Mass Bread Producers Need To Follow Artisan Indust...

Mass Bread Producers Need To Follow Artisan Industry’s Lead To Survive

Consumers concerned with health and quality are moving away from mass-produced supermarket bread and towards high-margin products from artisanal bakeries, particularly those touting organic, wholegrain, seeded or gluten-free options.

Research by IBISWorld has suggested the popularity of cooking shows and celebrity chefs has brought quality and freshness to the forefront of consumers’ minds, even for household basics such as bread.

“Many customers are willing to forego the cheaper supermarket loaf in favour of high-margin, specialist products from artisanal bakeries,” IBISWorld industry analyst Brooke Tonkin said.

“Mass producers of bread have only recently started to respond to the artisan trend and are now beginning to focus on producing premium, innovative products in an effort to take back market share from bakeries.”

The research said artisanal bakeries have immediately and strongly benefited from the growing focus on quality and health consciousness, with the industry expected to soon post growth of more than 3 per cent to $3.9 billion.

“Artisanal bakeries offer a range of fresh, specialist products. Operators can tailor their offering according to their local demographic, and their innovative, fresh-baked goods attract higher prices than supermarket offerings. This allows artisanal bakeries to enjoy better profit margins than cake and bread manufacturers,” Brooke said.

However, the research also suggested the threat of supermarket in-store bakeries looms large for artisanal bakeries. Supermarkets are increasingly emphasising freshness and value, with Brooke acknowledging customers are able to complete all their shopping under one roof.

“Intensifying competition from supermarket in-store bakeries will put pressure on artisanal bakers, even as demand for high-quality baked products remains robust,” she said.

On the other hand, IBISWorld research also revealed there is a growing pool of value-conscious customers who are gravitating towards private-label baked products in supermarkets, with Brooke saying mass-producing operators will have to rely on new product lines and smarter business models to effectively reach customers.

“The battle for market share in the bread production industry is intensifying. The rise of the supermarket in-store bakery has been a massive challenge for bread producers, who have recorded modest growth of an annualised 2.1 per cent over the past five years,” Brooke said.

“Revenue is expected to total $2.6 billion in 2014-15. For customers that are primarily concerned with value, in-store bakery products are low-priced while also appealing to the customer’s desire for freshness.”

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