Consumer and Innovation Trends in Bread and Bakery

1. Consumer Insight
Consumer and Innovation
Trends in Bread and Bakery
Category Series. Published July 2013

2. Contents
1.Introduction
1.Definition and scope
2.TrendSights framework
2.Health & Wellness
1.SWOT analysis
2.Natural attributes
3.Gluten-free
4.Heritage grains
5.Shifting focus on fat
3.Easy & Affordable
1.SWOT analysis
2.Private label growth
3.Convenience
4.Choice facilitation
4.Sensory & Indulgence
1.SWOT analysis
2.Consumption experiences
3.Freshness is key
4.Variety and novelty
5.Comfort & Uncertainty
1.SWOT analysis
2.Rise of at-home baking
3.Localism
4.Artisan production



Please click on the section of interest
07
08
11
14
15
18
20
25
31
35
36
40
42
47
48
49
51
57
60
63
64
66
70
74
2
6.Evolving Landscapes
1.SWOT analysis
2.Emerging markets
3.Single households
7.Individualism & Expression
1.SWOT analysis
2.Targeting children
3.Vegetarianism
8.Smart & Connected
1.SWOT analysis
2.Online and social media presence
9.Sustainability & Ethics
1.SWOT analysis
2.Environmentally-friendly packaging
3.Organic claims
4.Free range
10.Conclusion
11.Appendix


75
76
78
83
84
85
87
89
91
92
94
97
98
100
102
104
105
107

3. Health & Wellness
xx
Opportunities exist for manufacturers to tap into the multiple health benefits of "heritage"
grains
Source: Datamonitor analysis; [1] Brannon ,2007; [2] Whole Grains Council (2012) 3
What?

Why?


Opportunities for product differentiation
Take-out

Bringing back ancient varieties to meet
contemporary needs
Taps into growing consumer interest in functional
foods
•Many once-popular grains have fallen into near-disuse since the rise of
modernized hybrids, but are now re-emerging.
•These grains have the potential to move into the mainstream food space.
•Today's Dietitian reports that these grains are considered to be "a
richer source of nutrients than modern grains because a lack of
breeding has left their nutrition profile intact¹."
•According to experts, some varieties of ancient grains, such as einkorn,
are gluten-free. As they have fewer chromosomes, older wheat
varieties "tend to have lesser levels of gliadins, the type of gluten
proteins that seem to cause most sensitivities²."

•Using these grains in product formulation helps to create a unique brand
positioning and provides bakery manufacturers with a route to
premiumization for an otherwise commoditized product.

4. Easy & Affordable
Private label bread products effectively deliver on both price and quality and thus compete
more intensively with national brands for consumer choice
Source: Datamonitor's Product Launch Analytics; Datamonitor analysis 4
VALUE PREMIUM STANDARD
Essential Everyday –
"artisan-style" bagels
US
Tesco Everyday Value –
bread
UK
Marque Repere EPId'Or
–panini bread
France
By Sainsbury's – flame-
baked chapattis
UK
Whole Foods Gluten-
Free Bakehouse –
cinnamon and raisin
bread
US
Marks & Spencer –
mini Belgian
chocolate hot cross
buns
UK

•No frills, low-cost basics
•Compete on price
•Inferior to national brands


•Core house/retailer brands
•Comparable in quality to
second/third tier national brands


•High quality brands with an upscale
image and their own distinct values
•Often superior in quality to many
national brands

5. Comfort & Uncertainty
Nostalgia induces a positive emotional response as consumers anchor their emotions to a
time and/or place when life seemed simpler
Betty Crocker's new vintage-themed marketing and branding
reflects modern recreations of the past
In 2012, Betty Crocker updated the look of its entire product
portfolio with a new "modern-vintage" theme in order to
differentiate from its competitors. The new-style packaging has a
retro look and features a traditional handwritten font along with a
pencil drawing of a 1920s housewife. Following the launch of its
new packaging, the brand launched a new website to align with
the brand's retro theme in 2013¹. With a focus on the brand's
longstanding heritage, the new website features a tab dedicated
to telling the "Better Crocker Story" through the years, highlighting
how her message has been tailored according to changing
consumer demands and socio-economic trends. The site also
features video archives of Betty's vintage TV shows including the
first one ever made, to reemphasize her expertise in all things
related to baking.
Consumers tend to glorify products and contexts that were
relevant in prior periods and/or places
The nostalgia sub-trend is a perfect fit for the rise of home
baking. Research suggests that the act of baking is also about
the nostalgic feelings it arouses – a phenomenon known as
olfactory-evoked nostalgia. This phenomenon occurs during
economic downturns as: "Targeting our sense of smell is the
quickest way to alter our emotional state." Brands can capitalize
on their rich history and heritage to reassure consumers, as
evidenced by products "going retro," often in limited-edition
marketing efforts.

Source: BBC; [1] FDIN, March 2013 [2] BBC, November 2012 5

"I think that the resurgence of baking is an
attempt to re-establish nostalgic feelings for
the past when people feel safe and secure."

Dr. Alan Hirsch, neurologist and founder of the Smell &
Taste Treatment and Research Foundation, quoted by the
BBC, November 2012

6. Evolving Landscapes
Emerging markets offer unprecedented opportunities; however, Western bread and bakery brands need to "localize" products
to attract and sustain consumer interest
The rapid economic growth of emerging markets and the resulting increase in demand and scale have opened up new and significant
opportunities for Western brands in these regions. However, bread and bakery brands need to overcome strong cultural barriers and
offer customized products tailored to the palates of local consumers. This goes hand in hand with a measured approach to price and
making such products available and affordable, particularly in emerging markets. The bakery industry, particularly the bread and
biscuits segment, is poised for strong growth over the next few years as consumers are exposed to Western cultures and cuisines.
Ultimately, successful ventures in the bakery sector will depend on brands driving uptake through effective marketing communication.



Emerging markets demonstrate promising growth prospects in the bread and bakery category
Source: Datamonitor's Market Data Analytics 6
Country
Category growth, by
market value, 2012–16
India +58%
China +54%
Nigeria +24%
South Africa +21%
Saudi Arabia +21%
US +12%
UK +5%
Emerging markets: consumers who are highly influenced
by "locally produced" product claims, 2011
Bread and bakery category growth by value (CAGR), 2012–16
India 59%
China 50%
Russia 47%
Brazil 43%
South Africa
39%
Saudi Arabia
48%

7. Sensory & Indulgence
SWOT analysis
Source: Datamonitor analysis 7
Weaknesses
•The ubiquity and affordability of basic bread and rolls
will continue to challenge mass brands pursuing a
more premium market positioning.

•The impulsive nature of most bread and bakery
product purchases can limit consumer involvement in
its consumption, causing products to suffer from
perceived sensory drawbacks.


Strengths
•The typically sweet and rich taste profile of cookies
and cakes means that indulgence is a key
purchasing driver.

•The strong affiliation that cakes and pastries hold
with celebratory occasions and gifting makes
exclusive and premium positioning easier to
convey.



Opportunities
•Go "beyond the product" by creating an overall
experience to better resonate with consumers.
•Ancient grains are a key route to premiumization.
•Develop innovative packaging formats to retain
freshness and gain consumer appeal.
•Explore new and unique flavor combinations,
especially in the processed bread and bakery
category.


Threats
•Consumer perception that indulgent products
compromise on health.

•Biscuits face stiff competition from other "treat"
categories that are considered more indulgent, such
as chocolate and ice cream.