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United Kingdom baked goods market: £6 billion industry in 2012

Press Release   •   Feb 19, 2013 17:17 GMT

Premier Foods Group Ltd continued to lead sales in the United Kingdom baked goods market with a value share of 14% in 2012. The company benefits from its presence in bread with its Hovis brand and also in cakes with its Mr Kipling brand. However, it has been heavily impacted by the price promotions of retailers and has suffered value share loss since 2008, including 2012. This has been caused by consumers seeking the best value and choosing products with the bets promotions, be them private label or other brands on promotion. Indeed, the second- and third-ranked operators, Warburtons Ltd and Allied Bakeries Ltd both saw notable gains in share value between 2007 and 2012 as the competitive landscape became increasingly aggressive.

Food inflation has been an ongoing issue through the review period and has been countered by the strength of the supermarkets. Distribution is concentrated in the hands of supermarkets and hypermarkets to the extent that operators are able to exert considerable influence on pricing. Following intense lobbying in 2008, baked goods manufacturers agreed to maintain prices in spite of the rising cost of wheat. However, this attempt to manipulate prices has become unsustainable and the unit price has been rising slowly more recently. This has meant that value sales have increased slightly while volumes fell and this trend has continued in 2012.

The baked goods category is expected to see marginal declines in both volume and constant value terms over the forecast period. This is due to the continuation of a number of long-term trends. Most important, as always, is the performance of the bread category. Bread is likely to continue to fall in volume terms while economic growth remains limited and the current forecast posits that this is likely to continue until well after the next election, which is essentially all of the forecast period. If living standards remain under pressure, then it is unlikely that volumes will grow significantly for bread or any of the baked goods categories.

Key Headlines

- Baked goods value sales see marginal growth to reach £5.8 billion in 2012
- Value growth is limited by discounting in supermarkets and movement away from bread staples
- Bread substitutes is the most dynamic category in 2012, with 6% current value growth
- Unit prices increase by 2% in 2012
- Premier Foods Group Ltd continues to lead the category with a value share of 14% in 2012
- The baked goods category is expected to see marginal volume and constant value sales declines over the forecast period

For more information on the United Kingdom baked goods market, please click here: United Kingdom baked goods market

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