In the UK branded bakery space, Associated British Foods-owned Kingsmill has youth appeal. The brand, which is operated by ABF’s bakery unit Allied Bakeries, over-indexes with consumers under the age of 35. As long as Kingsmill can maintain its relevance, this bodes well for its long-term health, Katy Askew suggests.
The UK bread market is worth GBP3.6bn (US$5.8bn) with around 4bn units sold each year, data from the Bakers Federation reveals.
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Plant baking companies produce approximately 80% of the bread sold, which primarily takes the form of pre-sliced and packaged loaves.
The three largest manufacturers in the plant sector are Allied Bakeries, which manufactures the Kingsmill brand, Hovis – now run as a joint venture between US private-equity firm Gores Group and former 100% owner Premier Foods plc – and Warburtons. These three manufacturers account for almost three-quarters of the bread market by value.
Brands are therefore a powerful force in UK bread. Consumers shop for bread in all kinds of retail locations – from the petrol station to the grocery store – and a brand promises consistent quality. People need convenience, accessibility and the assurance they know what they are getting. Branded bread ticks all the boxes.
But, as in any other category, all brands are not created equal.
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By GlobalDataWarburtons is the largest of the UK’s big three bakers. The group has seen “rapid expansion”, moving from third to first place in the last five years, the Bakers Federation reveals.
According to research firm Kantar Worldpanel, its survey of UK consumer shopping habits reveals an interesting trend in the branded bakery space.
Warburtons, Kantar director Chris Longbottom says, has the strongest appeal with consumers aged 55 and over. However, Kingsmill is the brand with the greatest youth appeal.
Through its consumer panel monitoring UK shopping habits, Kantar found of the three largest bread brands in the country Kingsmill has the greatest appeal among younger demographics – consumer groups aged under 28 and 28-34.
In many ways, this leaves Kingsmill well positioned for the future.
A good amount of effort goes into reaching out to younger consumers in their 20s and 30s among FMCG companies.
In building brand loyalty among younger consumers, you are securing a brand’s future year’s down the line.
As consumers grow older, they typically don’t switch their brand allegiance. In bread, for instance, the average consumer does not wake up on their 50th birthday and think “Time to make a switch to Warburtons”.
By appealing to consumers in their 20s and 30s today, Allied Bakeries has gone some way to ensure Kingsmill will appeal to the consumers of their 50s and 60s of tomorrow.
Of course, the company must also retain its relevance to tomorrow’s youth if the cycle is to result in market share growth.
Allied Bakeries believes that it will continue to reach out to the next generation of young consumers through innovation and product development.
Moreover, the company expects to leverage its “youth appeal” to accelerate growth in certain areas of the bakery category. According to the baker, Kingsmill’s brand appeal can bring younger consumers into new areas, such as the already higher-growth “sandwich alternatives” sector.
Speaking at a recent launch event for Kingsmill Thins, Matt Watkins, Allied Bakeries strategy and insight manager, said: “Kingsmill is a young brand… Kingsmill can definitely bring something to the sector that isn’t already there.”
Specifically, Allied Bakeries believes it will draw in younger, higher spending, upmarket consumers and families – a valuable consumer segment.
According to Kantar, over the past 52 weeks households with children spent an average of GBP26.46 on “sandwich alternatives” compared to an average spend of GBP16.56 from those without kids. Empty nesters are the least valuable group to the category spending just GBP15.43 per year, while families with kids aged between five and nine – Kingsmill’s core customer target – spend the most at GBP30.10 per year.
“Our appeal is to families, who have more than two people to feed and a higher household spend,” head of innovation Janene Warsap told just-food.
The company hopes to gain a 25% market share as the Kingsmill brand attracts new people to the alternative bread product category, she continued.
“We estimate that 47% of spend on thins will be incremental to bakery (based on what we’ve seen for the category to date) with the remaining 53% coming from elsewhere in bakery. We expect 85% of volume will be incremental to the thins sector,” a spokesperson for the group revealed.
And, because the product will be attracting a high level of incremental spending, Allied Bakeries anticipates around 9% of total Thins volume will be cannibalised from existing Kingsmill products.
The launch pits Kingsmill against Warburtons’ sandwich thins brand. Marketing manager Jon Wilson conceded the products were “not massively different” but stressed the Kingsmill brand nevertheless had something new to bring to the table.
“What Kingsmill is bringing [that is] new and different is that it has a reach and appeal that will bring in families.”
Through this kind of smart, targeted, innovation Allied Bakeries believes it can both leverage and retain its youth appeal.
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