European Bread Market
The Market
The western European bread industry produces 25 million tonnes of bread per
annum, of which the industrial or plant sector's share is 8 million tonnes.
Germany
and the UK are the main operators with 60% of plant sector production –
France,
the Netherlands and Spain produce another 20 % between them.
Despite the dominance of industrial bakers in some European markets, such as in
Britain and Ireland where they represent over 80% of the market, craft bakers
continue to represent the bulk of bread production in Europe, accounting for an
estimated 48% of the total volume in 1997, compared with 36% for industrial
bakers
and 16% for semi-industrial bread., including frozen part-baked products
and
in-store bakery production. . Even now, in France, Italy and Germany craft
bakers
have by far the largest market share although the situation is changing
rapidly.
Throughout Western Europe the plant sector is taking market share away
from the
master bakers. In Germany there are 18, 000 craft bakers but the
number is
expected to half in the next five years. In the UK and Denmark, plant
bakeries
currently hold between 75 – 80% of the market.
There are a number of reasons for this. The younger generation are not prepared
to work the very long hours required in craft bakeries, preferring to work
shorter shifts in modern industries. However, the main reason is commercial
pressure.
In Germany some of the larger plant baking companies are now supplying
their own
chains of retail shops instead of supermarkets. These chains have grown
rapidly
and now account for more than 30% of the German market. In France
frozen
dough
and part baked baguettes have transformed the market so that
co-operatives
and
industrial baking companies are flourishing at the expense of
the
craft
sector.
In-store bakeries are perhaps the fastest growing sector, continuing to
increase in number as the larger retailers gain an increased share of the overall
retail market. Freshness remains a significant factor in bread purchasing on the
Continent, with many consumers buying bread daily for same day consumption.
In-store
bakeries therefore have a distinct advantage over industrial pre-packed
products
and offer strong competition to the small craft baker. In the UK
supermarket
in-store bakeries produce more than 15% of all bread and have taken
market share
away from craft bakers who now produce less than 5%. British
master
bakers
cannot
compete with the price of bread sold in supermarkets.
Key Players
Throughout Europe, there is a strong link between the industrial baking sector
and the agricultural and milling industries, with many of the large bakers
being
owned by key agricultural or milling concerns. For example, in the UK the two
largest plant bakers, Allied Bakeries and British Bakeries, are owned by
Associated British Foods and Ranks Hovis Macdougal. Unlike the biscuit industry,
which is
dominated by multi-national companies such as Danone and Bahlsen, the
industrial
bread baking industry is largely made up of companies which
concentrate solely
on their domestic market. However, some of the larger industrial
bakers have
strong links with other through a common parent company or through a
parent/subsidiary relationship. For example, Skogaholms Brod of Sweden and
Hatting-Bageri of
Denmark are both owned by the Swedish company Cerealia, while
Austria's leading
industrial baker, Ankerbrot, is owned by the German firm
Muller-Brot.
Retailers
The retail market is also changing. In Southern France large hypermarkets are
the main sellers of bread while German trading groups are gaining ground in the
East. Discounters, including Lidl, Norma, Aldi and Plus are also significant.
In
the UK, conventional major multiple retailers (Tesco, Sainsbury, Safeway and
Asda) have retained their dominant position by heavy discounting of key items
which
always include bread. 30% of sliced and wrapped bread is “private label”.
In
other words, while the bread is made by independent plant bakeries, the
wrapper
bears the name of the supermarket and the retailer dictates the
composition
and
the
price! A new player has emerged in the sale of bread and
bakery
products –
the
garage forecourt. This is in response to the traditional
food
retailers
selling
petrol at low prices, far below those of petrol
company
outlets.
Imports/Exports
Imports and exports of bread are limited. Only 1% of bread is imported in the
UK, most ethnic breads being made locally although there is a small trade in
part-baked and frozen speciality breads and morning goods and gas packed
products.
Exports from the UK are slightly higher, including part-baked and frozen
French
bread and rolls. There is increased interest on the continent in importing
fresh
sliced and wrapped bread from Britain, mainly for the growing sandwich
market.
Even so, all bread exports represent no more than 2% of the market.
Consumer Trends
Bread consumption in western Europe is stable, although it varies greatly
between states. The Germans and Austrians eat the most bread at about 80kg per
person
per year while the UK and Ireland are at the bottom of the list with an
annual
consumption of less than 50 kg. Bread consumption is not likely to grow
dramatically since bread is eaten in nearly every household and it is unrealistic
to
expect bread to make any major inroads into other sectors.
Increased foreign travel and the movement of ethnic groups have created demand
for a greater variety of bread than ever before. Ethnic breads are becoming
increasingly popular in the UK. In Germany more than 500,000 tonnes of Turkish
bread
is produced by and for the Turkish community, accounting for 10% of all
German
bread production. In France younger people are gradually turning away from
traditional baguettes and opting instead for wholemeal loaves, factory made
breadsticks, longer life sliced bread and “exotic” bread from regions of France
and the
world at large. Hot and cold sandwiches made from Swedish thin,
unleavened bread
have become quite trendy in Paris where “le grille Nordic” is now an
established
concept. Sales of Swedish crispbread are also increasing in other
parts of
Europe.
The Challenges Ahead
Out of home food consumption and snacking is increasing in the UK, in line with
other European countries. Fast food outlets and sandwich bars are showing
strong
growth all over the continent, including the East. This trend will put
pressure
on the major multiples to defend their dominance of food sales. There will
be
continued growth in morning goods and speciality breads with opportunity for
innovation. However, this is still a small sector of the total market and is
not
likely to make a major dent in the market share of sliced bread.
COUNTRY PROFILES
Denmark
Bread production in 2002 was just under 360,000 tons, including craft
bakeries., which was a slight rise on the tonnage recorded in 1998 of 356,000 tons.
Total
turnover of bread, including craft bakeries, was 1,344 million DM in 1998.
There
are 15 industrial bakeries in Denmark, with the largest four accounting
for 85%
of distribution. The number of craft bakeries was decreasing.
The most popular bread among Danish consumers is rye bread, however the sector
saw a decrease in 2002. Growth in the white bread sector meant that the overall
market share grew by 8%.
Finland
In 2002 total production of bread amounted to 235,312 tons, little changed from
previous years. The market is dominated by two large companies, Fazer Bakeries
and Vaasan & Vaasan who together hold 70% of the market share. The craft
sector, which totals about 850 companies accounting for 15%.
Although the total production levels have remained static the share held by
industrial bakeries are increasing.
Germany
Total domestic consumption in 2002 amounted to 6.4 million tons. The market
share of Plant bakeries increased with the growth of the retailers and hard
discounters with white bread and toasting bread driving the growth. The craft sector
declined with 2,000 closures during 2002 leaving approximately 16,500.
The plant sector has less than 60 bakeries with four major players.
Italy
In 2002 total production of bread, including that of craft bakeries, reached
3.96 million tons. During this period, total turnover of bread in Italy amounted
to €8, billion . Per capita consumption of bread decreased to 64 Kg, 2.8%.
As in other European countries, there is a trend towards takeovers and mergers
in both the industrial bakery sector and the craft sector. The market share of
industrial bakeries amounted to 8%, the same as the previous year. The price of
bread in Italy remains stable.
The Netherlands
In 2002 bread production in the Netherlands amounted to just over 960,000 tons.
The annual per capita consumption of bread has been static at 60Kg since 1998.
In 1998 there were 100 industrial and 2100 craft bakeries in . The market share
of industrial bakeries amounted to 75% of turnover.
Consumers in the Netherlands prefer rye bread. Retail prices have risen
slightly overall, particularly for wheat and special bread, although the average
consumer price for sliced bread has decreased.
Norway
The industrial bakeries market is marked by strong competition due to the high
concentration in the retail food sector, leading to a higher requirement for
product innovation. 95.1% of the Norwegian food trade is controlled by four major
food chains, two of which operate in-store bakeries. Norwegian bakeries are
more
or less restricted to the home market as customs duties for export are
relatively high.
Spain
In 2002 total production of bread and biscuits, including that of craft
bakeries, amounted to 2.362 million tons. Per capita consumption of bread and biscuits
in Spain was 58.5 Kg. The market share for large bakeries is 7.9% of total
value
for sliced bread.