Whether cookies, brownies, biscuits, dinner rolls, or pizza, the market for frozen bakery products is expected to grow, albeit slightly, in the next couple of years, especially due to the recovery of the out-of-home market, post-recession. NPD in this category comes especially from the pastry segment, where innovations such as the crounut, the brookie or the wonut keep the segment on an upward trend.
Dan Orehov
The global baked goods market is set to grow by 5% in current value terms and reached USD339bn in 2015, while volumes continued to stagnate for another year, according to research by Euromonitor International. This is to a large extent driven by bread, which accounts for 84% of total baked good sales, but continues to suffer from a decline (or at best stasis) in volumes. While bread’s lackluster performance exerts a downward bias to the overall category, Euromonitor says there is more to baked goods than bread. As such, baked goods, which include desert mixes and frozen bakery products add a further USD10bn to market coverage – in addition to its traditional categories of bread, cakes and pastries.
Frozen Dough Products
Some of the fastest growing segments of the food processing industry are frozen/refrigerated dough products, consisting of cookies/brownies, biscuits, dinner rolls, sweet rolls or pizza base, but the market is not limited to these. According to the latest report by research company Future Market Insights (FMI). Modern equipment and packaging opens up a new demand spectrum in refrigerated/frozen dough industry, with various refrigeration processes increases the shelf life of the product and lowers the chances of product wastage. Also, the demand for frozen bakery products is increasing and expanding, for example even onto the sandwich category, as more consumers understand the benefits of refrigerated products.
Geographically, the market can be segmented into North America, Latin America, Western Europe, Eastern Europe, Asia Pacific, Japan and Middle East & Africa, with North America being the largest market in 2014 followed by Western Europe, according to FMI. However, Asia-Pacific is expected to show robust growth during the forecast period due to rising per capita income coupled with increasing trend to live healthy and luxurious lifestyle.
Market Breakdown
The refrigerated/frozen dough products market across the globe is expected to show a substantial growth with a single digit increase in CAGR over 2015 to 2020, according to the FMI report. There is a significant increase in the refrigerated/frozen dough products market because of their low prices, in comparison to fresh baked goods. However the market is expected to grow moderately in developed countries, despite important opportunities resulting from an increase in snacking and the breakfast market.
“The market remains largely fragmented worldwide, having small players supplying the refrigerated/frozen dough to bakeries, quick service restaurants and other food service industry,” FMI says. “Emerging countries such as India, Brazil, China and South Africa are expected to grow significantly due to changing eating habits and availability of these products in supermarkets and other retail outlets. Developed economies have seen a greater number of in-store bakeries and sandwich programs popping up in outlets such as convenience stores and hypermarkets, while family gatherings and holiday parties further fuel the demand of dough related products such as pastries, cupcakes and sweet rolls.”
Foodservice Is Key Driver
Foodservice plays an important part in the sales increase of the category, as the variety of products enables food service outlets and coffee bars to provide fresh oven buns and rolls which matches artisan style and taste with convenience. In addition to this, consumers are trying varieties of dough related dishes at home, which were previously available only at restaurants or coffee shops, among which crepes and filo dough, par baked buns, gluten free bread etc.
“With increasing disposable income and consumption of coffee in the emerging countries the demand of refrigerated/frozen dough products is also elevating,” FMI analysts say. “Dough products are considered healthy options in comparison to meat and other calorific meals. Moreover, dough products can be consumed at any period of day such as during breakfast, lunch or dinner. We have observed a large number of product innovation and availability of products through different retail outlets have made it an attractive market overall,” FMI says.
Some of the restraining factors in the refrigerated/frozen market growth could be unstable demand forecast and supply chain, but also the perishability of the product. Proper packaging and storing facilities are major concerns for manufacturers and distributors as the products require a specific temperature even while transportation.
From Cronut to Duffin and Crookie
According to Euromonitor International, hybrid pastries are taking off fast and it all started with the cronut last year. Initially launched in the US, the croissant and doughnut combination has become a popular snack in South Korea, Taiwan, Brazil, the UK and even France within less than a year. This has been followed by the townie, a blend of tartlet and brownie, as well as the brookie, a brownie crossed with a cookie. Now the pastry world hosts several fusions, ranging from muffle and crookie to the Starbuck’s duffin. The latest addition is wonut, the waffle-doughnut combination invented by an independent café in Chicago in April, which sold 600 pieces in one store within two days of its launch.
“Hybrid pastries work well because they offer something new and exciting to today’s novelty-seeking consumers who are reluctant to completely give up on the familiar. These pastries also benefit from the rise of artisanal products, which reminds one of home-baked food, personal enough to make consumers feel at home and convenient enough to make the visit to a far-off bakery worthwhile,” explains Pinar Hosafci, analyst with Euromonitor.
“Hybrid pastries might have started as an American culinary experiment, but they are spreading fast across other (more conservative) parts of the world. Some will undoubtedly regard them as an insult to gastronomy, if not the English language. Others will baulk at the high fat and sugar content the products boast. But, in a world where not everybody prefers to dine on diabetic chocolate or reduced fat crisps every day, hybrid pastries offer a moment of mixed (and perhaps personalized) pleasure for all of us who, on occasion, want just a little more than a doughnut,” ends Hosfaci.
Shift in Country Rankings
Referring to some of the major markets for bakery and pastry products, Euromonitor’s analyst says that Egypt is expected to overcome Turkey to become the world’s second biggest baked goods market in volume terms. This is in part due to the Turkish Government’s efforts such as the Preventing Bread Waste Campaign, which significantly reduced unpackaged white bread purchases in Turkey. In part, it is the result of the ongoing subsidies given to bread flour in Egypt, which has kept unpackaged bread affordable for the masses. At less than USD0.5/kg, bread prices in Egypt are among the lowest in the world, leading to over purchase of the staple. With over nine million tonnes worth of sales in 2015, baked goods volumes in Egypt are more than France and Italy combined.
“Perhaps the most surprising move comes from China, which will overtake the US, to jump into fourth position. In the absence of a potential hard landing, China is expected to become the world’s second biggest baked goods market by 2020, just behind Mexico, which in itself is quite telling given how non-traditional a staple food bread is in China,” Hosfaci says. “Pastries, on the other hand, paint a different picture: with close to five million tonnes worth of sales and 6% growth over 2015, pastries are not only the most popular baked goods category in China, but also the fastest growing,” she adds.
Major Players
Baked goods has also seen significant change in competitive activity, according to Euromonitor. Mexican-owned Grupo Bimbo – baked goods’ unrivalled leader – has managed to boost its value share from 3.3% in 2010 to 4.4% in 2015. In actual terms, this represents an increase of US$6 billion, which is more than the total sales of Yamazaki Baking Co, the second biggest baked good player.
“Bimbo’s growth is mainly due to the recent flurry of acquisitions in a number of important markets. In Canada alone, the company made three key purchases. Starting with the buy-out of Canada Bread in 2014, Canada’s leading baked good player, from Maple Leaf Food, Bimbo then added Saputo Inc and Italian Home Bakery to its portfolio in 2015,” says Pinar Hosafci analyst with Euromonitor. “While the Canada Bread acquisition put Bimbo into the second place behind Weston Foods in 2014, the Saputo purchase made the company the leading baked goods player in Canada in 2015. Saputo, being Canada’s leading cake player, also gave Bimbo access to the growing packaged cake category, which fits well with Bimbo’s larger portfolio,” she adds. Italian Home Bakery, on the other hand, enabled Bimbo to diversify into artisanal European-style products, and experiment with ancient grains, which are increasingly popular among health-conscious, novelty-seeking Canadian consumers.
Among other major players on the global market, the following companies have been leading the frozen segment for quite some time: Goosebumps frozen convenience, Kontos Foods, Inc., Custom Foods Inc., Readi-Bake, Inc., Earthgrains Refrigerated Dough Products, L.P., Gonnella, Wenner Bakery, Europastry and Swiss Gastro Bakery Beijing Co.,Ltd, Dr. Schar USA, Inc. and Boulder Brands among others
