38% growth in unit sales. Warburtons Thin Bagels are also key part of this offering a lighter version of the traditional bagel, with the same great taste.
Warburtons has a dedicated field sales team who work with retailers to improve merchandising to encourage browsing and purchase in-store. Having a wide range of both wrapped bread and bakery products in-store is also a key way to encourage instore traffic and allow consumers to shop the breadth of the range, the company says.
Over the last year Warburtons has launched a number of new products including Wholemeal Toastie Loaf, Pulses and Seeds Batch, Bistro Deli Buns and most recently a craft range.
The wrapped traditional bread sector is worth £1.4bn with growth of 4.3% being influenced by different consumption patterns (Kantar).
Changes in household sizes and eating habits is causing the shift away from some of the more traditional large loaves.
Homes containing two people are the most common household sizes (35%) followed by single person households (28%) according to the Office for National Statistics.
These demographics have driven demand for smaller pack sizes that last for longer.
In addition, time pressured consumers expect to be able to buy bread when they want it and in the format that is most convenient to them, therefore it is important for retailers to stock a variety of products that are suited to a number of eating occasions, says Carrs Foods.
With fewer consumers demanding the traditional style loaves, the large 800g packs can be off putting to those living in smaller households; who are concerned about reducing their food waste or, indeed, wasting money. According to WRAP, three quarters of bread that is binned, is wasted because it is not used in time.
This is supported by Baker Street’s consumer research which found that bread going stale too quickly at home was a source of frustration among nearly half (49%) of those surveyed.
Baker Street sliced loaves were ranked as the 8th largest bread brand, growing 145% in 2018 (Nielsen).
Increases in bread sales volumes in 2018 have also been driven by the success of bread with benefits.
Carrs Foods has responded to this trend with the launch of two new products within the Baker Street range this month – Deli Rolls in two variants and Ciabatta Loaf and Rolls.
Tapping into the growing trend for seeded and ‘benefit’ products, the new Baker Street Deli Rolls are available in Multi Seed and Multi Seed with Chia (both with an RSP of £1.69 for a four pack).
Suitable for vegetarians, the rolls are high in fibre, low in saturated fat and provide a source of protein, while the Chia rolls are also high in Omega 3.
Specially developed for the convenience market, the part baked Ciabatta Loaf (RSP £1.39 for 250g loaf) and Rolls (RSP £1.39 for a four pack) provide an opened texture and crispy crust and will be ready to serve in ten minutes.
Carrs Foods’ St Pierre On the Go range of nine individually wrapped products, launched last summer, includes Croissant, Pain au Chocolat, Brioche Swirl, Brioche Chocolate Chip Roll, Caramel Waffle, Caramel Cake Bar and Chocolate Cake Bar.
Each product is individually wrapped for convenience, so they can be easily eaten with one hand and cause minimal mess.
In terms of merchandising strategies, Carrs Foods says there are a number that work well for the bread and bakery category within independent stores, for instance, price marking can prove competitiveness alongside the multiples and placing dispensers at the till point is also beneficial.
Furthermore, retailers should consider a mixture of fresh and longer life products to cover the demands of consumers and ensure they never need to be off sale, Carrs suggests.