Food and drink purchasing is worth £165.9bn a year with take home (grocery) spend accounting for 68.5% of this (Kantar). The out of home channel is growing faster, up 5.3% year-on-year (Kantar). Food to go is appealing to more consumers than before with an expected value of £21.2bn in 2019 (MCA). The whole food to go market, including meals, snacks and drinks, passed the £25bn mark in 2019.
Our eating habits are now increasingly fragmented – with more meal occasions contributing to the resurgence in snacking. Health as a purchase driver has also plateaued. Both these factors mean there is great potential for bakery both in grocery and out of home channels.
People are more health-conscious and increasingly allowing ethical or environmental factors to influence purchasing decisions, especially when it comes to food and drink.
But alongside this, there has been an upsurge in indulgence. Leading hectic lifestyles and constantly having to be conscious of eating and drinking choices is hard work – this means that consumers are increasingly seeking comfort in sweet treats and rewards, often at the premium end of the scale. Here, people are aware their choices are not health-driven; and if they’re going to indulge, they want luxurious premium products that are ‘worth the calories’.
“These trends offer significant opportunities for food manufacturers, foodservice companies, OOH outlets and retailers, particularly if they tap into the exciting new products being developed specifically for these growing markets, where both sales and margin can accelerate,” comments Rich’s Marketing Director John Want.
Enjoyment is the number one driver in the sweet bakery category, accounting for 94% of servings in ISB sweet bakery (Kantar). And the trend for ‘treating’ is driving real growth in the category.
Sweet In-Store Bakery was in strong growth ahead of the Covid-19 lockdown, growing at +5.9% (Kantar), recovering to the point that it was three years ago. This is because shoppers were purchasing in the category more frequently and putting more in their baskets, although the number of shoppers in the category is currently flat. Another driver of ISB sweet bakery has been the growth of snacking occasions, up 6.2% from last year (Kantar). Seasonal holidays remain important for incremental bakery growth, shown by the performance of hot cross buns during the Easter period.
While both young families and empty nesters have contributed to this, pre-families are the key driver of spend growth in the last 12-months, buying more frequently, although only 78% of this group purchase Sweet ISB. While the market will of course see a dip as a result of the lockdown, there are opportunities for growth with this demographic, as well in local convenience outlets.
Following a period of decline, buns are now performing strongly, up +32.7%, which is driven by increased frequency and penetration. ISB Muffin performance is currently flat, although there are promising signs for branded muffins. ISB Cookies are also in growth, driven by frequency and volume per trip, with the chocolate flavour still the central tenet of this category. Again, there are promising signs for branded cookies, but there is also demand from consumers for new flavour variations, as well as the need to dial up taste/indulgence.
“There is, therefore, an opportunity for grocery to be bolder in its ISB sweet bakery offering, which is one of the reasons Rich’s has developed an exciting new range,” adds Want. “Baked By Rich’s is a suite of high-quality, premium products that can help retailers create a real sweet bakery ‘wow factor’ in both grocery and OOH that will have their customers regularly coming back for more.”
Jen Brown, Head of Marketing for Cake & Dessert at Dr. Oetker UK, comments: “At Dr. Oetker we want to support a nation of bakers at this uncertain time. We know the best way we can do this is by making sure everyone can still get that baking feeling. That’s why we want to reassure customers that we’re doing everything we can to make our baking products available in the usual retailers. We’re busier than ever making our much-loved Dr. Oetker products and working hard to get stock to the shelf as quickly as possible in partnership with the retailers.
“While we work hard to deliver this, we only ask that customers take care of others, buying what they need and help those who may need extra help. Meanwhile, we’re continuing to give baking inspiration wherever we can, using simple ingredients our customers might have at home to help keep the kids busy or to make someone smile.”
The home baking category has seen value growth as more premium areas of home baking attract shoppers to the category. This is due to bakers looking to produce perfect results for special occasions, as well as adding more indulgent elements. We are, however, seeing older shoppers cut back on indulgence, bought about because of concerns with their health, and this has ultimately led to less baking occasions in the category.
“This is why it is important to be able to attract bakers of the future, through encouraging baking for everyday occasions rather than just celebration, through trend led innovation across the whole category,” adds Brown.
The total home baking market in the UK is worth £988.4m and has a value growth of +0.5%, driven by average price and number of households. The key products which have dominated include juices, baking fruit and nut, and syrups.
Sweet Cake Mixes continues to be a growth area for home baking, worth £38m and growing at 4.1% (units however seeing slight decline -0.4%). Sweet Cake Mixes is predominately whole cakes which has 44% share of the category however more trend led products such as brownies, tray bakes & cookies are outperforming the category +15.5% and +11.1% respectively (IRI).
In line with strong performance from tray bakes & cookies within sweet mixes, Dr. Oetker launched its Tray Bakes in November 2019 and since then the 3 SKU’s have delivered £85k in 3 months, with Lemon Drizzle being the strongest seller, followed by Chocolate & Salted Caramel, then Carrot Cake.
Trend led items are also key drivers of growth within the category, Rainbow being one of these as it meets both the adult and children occasions. Dr. Oetker Rainbow Cases launched in November 2019 and is already seeing strong £ROS within the cases category, alongside being the best performing trend led case.
Personalisation has also been a huge driver within home baking which has led to the launch of Dr. Oetker’s Chocolate Letters & Numbers which is a unique product that allows personalisation on bakes. “Seasonal events remain a cornerstone of the category and gives bakers an extra reason to get involved; they comprise 35% of sales within 29% of weeks across the year,” says Brown. “Aligning the right product, to the right promotion, and at the right time will help maximise the sales that retailers can achieve. Some of the most prominent seasonal events where a higher percentage of households shop the category include Valentine’s Day, Mother’s Day, Easter, Coffee Morning, Halloween and Christmas.”
Over a quarter of people say they would bake more often if they had more reason to, so as such, new events & occasions outside of seasons can also play an important role for the category. Ensuring the current range caters toward the everyday moments can be impactful for retailers, as this still accounts for the majority of all baking occasions, including snacking, breakfast/lunch and after dinner desserts. It is also beneficial to tap into the treat occasion by dialing up indulgence. This can be supported through premium product offering which continues to show value growth YoY (IRI).
Jeremy Gilboy, Founder, St Pierre Groupe, comments: “In March, we reported an increase in sales across all our brands including St Pierre, Baker Street and Paul Hollywood. We believe this is due to consumers looking for foods that are frequently eaten, that are comforting, versatile, convenient and good value, during these unprecedented times.”
To help meet this demand, where possible St Pierre Groupe has streamlined its offering to ensure its most popular products are readily available for customers. The company has also simplified logistics by sending out full pallets and full truck loads where possible to help customers get their orders.
“We understand the need to be agile and are regularly adapting to the changing situation by liaising more frequently than usual with our bakeries, haulage companies, warehouses and customers,” adds Gilboy.
Baker Street’s core range of wrapped bread has performed well with double digit growth for three consecutive years, making the brand worth £24.2m in 2019. This trend has continued over the last few weeks with sales value growing by over 40% in March (vs. previous year). Packed to be fresher for longer, Baker Street guarantees a minimum life of 35 days from delivery to depot to help ensure on-shelf availability and reduce the risk of wastage. This is a feature that has never been so relevant, as more than ever consumers are looking for food items that have a generous shelf life, and which bring both comfort and familiarity, convenience and versatility – all benefits that wrapped bread offers.
“We believe that the unprecedented demand we are seeing for Baker Street and our other brands indicates that consumers are focused on buying staple food products that help them reduce the frequency of their shops, so they can have the food they want and need at home whenever necessary,” says Gilboy.
Bakery alternatives are also performing extremely well during this time. As people can’t go out for a meal, they are finding new ways to help make their home cooking more interesting by introducing quality ingredients, such as brioche.