Find your niche

Time was when consumers would be satisfied with a bog standard daily loaf and not give it a second thought. Now they want healthy, tasty, specialist fare. Those providing that are driving growth.

And there's no doubt bread and cake sales are climbing. According to Warburtons' latest Bakery Review, total bakery sales topped £3.2bn in the 52 weeks to July 14 2007, up 7.2% on 2006 figures. Both in value and volume, the biggest growth is coming from 'for health bread', which includes fortified products, free-from loaves, and those that promote weight management. This category is followed by organic bread, then grains and seeded, the company claims.

In rolls, the organic sector is growing the strongest in terms of both value and volume, albeit from a small base. 'White plus rolls' - white rolls with the goodness of wholegrain - have the second strongest value growth, followed by 'for health'.

Meanwhile, the cake market grew 5.9% from £976M to £1.03bn (ACNielsen 52 w/e December 29 2007).

So where do the opportunities lie? Warburtons has split the bakery market up into eating occasions in order to identify key trends. Among traditional breakfast products, it says crumpets and potato cakes are showing the strongest value and volume increases. If consumers want a breakfast treat, they are going continental. Croissants are still by far the most popular choice, with a market value of £44.4M, but brioche is showing the strongest growth (up 15.5% year-on-year to £19.8M), followed by pain au chocolat (up 9.5% to £18.2M year-on-year). Cuisine de France has certainly seized on brioche, having just launched a range of brioche rolls, brioche swirls with dark chocolate chips and a brioche loaf.

For tea, Warburtons says shoppers are hooked on malt loaf, which shows annual growth of 12.3% to £23M, while for sandwich alternatives, paninis and bagels are both showing double digit value growth. There's also a lot of interest in Indian and Mediterranean meal accompaniments.

Niche ethnic and healthy inclusions

Growth in niche ethnic markets feeds into mainstream ethnic trends, says Kate Raison, marketing director for baked products supplier Bakehouse. "There will be more Eastern European-style breads, as more Eastern Europeans enter the UK. I imagine some trends will be picked up and incorporated into mainstream breads." Ethnic varieties offering alternatives from standard products, such as mezzaluna bread, a cross between pizza dough and a wrap, could prove popular, she says.

As far as authentic ethnic cuisine is concerned, artisan breads with added ingredients are also attracting interest across consumer groups, she adds. These inclusions can have additional health benefits, tapping into the healthy eating trend. Bakehouse is mining that vein by spinning off into Booster Bars, which have just hit stores. Aimed at instore bakeries, these low fat dough-based snack bars contain honey and walnut and are packed with superfruits (they contain one of consumers' five-a-day portions).

"While indulgence and healthy eating are often seen as polar opposites, they do overlap in products with nuts and seeds, which have a deliciousness to them," says Raison.

Demand is rising for small seeds such as millet and linseed, which are easy to incorporate into loaves and rolls, says Sara Autton, technical specialist at bread ingredients supplier Fermex. "Linseed in particular is full of omega-3 and 6 [fatty acids]. People are also latching on to the idea that if they want to get fibre into their diets, seeds are the way forward." Warburtons confirms the appetite for seeds, claiming sales have grown 18.1% in value terms to £165.8M for bread and by 16.8% to £18.4M for rolls (52 w/e July 14 2007).

But the use of seeds raises interesting challenges, says Autton. "When distributing products, the larger seeds such as pumpkin or sunflower tend to drop off during transit and the end result is not visually appealing. In addition, nuts and seeds are proving to be allergens to certain sections of the population."

Despite rising numbers claiming such allergies, Autton is convinced sales of such products will continue to grow. She believes the trend is not just driven by healthy eating, but by a wider backlash against tasteless, mass-produced alternatives. "There's a big demand for bread with flavour and that's not just about including olives or sun dried tomatoes; it's going back to what bread should taste like."

The continuing drive to cut salt levels will also serve to fuel sales of grain and seeded products, she believes. "Taking salt out will leave bread bland, so putting the taste back in will be key." The same applies to sugar, says Mark Sheath, head of new product development (NPD) at Kate's Cakes, which plans to launch products replacing sugar with agave nectar, a natural sweetener, later this month. The company is also looking at fruit juice sweeteners, such as apple pulp.

Slow food

Alongside this, the Slow Food movement, based in Turin, Italy, has been instrumental in raising consumer awareness of more specialised cooking methods that generate fuller flavours. For example, processors' interest in sour doughs and levains as ways of creating tasty breads with added texture is increasing, says Autton. Levains are pre-fermented doughs, fermented naturally by lactobacilli in yeast. The Lesaffre Group, global supplier of baking yeast, has isolated a lactobacillus causing yeast fermentation, enabling this natural process to take a day, rather than three or four.

Meanwhile, Bakehouse has followed the quest for taste by launching speciality, stone-baked French breads made in the Loire Valley. The company's creations include a malted grain baton, plus sour dough products.

Fermenting bread over a longer period can have the knock-on effect of making gluten more digestible for consumers with food intolerances, says Autton.

The gluten-free market also has a lot to offer cake firms, says Sheath. "There are a growing number looking for gluten-free, wheat-free and dairy-free products." Kate's Cakes is investigating the potential of soya, he says. "We want to make a lot of our cakes without butter and would use soya milk [to counteract allergies]." He believes taste doesn't have to be sacrificed for such products. "If we could develop an indulgent cake with the benefits of being, say, gluten-free, I'd like to market that."

Autton is less enthusiastic. "It's difficult to make gluten-free bread with the same qualities as normal bread that's palatable for the public and it's expensive for a large company to invest in a gluten-free factory. Demand for gluten-free bread mixes you make at home might continue, but ready made gluten-free bread is not going to grow as it has in the past."

Appetite for gluten-free products sits alongside the expanding awareness of health and dietary issues. Warburtons claims 'for health' is the top growing bread category, up 27.8% annually to £65M, while 'For Health' rolls are also seeing strong value growth of 17.6% to £3.8M. The growth of organic, up a massive 56% in rolls to £2.5M and 18.5% up in bread to £28.7M, to a certain extent also reflects that trend, as organic products are often perceived to be a healthy alternative.

Frost & Sullivan's Strategic Assessment of the European Bakery Industry says: "Manufacturers should address the needs of increasingly health conscious consumers. Multi-cereal, high-fibre, sugar-free, trans fat free, low fat, low salt, additive-free, organic, allergen-free, low-glycaemic index, and fortified with folic acid and other natural ingredients, are categories that have gained immense popularity."

Clean labels

However, Autton believes folic acid fortification is not at the forefront of NPD. It will resurface again in due course, she says, but the move to clean labelling will have more immediate influence on NPD.

One ingredient on the fringes of the clean label debate is ascorbic acid, she claims. "The use of ascorbic acid [which is an E-number] is currently allowed. Supermarkets would like to get rid of it on labels, but it has quite an effect on dough and how bread is made." Alternatives are costly and hard to come by, says Autton. Developing clean label ingredients is a core focus for Fermex, she adds.

Finsbury Food Group sees orders to remove artificial preservatives from cakes as a considerable barrier to NPD. "The big retailers are trying to remove these from their premium brands, but this alters shelf-life and impacts on waste," says md Dave Brooks. But he says the supermarkets are at least showing willingness to listen.

Where the move to ditch artificial additives is successful, indulgent products can be created that satisfy retailers and consumers. BakeMark UK, for example, is working with brands such as Nestlé Milky Bar and Toffee Crisp using natural colours and preservatives to develop American style cookies, sales of which it claims have grown 30% in value in the past three years. And it's working on similar branded activity in the field of doughnuts.

So whether consumers are peckishly pecking at seeds or simply after healthier versions of traditional indulgent products, it seems processors are still keeping one step ahead of them, despite the hurdles. FM