As is the case with other frozen food categories, Scandinavian countries continue to lead in terms of consumption and per capita spending on frozen bakery products. In this regard, the top European countries are Finland, Norway and Denmark, followed by Switzerland, Greece and Germany. But how is the category evolving around the world and what makes it such a popular choice among consumers?
The leading country for the frozen bakery category remains Germany, with a total value estimated by Euromonitor International at almost EUR365m, followed by Russia, with over EUR240m and the United Kingdom, with EUR160m. Breaking the category down into the two main regions in Europe, the current value of frozen bakery products stays at around EUR330m in Eastern Europe (EE) and exceeds EUR1bn in the West, according to the research company mentioned, which estimates that in 2015, the figures will be close to EUR440m in EE and 1,2bn in Western Europe.
A percentage breakdown concerning market share of the main producing companies shows that in Eastern Europe, the top three leaders are Talosto ZAO, Karl Fazer Oy Ab and Lantmännen ek för, while in the West, the leading
producers in terms of market share remain Lantmännen ek för, Conditorei Coppenrath & Wiese GmbH & Co KG and Vaasan Oy. Surprisingly, while also in the top 10 in Western Europe, the worldwide food giants are taking up the latter positions of the market share top, as Euromonitor International data shows. Thus, General Mills Inc, Nestlé SA, Findus Group, Oetker-Gruppe and Unilever Group manage to record market shares between 1,6 and 1,1 in the region.
Factors which contribute to market growth
The global frozen bakery market is estimated to reach USD32,5bn by 2018, with the three most important sub-segments being frozen pizza crusts (32,2%), frozen breads (25,5%) and frozen patisserie (15,5%).
“Europe has been market leader in the frozen bakery market so far, followed by North America and Asia-Pacific, but the biggest growth opportunities are in the emerging markets, if you look at the projected growth for foodservice in Latin America (+ 62% in the next 5 years) and in the Middle-East (+58% in the next 5 years). With a projected growth of 46% in foodservice, Eastern Europe and Russia also offer interesting opportunities for frozen bakery,” according to frozen food producer Dirafrost.
Considering this information, frozen bakery is a growing industry in the food processing sector and there are two main reasons for the success, according to Dirafrost.
The convenience factor is one of the reasons, since it is easier to preserve the quality of frozen bread and frozen patisserie in the freezer, compared to the short life span of fresh bread or patisserie.
The second reason for success is “food on-the-go”: again, due to busier life styles, people tend to skip breakfast and grab something at a coffee shop. These chains are an important growing outlet for frozen bakery products. The supermarkets have also been successful in capturing their share in the frozen bakery market, with an increased number of in-store bakeries, as well as clean label products.
“Frozen bakery is a growing segment and consumers are looking for healthy food, so how important is clean label in bread and patisserie products? Clean label has become a real buzzword in the food ingredient industry, but funny enough, there is no clear definition of the term. From a food manufacturer’s point of view it is aiming to «clean» their ingredient list, getting rid of artificial components. From a consumer point of view, it is looking for «free from artificial additives» products”, says Dirafrost.
Individual diets shape the German market
Bakery goods that are free from various ingredients as well as those that offer benefits such as ‘organic’ and ‘vegan-friendly’ are increasingly popular in Germany, according to research company Canadean. In 2013, the German bakery and cereals market was worth USD17bn, of which German consumers spent USD3bn on bakery products tailored to their personal dietary choices, such as without gluten, wheat, lactose, eggs and milk. Although some consumers have to exclude certain items from their diets due to intolerance or other medical issues, more and more are discarding what they think of as ‘unhealthy’ or ‘unethical’ ingredients from their shopping lists by choice.
Catherine O’Connor, senior analyst at Canadean, says: “In the last few years we have seen a wave of people in developed countries such as Germany wanting natural products. Lactose, gluten and wheat have become increasingly untrendy ingredients among the health-conscious, and products free from these have seen a rise in popularity. This development is directly reflected in the sales numbers.”
According to Canadean’s new report, organic products are most popular when they can be tied to other benefits such as fresher and better quality. For example, a product that contains no artificial colors and flavors or additives, such as monosodium glutamate (MSG) and e-numbers, can be marketed as natural and better for your health. German women in particular buy products that meet a variety of nutritional lifestyle choices, and this need is extending beyond weight maintenance, and into concerns such as brain development and digestive health. According to O’Connor: “Consumers see the products they eat as a reflection of who they are, and feel closer to brands that offer a choice that fits their lifestyle and food choices.”
The same report shows that the average German consumes 731 bakery and cereals items per year, which is one of the highest among the major EU nations. Bread rolls, which make up 49.8% of the German bakery market, are the most popular product among the Germans. There are more varieties of breads produced in Germany than in any other country, ranging from dark and whole-grain breads to white breads, rolls and mini-breads.
Improving the US perception
One of the greatest challenges that the frozen food industry has had to face has been consumers’ perception of frozen food as unhealthy and highly processed, making it a tough market in which to operate. However, things may be changing as the industry, led by the American Frozen Food Institute (AFFI), has embarked on a campaign to improve the reputation of frozen processed food.
“With the US being one of the pioneers of frozen foods, a large share of the American grocery basket already goes on frozen pizza, ready meals and other frozen convenience foods. In comparison, in other developed markets such as Germany and the UK, only 8% of packaged food shopping is accounted for by frozen processed food, while in emerging markets such as China and Brazil this share is even lower at 6% and 2%, respectively. Clearly, the convenience of a quick meal and the predisposition of Americans to snacking make this proportion so high,” says Lianne van den Bos, food analyst at Euromonitor International.
Recently, in order to promote the category in the US, the AFFI has launched a major public relations campaign to defend the nutritional reputation of frozen food products. Representing the likes of Nestlé and ConAgra Foods, which have seen their sales stagnate in this market, the aim of the campaign is to inform consumers that the freezing process is just a way to hit the “pause button”, locking in the nutrients, quality and taste of fresh food.