A recently released report on cake and pastry manufacturing in Australia has highlighted the resilience of the industry during recent economic turbulence. According to the IBISWorld report, changing consumer trends, volatile commodity prices and a saturated market are characteristic of the Australian cake and pastry manufacturing industry.

“Although the industry has shown periods of promise, rising input prices, turbulent economic conditions and changing consumer trends have posed some serious challenges. However, the industry has remained resilient during the current economic turbulence and has tended to outperform the economy during recessionary years, despite waning consumer spending. In the five years through 2011-12, industry revenue is expected to increase at an annualised rate of 1.9 per cent to total $1.6 billion,” the report states.

“The entrenched position of the major players, coupled with enviable levels of brand and customer loyalty, has enabled them to pass on cost increases during times of unsustainable high input costs. Sweeping changes across the landscape of consumption needs and preferences have warranted clever innovation and new product introductions in order to stimulate demand in a mature and stagnant market. Industry revenue is estimated to decrease by 1.5 per cent in the current year.”

The report says the future of the industry presents niche growth opportunities, and that over the next five years, it is anticipated there will be a widening range of products promoted on the basis of convenience, proteins, calcium or various vitamins.

“Consumers can also expect to see new products enriched with fibre, selenium, antioxidants and a growing range of other properties. In terms of profitability, the reason for the emphasis placed on the importance of functional foods is that it transforms commodities that are vulnerable to private-label competition into unique, high-priced premium products.”

IBISWorld estimates that in the five years through 2016-17, industry revenue will increase at an annualised rate of 2.2 per cent to total $1.78 billion.

To obtain a copy of the report, visit www.ibisworld.com.au.