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Bread
Growth within the bread market was better in 2001 than in other recent years, for a number of reasons. A feature of the market in the past decade has been price-cutting by retailers, but in 2001 there were fewer and less stringent cuts. There has also been continued activity within the industry to develop added-value products, especially in the speciality bread and bakery products sectors. However, the overall growth rate of just 2% in 2001 reflects the fact that this is a mature and saturated market.
The white bread sector gained in value slightly after remaining static for many years, although the brown and wholemeal bread sector continued to decline. The ethnic and speciality bread sector has become increasingly important, benefiting from both the trend towards in-store bakeries (ISBs), which are particularly suited to the production of French and other continental breads, and from the internationalisation of eating habits. Although the bakery products market grew faster than the traditional bread sectors during the second half of the 1990s, growth slowed during 2000, as this sector became the target of price cuts. However, 2001 witnessed something of a recovery.
The end of severe price-cutting within the market has occurred as a result of a number of factors, including a change of emphasis among supermarkets, with a move towards quality and away from knock-down prices. The adverse weather conditions in 2000/2001, and the subsequent poor wheat harvest, which has led to higher flour costs, have been widely publicised in the general media, and consumers have, on the whole, been prepared for price increases.
However, manufacturers are now having to contend with growing competitiveness within the bread market. The high level of new product development (NPD) has meant that the number of product categories is increasing Ñ in some cases leading to a fight for shelf space in supermarkets.
With almost 100% household penetration, there is little room for any dramatic market growth in the future. Undoubtedly, there is scope for product innovation and adding value within individual sectors, with speciality breads and bakery products the most likely to benefit. However, it is probable that this will be at the expense of the traditional bread sectors, and the overall market will grow only slowly between 2001 and 2006.
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