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BAKERY

Global bakery turns to Asia-Pacific for growth opportunities
Friday, 28 August, 2020, 14 : 00 PM [IST]
Shagun Sachdeva
At a time when bread consumption in the West is declining and inclination towards naturalness is rising, global bakery turns to Asia-Pacific for growth opportunities. 

When it comes to India, bakery remains one of the largest segments in the food processing sector. Indian bakery industry offers huge opportunities for growth as well as innovation. Despite certain challenges, the forecast for the Indian bakery industry is positive with a projected market value likely to reach US$10.5 billion by 2024 growing at a CAGR of 5.5% during 2019 to 2024.

A large part of this market (nearly 51%) is captured by cookies (sweet biscuits), which is valued at US$4.1 million in 2019 and projected to grow at a CAGR of 7.9% over the next five years. The category not only resonates with busy millennials who are looking for quick food options, but also present good innovation opportunities as rising number of obesity and diabetic cases in the country will drive the demand for sugar-free and healthy cookies.

However, smaller value categories such as cakes, pastries & sweet pies (6.5% value share) is expected to register faster growth than other categories with a CAGR of 9%, over 2019–2024. The category is catching the attention of big FMCG players, who are trying to explore beyond their core portfolios, for instance, recently Mondelez India, the owner of popular brands like Cadbury Dairy Milk, Cadbury Bournvita and Oreo, announced its foray into cakes category with Cadbury Chocobakes Choc Layered Cakes as part of its product portfolio expansion plan.

Catering the urban as well as rural customers, bakery products are considered as grocery staples in India, with breads and biscuits being consumed daily. Even though the bakery category is already ideally placed to address the growing consumer concerns to live healthier lifestyles, Indian baking industry is exploring deeper market penetration in the critical times of Covid-19.

To stay relevant among the consumers, and ahead of the competition, bakery manufacturers are looking beyond ingredients and demonstrating forward-thinking efforts in terms of sustainability or their clean label credentials, focus on product innovation such as plant-based inclusions to add more value to their bakery portfolio along with the use of bright colours, fusion flavours and multi-layered textures to create an unique sensorial experience to re-engage with the consumers.

Closer Watch at Key Trends Driving the Growth
As the Covid-19 pandemic has gripped the nation, prompting Indian consumers to push health up the priority list, Indian bakery industry needs to gear up to face the daunting task that lies ahead, which is of striking a balance by realigning themselves to the following key trends:

Enhanced Health Cues
In India, health scares have already thrust elements of the bread and bakery category into a negative spotlight. To address consumers’ quest for healthy lifestyles in the current situation, bakery brands have an opportunity to spotlight a wider range of healthy better-for-you attributes, exploring clean claims, natural positioning, simple labels, added functionality, lower-sugar recipes and whole grain/multigrain credentials. According to the survey, 70% Indian consumers are influenced by how the product/service impacts their health and wellbeing. 

Even though greater awareness around health is not something new in India, manufacturers have already been introducing innovative products such as whole wheat jaggery cakes in place of the regular maida cake and eggless oatmeal raisin cookies, spiced with cinnamon, encouraging a healthier take.

With Covid-19 pandemic, health and wellness trend has become much more relevant. With these unique conditions spurring concerns over nutrition and over-existing lifestyle-related diseases like obesity and diabetes, plant-forward and nutrient-dense functional bakery products will remain much in demand. Brands are taking note of these changing consumer needs and realigning their portfolios.

Classic example to quote here is So Good Serapheena So Easy cake mix. The gluten-free and preservatives-free, vegetarian-friendly cake mix features an espresso coffee flavour and formulated with jowar and sweet potato flour.

Focus on Value
As consumers are trying to restrict contact with others as much as possible and embracing home-life and new activities, life under new-normal has created new scenarios for brands to offer value to their customers. Due to the uncertain economic environment and supply chain disruption due to Covid-19, many consumers initially bought food out of panic. Consumers have essentially moved from a ‘just-in-time’, ‘on-the-go’ model to a ‘just-in-case’ stockpiling model. This means that value, rather than premiumisation, has become the key priority for consumers. Special offers, gift cards, or loyalty programmes by brands are a straightforward way to court this consumer desire.

According to the survey, 57% Indians are buying bakery products at the lower and medium price range, while 14% are buying bakery products at the premium or highest end of the price range.

New Channel Choices
Covid-19 has pushed some brands to diversify their audience channels and learn to sell directly to their consumers online. This shifting focus birthed by lockdowns in various APAC countries will continue, further encouraging brands to look at the realignment of sales channels. Bakery manufacturers are focussing on online marketing, targeting, deals, and delivery. They are well aware that e-commerce should be the number-one priority for securing regular payments and deliveries on proprietary websites and third-party platforms makes it easier for the isolated customers to buy more and conveniently. Along with e-commerce, brands are also considering subscription-based models to maintain steady sales during the pandemic.

According to the survey, 66% consumers claimed that they will continue to buy more products online rather than visiting a store in the 'new normal' world after the Corona virus pandemic period.

Technological Advancements 
With more consumers demanding transparency from the seed to the plate, bakery manufacturers embrace tech-based innovations that offer the advantage of traceability. In coming years, we will get to see more brands will rely on technology and will introduce personalised bread and bakery products to match consumers' specific nutritional, dietary, flavour or even design preferences/requirements.

Classic example to quote here is Parle gearing up for a major shift in the retail landscape and technology by introducing automation at loading and unloading levels in its factory outlets, amidst reduced factory staff due to lockdown and increased product demands. The rise in demand is also highlighted by survey data which states that 28% consumers buying slightly/significantly more than before and stockpiling bakery products since the outbreak of Corona virus.

DIY Healthy Baking
In line with emergence of lighter and healthier homemade items, companies are offering handcrafted granola which is gluten-free, loaded with nuts and seeds and sweetened with locally sourced organic honey to flourish. Keeping aside the increased demand of homemade chocolates, people are not shying away from paying a little more for products of their choice – healthy, hygienic and tasty, resonating with 52% consumers willing to pay middle/premium/hight end of the price range for bakery, cereals, morning goods, according to the survey.

Improved Packaging Solutions 
Packaging of bakery products plays a significant role in increasing shelf life, preventing mechanical damage, nutrition value, displaying food safety related warnings and marketing. According to the survey, 76% consumers strongly/somewhat agree that they are concerned about the safety of the packaging of the products they purchase. For instance, Frontier Biscuit Factory Pvt Ltd offers a rich product portfolio in the vegan packaged cake market.

Novel Ingredients 
Along with the technological advancements, Indian bakery industry has been using innovation in ingredients as well. Ingredients rich in antioxidants and nutrients, source of important vitamins, minerals and protein will remain much in demand. 

In 2019, Puratos India launched four new innovative products catering to the bakery, patisserie, and chocolate industry, developed by the Puratos’ innovation. Identifying the distinctive needs of consumers, sensory flavours are infused to give a finished application the element of ‘wow!’ and cater the demand for global food with a local touch.

What’s Next?
So far, we have enough reasons to be cautiously optimistic about the sector growth. When the Covid crisis wraps, we can expect to see a new generation of consumers, ecosystems, new rules, products and experiences.

(The author is consumer insights analyst, Global Data. She can be reached at shagun.sachdeva@globaldata.com)
 
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