Breads use more than their loaf: over the past few decades Brits have been eating less and less bread. It's a situation bakers are determined to turn around, reports Chloe Ryan. But will they succeed?
Volume sales of pre-packed bread fell 2.4% last year [IRI 52w/e 20 February]--a decline that is, according to Hovis marketing director Jon Goldstone, in line with a 30-year downward trend in consumption.
And, while commodity price hikes played a big part in pushing category value up 15.9% year-on-year to February 2009, the subsequent 12 months have brought a 0.6% decline in value to [pounds sterling]1.8bn [IRI] as wheat prices have stabilised.
No wonder the big bread brands have ventured into the wider bakery sector. Warburtons launched snacks range SnackaDoodle in March and Hovis upped the stakes in an already-buoyant morning goods category (see over) with a range of branded crumpets, teacakes and pancakes launched last October.
BREAD BRANDS TOP 10 products Sales Change [pounds sterling]Ms y-0-y% Warburtons white 424.0 * -0.8 Kingsmill white 214.7 * -4.5 Hovis white 202.4 # 28.0 Hovis Best of Both 108.9 * -5.9 Hovis brown 81.8 # 11.7 Warburtons brown 82.2 * -3.8 Kingsmill 50/50 71.6 # 15.0 Hovis Bread with Bits * 68.8 # 7.8 Brace's white 41.7 # 3.9 Kingsmill brown 41.7 # 6.2 Source: IRI 52 w/e 20 Feb 2010 * Note: incl Seed Sensations and Granary * Blue Triangle # Red Triangle
But will such moves succeed in growing the bakery category, or simply result in brands stealing share from each another?
It's not hard to see why leading bread brands are attempting to diversify. The top 10 products have experienced very different fortunes over the past year, some resuming growth after a period of decline while others have almost become victims of their own success in the brand-dominated sub-category. Value sales of Hovis's white bread have risen by 28% and its brown by 11.7%--but Warburtons, the UK's top selling brand, suffered a 0.8% decline in sales of white and a 3.8% fall in brown [IRI].
Hovis is one of the few major players to have increased sales of white bread--thanks chiefly to a packaging and recipe revamp in 2008, prior to which sales were declining steeply. Although the recession brought with it a desire for comfort foods that drove buyers back to white bread--making it the fastest-growing segment of the market in the year to February 2009--it has been a different story over the past 12 months. Sales of white bread have generally faltered, with own label white hit especially hard, falling 19.6% in value and 24% in volume. Meanwhile sales of Hovis and Kingsmill brown bread have picked up, and sales of Kingsmill's healthier 50/50 white bread has enjoyed a 15% rise [IRI]. "Category research highlights a growing demand for healthier food options," says Kingsmill marketing controller Michael Harris. "Twenty-two per cent of food choices are made with health benefits front of mind," he adds.
According to Goldstone, bread with added bits--such as seeds and grains--is now the fastest-growing sector. Sales of Hovis's 'Bread with Bits' products, have grown 7.8% over the past year to [pounds sterling]68.8m, while sales of own-label bread with bits rose 4.7% to [pounds sterling]56.9m [IRI].
Hovis is hoping to encourage more Brits to reach for the bread bin at breakfast by promoting the health benefits of wholemeal. In January, the company signed up Olympic gold medal-winning cyclist Victoria Pendleton to front the Wholegrain Challenge campaign, which encouraged consumers to switch their usual breakfast for wholemeal bread.
Kingsmill is adopting a similar approach with its Wake up to Wholegrain campaign, designed, according to Harris, to "reclaim bread's position at the weekday family breakfast table". The campaign began in 2009 and hit TV screens again in January this year to promote Kingsmill 50/50. Harris says sales of its Tasty Wholegrain and 50/50 brands have been boosted by the push, with sales up 31% and 21% respectively in the six months to 20 February.
Kingsmill and Hovis are also attempting to capitalise on the current interest in the health benefits of oats. Kingsmill launched its Oatilicious loaf in January and Hovis followed with Hearty Oats in April, again designed to tap into the breakfast market.
Provenance looked set to become another key selling point after the announcement by Hovis in November that it would switch to using 100% British wheat in its bread.
But the jury is out on the potency of provenance as a message--and the practicality of making the switch to 100% British in the wake of Warburtons' decision to scrap its plans to produce a loaf made from British wheat. Warburtons claims there is a lack of demand--and will continue its long-term supply arrangements with Canadian and British farmers.
"When you look at the top reasons why consumers buy each brand, quality is the top reason, followed by taste, texture then value for money," says Warburtons category director Martin Garlick.
Warburtons has arguably paid the price for advertising and promoting less heavily than its rivals, but it is hoping its recent raft of NPD will improve its fortunes. The brand was the first to launch a 600g loaf last year when legislation changed to allow bread to be sold in any weight. Kingsmill also took advantage of the new rules, with the launch of its 525g Little Big Loaf.
Warburtons has also launched brand extensions to its Farmhouse range and has moved into new areas of the bread market by offering an unsliced tiger loaf.
But by far its most surprising move has been the launch of bagged snacks, which Garlick insists is not an indicator that there is no room for growth in standard bread. "It felt appropriate to take our baking credentials into another area," he says. "Snacks is a huge market. It is a natural move for us."
He reveals the company is looking at other categories adjacent to bakery, although he refuses to say what form brand extensions might take.
Goldstone is sceptical, and insists Hovis would never stray from its core area. "I wish them luck, but it's a tough category and I'm not sure I hold out much hope," he says of the move into snacks.
While by no means as radical as Warburtons' launch, brands have also been busy in the morning goods sub-sector, which is dominated by own-label and in-store bakeries and is a sector where brands are confident they can grow their share.
"Own label accounts for just 15% in bread, but represents over 72% of other bakery goods," says Goldstone, adding that this presents a great opportunity for brands.
Hovis already produced own-label morning goods for the retailers but moved into branded products in October to try and increase its market share, which was less than 2%. It now supplies branded muffins, crumpets, teacakes and pancakes to Tesco and Asda. "We now have a 15% share in each of those segments in Tesco and Asda," says Goldstone.
Warburtons has had a mixed year with its branded morning goods. Sales of pancakes, potato cakes, soda farls, croissants and pastries have declined and consumers are showing more interest in basics such as muffins and crumpets.
"We have built a new crumpet plant at our bakery in Burnley to keep up with demand," says Garlick. "Fifteen years ago crumpets were a seasonal line we produced three months of the year. Now we make them week in, week out."
Based on the success of its crumpets, Warburtons launched branded muffins in January and initial sales are strong, claims Garlick. Warburtons has also conducted research with retailers on how to boost impulse sales and is working with promotions analysts Accuris.
One area that could be key to growing category value, claim suppliers, is in-store bakery. It accounts for about 30% of the bakery market, but many retailers are making efforts to improve their offer. Asda last year overhauled its in-store bakeries by introducing more speciality breads, including sourdough made from a mother dough imported from San Francisco.
Speciality breads are the main growth driver in this area, says Claire Warren, brand manager at Bakehouse, which supplies ready-to-bake products. "This is driven by products such as rye bread, which, with a sales value of more than [pounds sterling]5m and value growth at 24.4%, is essential to the speciality breads segment."
Stephen Clifford, marketing controller of Country Choice, agrees: "Treating yourself to a rustic roll or ciabatta loaf is not expensive."
Sainsbury's says the in-store bakery is crucial to the ambience of the store because of the delicious aromas it pumps out. A spokesman says doughnuts, cookies and pastries are among its bestselling bakery products, thanks to being freshly baked and the number of promotions offered.
Sainsbury's has switched all its in-store bakery products to 100% British wheat, a process it completed last July. "It is one of the innovations we are most proud of," says a spokesman. "When we started the project we were told it couldn't be done, since the belief was that the quality could not be achieved through the use of only British flour. However, through working with our farmers and millers we have been able to deliver a 100%-British range of scratch-made breads, rolls and doughnuts."
There is no doubt enormous effort is going into developing this category. Manufacturers and retailers will now be hoping the hard work pays off.
RELATED ARTICLE: TAKE-HOME SNAPSHOT
BRANDED GROWING FASTER THAN OWN LABEL
* The UK morning goods market is worth [pounds sterling] 1.6bn. Trip size, purchase frequency and new shoppers have contributed to 3.9% value growth.
* Bread rolls and baps account for nearly 60% of market sales.
* Morning goods is dominated by own label, which accounts for more than 72% of sales.
* Brands are growing ahead of own label, with sales increasing 5.4% in the past year partly due to an increase in promotions.
* M&S, The Co-op Group, Waitrose and Morrisons are driving overall market growth.
* Morrisons overtrades in in-store bakery in part due to new products.
* In-store bakery has declined slightly in the past year as shoppers switch spend to products not baked in-store.
MORNING GOODS SALES 52w/e21 February 2010 Value Volume [pounds sterling] m y-o-y % pack ms y-o-y % Bread rolls and baps 920.1 # 1.4 1,248.0 # 0.6 Toasting products 213.5 # 9.3 320.1 # 8.9 Buns 147.7 # 8.1 181.1 # 12.8 Croissants 94.8 # 11.2 59.0 # 13.7 Naan bread 80.4 # 7.8 97.4 # 9.2 TOTAL 1,600.8 # 3.9 2,148.1 # 3.7% Note: # Red Triangle. MORNING GOODS MARKET VALUE 100+ represents sales overtrade vs undertrade Trading Sales grocery % category % overtrade value y-o-y % Marks & Spencer 1.1 5.3 # 482 # 15.1 The Co-op Group 5.7 9.4 # 165 # 7.5 Waitrose 2.4 3.6 # 150 # 7.4 Sainsbury's 11.8 15.0 # 127 # 0.1 Morrisons 10.9 13.0 # 119 # 6.0 Tesco 25.1 27.5 # 110 # 3.9 Asda 15.1 14.6 * 96 # 2.4 Discounters 6.8 5.4 * 79 * 1.0 Note: # Red Triangle. * Blue Triangle
TNS Worldpanel has rebranded as Kantar Worldpanel. The data and methodologies used are unchanged. The take-home snapshot is produced by Kantar Worldpanel. Kantar Worldpanel monitors the grocery retailer take-home purchasing habits of 25,000 demographically representative British households. Call 0208 967 0007 for details
RELATED ARTICLE: PROMOWATCH
MORE THAN HALF OF PROMOTIONS USE X-FOR-Y.
The number of bakery deals shot up last year at all retailers, with Morrisons showing the biggest rise. It ran just seven between March 2008 and February 2009, but upped this to 116 between March 2009 and February 2010.
In terms of the brands, Hovis increased its promotions by 139 during
the period, while Warburtons, concerned about the effectiveness of promotions, ran just 18 offers.
Hovis claims the increase is good news for the category. "The offers have been a sensible level of cut, which offer value to the consumer but don't crash the value of the category," says marketing director Jon Goldstone. "In some markets you see a lot of bog of activity, but in bakery a deaf would typically be two for [pounds sterling] 2."
The leading promotional mechanic is x-for-y, which accounts for 52% of all bakery deals. In the year ending March 2009 there were 89 x-for-y deals; in the most recent 12 months there were 256.
Grocery retailers-number of bakery promotions captured in each period Mar '08--Feb '09 Mar '09--Feb '10 ASDA 48 64 MORRISONS 7 116 SAINSBURY'S 132 146 TESCO 3 12 WAITROSE N/A 107 Top five bakery brand owners-number of promotions captured in each period Mar '08--Feb '09 Mar '09--Feb '10 HOVIS 30 69 KINGSMILL 59 19 RATHBONES 0 18 WARBURTONS 10 18 PAUL RANKIN 18 6 Source: Assosia. Notes: The figures represent featured and secondary promotional space across the UK's leading supermarket chains, including hot spots, power aisles, free-standing display units, gondola ends, seasonal space etc. For further information contact Kay Staniland on 01708 444840 or see www.assosia.com Note: Table made from bar graph.
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|Comment:||Breads use more than their loaf: over the past few decades Brits have been eating less and less bread.|
|Date:||May 15, 2010|
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