A rise in the number of functional and health-focused bakery products on supermarket shelves has helped the bakery sector fend off the attack from low-carb diets according to market analysts Datamonitor.
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New research by Datamonitor finds that despite concern the US and European bakery and cereals market is recording encouraging growth. According to Datamonitor, by providing consumers with premium products that go beyond simply being low-carb and providing more health-focused produce – for example wholemeal and granary breads, bakery manufacturers’ reaction to health and diet concerns has proved successful.
Health awareness in food has also crossed into the emerging markets of Eastern Europe where both US and European manufacturers of ready to eat cereals are meeting with huge success, switching Eastern Europeans from a breakfast of bread and ham towards cereals. “The rise in functional and health-focused bakery products on supermarket shelves has helped fend off the attack from low-carb diets,” said Nick Beevors, consumer market analyst at Datamonitor. “Growing consumer interest in nutrition and health is driving the demand in many food sectors for whole grain, functional and natural food.”
The US and European markets for bakery and cereals saw encouraging growth in 2004, up 3.2% and 2.7% respectively, compared to 2003. This represented an increase in market value of $1,638m in the US and $3,588m in Europe. Datamonitor predicts similar growth rates for 2005 and beyond, despite fears that keen interest in low-carb diets in 2003 and 2004 would adversely affect the industry over the long term.
A trend away from bakery products during the diet fad prompted action from manufacturers. The increase of functional and premium breads marketed by bread manufacturers fought the trend away from bakery products. For example in the UK Warburtons has launched its ‘Healthy Inside’ and ‘Summer’ loaves. While in the US Interstate Bakeries has launched its ‘Nine Grain’ and ‘Stone Ground Whole Wheat with Extra Fiber’ loaves.
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By GlobalDataDatamonitor believes the industry’s response through increasing its product portfolio of functional and more health orientated bakery products managed to allay the concerns of diet enthusiasts that the extra bread roll at dinner time was going straight to their hips. “The surge in sales of functional, organic and fair-trade bakery & cereal products in 2004 demonstrates the modern Western consumer’s concern with health and trade issues and their willingness to act on those concerns,” said Datamonitor’s Nick Beevors.
Stagnating markets in Western Europe and the USA prompted Western breakfast cereal manufacturers’ to target Eastern Europe. Increased marketing activity along with consumers’ rising health and nutrition interest has meant the cereal market has gained momentum. More and more Eastern Europeans swapped traditional breakfasts such as bread and ham for ready to eat breakfast cereals in 2004. Between 2003 and 2004, the largest market growth came in the Czech Republic (9.2%), Slovakia (7.6%) and Poland (5.7%). Both Nestle/General Mills and Kellogg’s enjoyed strong market share growth in Eastern Europe through targeting consumers’ growing health and nutritional concerns.
The European breakfast cereals market was worth $6,944 million in 2004 and Datamonitor estimates this will grow to $8,024 million by 2009. Eastern Europe will witness particularly pertinent growth rates representing a CAGR** of around 14.6% in Romania, 7.0% in Hungary, 7.5% in Poland, 6.9% in Slovakia and 4.6% in Czech Republic. “Increased marketing activity along with shifting cultures due to a growing European Union has driven growth rates in ready to eat cereals amongst young people and families in Eastern Europe,” said Nick Beevors.
