Innovation and Market Drivers in Bakery and ... - Business Insights

F o r a c l e a r e r m a r k e t p e r s p e c t i v e
Innovation and
Market Drivers in
Bakery and Cereals
Fast growth markets and
strategies for adding value
Report Price
Publication date
£1495/2160/$2875
May 2009
C O N S U M E R

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
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Report Overview...
The global bakery and cereals market is predicted to value $364bn by
2012. This expansion is being driven by fast growth markets such as
China and India. The European and North American markets are now
highly mature and low growth, and bakery and cereals have reached a
level of saturation in many markets. To counter both this and the high
levels of private label saturation, bakery and cereals manufacturers are
attempting to differentiate their brands, especially in growth areas such
as healthy and convenient bakery products. Ownership of a niche
segment or proprietary ingredients is a key way bakery and cereals
manufacturers can add value to their products and increase their market
share.
‘Innovation and Market Drivers in Bakery and Cereals: Fast growth
markets and strategies for adding value’ is a new management report
published by Business Insights that analyzes key trends in the bakery and
cereals market and forecasts future growth opportunities. This report
provides a detailed examination of the bakery and cereals market by
region, category and maturity to provide unique insights into the factors
shaping the market now and in the future.
Pages 104
Figures 38
Tables 8
“Identify and exploit new
and emerging opportunities
in bakery and cereals more
effectively with this new
management report...”
Natasha Horton,
Consumer Goods Analyst
Business Insights

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
Key Findings...
The largest category in the bakery and cereals
market is bread and rolls, which reached
$171bn in 2008. The bread and rolls segment,
showed the slowest rate of growth.
The key emerging bakery and cereals markets
are China, Russia, Brazi, Mexico, Saudi Arabia,
South Africa, Indonesia, Columbia, Chile and India.
In the US, the number of people aged 65 and
over is projected to increase from 39m in 2010
to 69m in 2030. About 20% of the total population
will be over 65 in 2030, compared to about 13%
currently.
Personalized products have experienced a large
growth since 2006. These products correspond to
the individual taste of consumers incorporating their
nutritional needs and personality.
Share of bakery and cereals products launched
globally, by category, 2005 and 2008
“Globally, bread is the most innovative category with
1.9% of all bakery and cereals products launched
between 2005 and 2008 classed as innovative as shown
in Figure 4.49. The following categories are cakes mixes
and finally pastries and baked products with each
category having 1.2% of all bakery and cereals classed
as innovative. Each of the bakery snacks, cereals and
other baking mixes categories only account for 0.9% of
all bakery and cereals products launched from 2005 to
2008 classed as innovative...”
Use this report to...
• Improve the targeting and effectiveness
of your NPD strategy using this report’s
analysis of product launch data of 18,000
bakery and cereals products launched globally
between 2005-2008.
• Gain insight into future opportunities in
the bakery and cereals market and examine
the most innovative product launches and
potential areas of opportunity for
manufacturers.
• Predict future growth areas in bakery and
cereals using this report's forecasts to 2012
of market values and volumes by category
and sub-category.
• Identify key trends that are shaping
the bakery and cereals market, and
examine the key drivers for the market
to 2012 detailing key trends in demographics,
lifestyle, economics and legislation.

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
Key issues...
Impact of changing population profiles. The older
population (aged 65 and over) provides a key
opportunity for bakery and cereals manufacturers to
address products which directly target the nutrient
needs of older needs, as this population is increasing
rapidly.
Increase in Private Label products. The increase
of private label in bakery and cereal products
has increased the pressure for manufacturers to
differentiate their brands, especially in growth areas
such as healthy and convenient bakery products.
NPD in bakery and cereals market. This market is
still being dominated by health concerns, including
increasing diabetes and obesity rates, particularly
among children. The health trend is overlapping both
indulgence and convenience trends as consumers
drive innovation in healthy indulgent and healthy
convenient products.
Special K Crackers, Kellogg, 2008
“Crackers increased their share of products launched
from 8.6% in 2005 to 9.3% in 2008. Crackers have
benefited from innovation in formulation to develop
healthy and nutritious crackers. A number of leading
companies have launched products in this area
including Kellogg’s which in January 2009 launched a
new range of savory snacks under the Special K brand
to target health-conscious consumers and women in
particular...“
The growth of Premiumization. In mature markets, where artisanal bakery takes a very low share, there
is significant activity in very premium artisanal bakery – as more affluent consumers turn away from
industrially produced bread and purchase high end bread as a treat, fostering a new wave of
premiumization in in-store bakery as it tries to compete.
Your questions answered...
• How can bakery and cereals manufacturers
minimize the threat of private label brands?
• Who are the key players in the bakery and
cereals market?
• What were the most innovative new bakery
and cereals products launched in the last year?
• What are the key trends likely to impact bakery
and cereals NPD over the next three years?
• How are leading bakery and cereals
manufacturers reacting to ethical issues
such as sustainability and recyclable
packaging?
• How can bakery and cereals manufacturers
position their products to reflect changing
consumer demands?

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
Sample Information
Chapter 6: Conclusions
Indulgence
Flavors
Consumers increasingly have less
disposable income due to the current
economic downturn; however many are
not prepared to compromise on the
quality and origin of the ingredients used.
Bakery and cereals manufacturers should
continue to develop premium products
with added value such as high quality and
tasty ingredients.
Figure 6.38: Me & Goji, 2008
Consumers are constantly seeking new
and different flavors and textures in food
and drink products, and this is evident tin
the bakery and cereals market. Bakery and
cereals manufacturers can develop
Business Insights
innovative products with original flavor and texture combinations. In particular, exotic fruits (such as
starfruit) and ethnic influences (Indian spices such as massala) will be important flavors in NPD in the
coming years.
Personalization
Foods and beverages continue to become customized, with food and drinks being tailored to fit
consumer’s lifestyles. Flavors, colors, functional, and health ingredients are often used as brands try to
maximize the appeal of their product and appeal to consumers by targeting a specific need. Bakery and
cereal manufacturers can capitalize on this trend by providing consumers with product formats which
they can personalize to provide them with the additional health, indulgent or ethical benefits they
require.
A number of bakery and cereals companies allow customers to custom design their products in order to
meet their taste and nutrition requirements. As an example in the cereals area, online American company
“me & goji” allows you to design your own cereal mix from thirty all natural and organic ingredients,
adding each to the bowl, dragging it across the web page. The nutrition stats of your custom cereal
immediately update with each ingredient added or removed to the “compost bin”. This is an example of
how bakery and cereals manufacturers can add value by adding health, indulgence and ethical benefits
to a product.
- 101 -

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
Table of Contents
CHAPTER 1: INTRODUCTION
CHAPTER 2: MARKET DRIVERS
• Introduction
- Increase in raw material prices
- Private label
- High levels of disposable income
- Changes in working patterns
- Drive for personalization
- Legislation
- Ageing population
• Adding value
• Maturity and traditionalism
CHAPTER 3: EMERGING BAKERY AND CEREALS
MARKETS
• Introduction
• Market value
- By category
- Bread and rolls
- Cakes and pastries
- Cookies
- Breakfast cereals
- Morning goods
- Crackers
• By region
- Emerging markets
- Brand shares
CHAPTER 4: KEY TRENDS
• Introduction
• Health
- Weight management
- Heart health
- Bone health and osteoporosis
- Oat based products
- Plant sterols and stanols
• Convenience
- Food intake reduction or portion control
• Ethical
- Locally sourced food
• Indulgent
- Premiumization, upscale, gourmet
CHAPTER 5: INNOVATION AND NPD IN BAKERY AND
CEREALS
• Introduction
- Growth of bakery & cereals NPD
• Category analysis
- Bakery snacks
- Bread
- Cakes mixes
- Cereals
- Cookies
- Crackers
- Other baking mixes
- Pastries & baked products
• Regional analysis
- The key regions
• Innovative bakery and cereals
- Innovation in formulation
- Innovation in packaging
- Innovation in positioning
• Leading tags on bakery and cereals
• Leading flavors in bakery and cereals
CHAPTER 6: CONCLUSIONS
• Introduction
• Adding value
- Health
- Indulgence
• Finding the right strategy
FIGURES
• Bakery & cereals
- Factors driving the market
- Overall market & private label growth (%) 2002-07
- Growth areas in the market
- Market value & CAGR by category/country, ($m),
2004-12
- % growth in launched, by category, 2005-08
- Share of products launched globally, by category,
2005 & 2008
• U.S. & foreign wheat prices ($ per metric ton), 2003-09
• EU retail spend as % of total consumer expenditure,
2002 & 2007
• Nestlé Cereal product Guideline Daily Amount label

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
Table of Contents
FIGURES (CONT’D)
• Smart Choice logo
• Population aged 65 & over, US, m, 2000-50
• Adding value vs. cutting back strategies
• Examples of products targeted at children, 2007
• Wholly Wholesome - Whole Grain Crumble Cake -
Harvest Berry, 2008
• Linseed sliced bread, Bimbo S.A de C.V, 2007
• Albany Superior - Bread - White Low GI, 2008
• Level of innovation in products launched, by category,
2005-08
• Bimbo Bakeries US, 2006
• 123 Naehrmittel GmbH , 2008
• Ruth's Chia Goodness, 2007
• Monkey Brains Oatmeal , Shrky LLC, 2008
• Special K Crackers, Kellogg, 2008
• Alixir Regularis Cracker, Barilla G. e R. F.lli S.p.A, 2008
• Pizza mix, Bob's Red Mill Natural Foods, 2008
• Frozen Dulce de Leche Roulade from the James
Skinner Baking Company, 2008
• Share of bakery and cereal products launched globally,
by region, 2005-2008
• Mary Louise Butters Brownie Butts & Topinchen -
Dr. Quendt 2008.
• Baker Organic, US, 2007
• Multi-textured chocolate bar, by Yamazaki Nabisco,
2008
• Sturm Foods, 2007
• Pie Oh My, LifeStream brand, 2007
• Nestlé Buitoni & Archers Farms Cereals, 2008
• Eat Local, US
• Meal replacement by Asahi Food & Health, 2007
• Me & Goji, 2008
TABLES
• US & foreign wheat prices ($ per metric ton), 2003-09
• Market value ($m) & CAGR, by country, 2008
• Bakery & cereals
- Market value by category ($m), 2004-12
- Value of the market in EU & the US ($m), 2004-12
- Top 5 companies in each region, market share, %,
2005
- % of types of innovation within innovative bakery &
cereals, 2005-08
• Top 20 product
- Tags on new product packaging, % of all bakery &
cereals products launched, 2005-08
- Flavors on new product packaging, % of all bakery &
cereals products launched, 2005-08

Innovation and Market Drivers in Bakery and Cereals
Fast growth markets and strategies for adding value
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