Baked goods in the European Union – Focus on top five markets

Market overview

Baked goods in the EU saw modest retail sales growth at a compound annual growth rate (CAGR) of 1.8% between 2016 and 2021, recording total retail sales of US$98.6 billion in 2021. Over 2021-2026, sales are expected to grow by a CAGR of 2.9%, led by higher sales in Netherlands, Italy, and Poland. Baked goods' sales are led by Italy, Germany, and France which collectively accounted for 58.7% of total EU baked goods sales in 2021.

Accotding to Euromonitor, compared to other staple foods, sales of baked goods have been largely unaffected by pandemic lockdowns in the EU. Packaged flat bread is growing in popularity, partly because packaged bread is seen as more hygienic with a longer storage life than unpackaged varieties. Flat bread popularity is also driven by interest in regional EU gastronomic traditions, such as piadina in Italy and tortillas in Spain, as well as foreign cuisine, such as burritos from Mexico. As flat breads can be used as a wrap, demand is expected to continue growing as employees return to the office.

As the pandemic prioritised health and wellness, baked goods with a healthier positioning are expected to grow over 2021 to 2026. Higher quality ingredients are expected to be in demand, such as organic, as well as enriched breads that offer extra health benefits and cakes and pastries that incorporate healthier ingredients. As premium prices for these products can be a major barrier for consumers, major European retailers like Carrefour, Aldi, Rewe, Alcampo, and Lidl are launching private label baked goods, in addition to stocking more branded offerings, to help make these baked goods more affordable.

Italy

Market overview

Italy was the largest EU baked goods market in 2021 with sales growing at a CAGR of 1.6% over 2016-21, reaching total retail sales of US$21.1 billion. Sales are expected to do better over 2021 to 2026 at a CAGR of 4.4%, valued at US$26.3 billion by 2026.

Packaged flat bread has remained one of the strongest performers in baked goods in Italy in 2021. This category has become more appealing to many Italians since the beginning of the pandemic, partly because packaged bread in general is seen as more hygienic than unpackaged varieties.

Pandemic-related hygiene concerns and the increasing preference for longer-lasting bread have also continued to support growth in sales of packaged leavened bread in 2021, with sandwich and soft varieties remaining the most popular.

While the pandemic has driven healthier eating, Italian consumers have also shown a greater desire for indulgence while spending more time at home. In terms of baked goods, the influence of these seemingly divergent trends has been most evident in the growing demand for packaged cakes and packaged pastries combining rich, luxurious flavours with natural and highly nutritious ingredients that provide functional health benefits.

New product launches

From 2017 to 2021, 5,648 baked goods products were introduced in Italy. The most popular product claim was "palm oil free". Other popular claims were "no additivies/preservatives" and "low/no/reduced allergen". The companies with the highest number of new product launches were Lidl, Barilla, and Eurospin.

Examples of new products

Germany

Market overview

Changing German consumer behaviour as a result of the pandemic has led to highier sales of baked goods as many consumers working from home have been able to consume breakfast at home, increasing demand for bread in particular. An increasing number of Germans are purchasing bread from supermarkets. Bread sales increased by a CAGR of 1.0% over 2016-21, valued at US$12.1 billion in 2021 and forecast to grow 0.8% over 2021 to 2026 to US$12.7 billion in 2026.

The pandemic has also driven Increased popularity regional products, which is considered to have a lower carbon footprint and to be healthier. With many Germans also wanting to support local businesses, these products, often artisanal, tend to be more expensive than non-regional products.

Despite an easing of restrictions in Germany, many Germans have become accustomed to working from home, which has had an impact on most consumers' behaviour. The "snackification" trend, has been strengthened, is expected to drive sales of dessert mixes and packaged cakes. It is also likely that the number of family celebrations, social gatherings and other events will increase over time, from which cakes in particular could benefit. For these reasons, new, innovative products and new flavours for cakes and dessert mixes are expected to be introduced. Frozen baked goods saw fastest growth of all baked goods over 2016 to 2021 by a CAGR of 6.5% over 2016 to 2021, followed by dessert mixes (4.1%) pastries (2.5%) and cakes (1.9%). Growth in these products is epected to slow over 2021 to 2026.

New product launches

From 2017 to 2021, 7,307 baked goods products were introduced in Germany, with the highest number of new products launched in 2019. The most popular product claim was organic, followed by sustainable and environmentally friendly package. The companies with the highest number of new product launches were ligle, followed by Aldi Sud, and Penny Markt.

Examples of new products

France

Market overview

Bread is still widely purchased on a daily basis across France, with the majority of bread purchased from local bakeries which are increasingly offering loaves made with grains, alternative flours and organic ingredients. Consumers perceive artisanal bread to be of good quality and naturally healthy due to the quality of flour used in its baking. Another driver for purchasing bread from artisanal bakeries is consumers' desire to preserve the French bakery tradition.

Mass produced bread is perceived as less healthy but despite consumers' preference for fresh artisanal bread, packaged bread has seen very strong growth during the pandemic, in particular, packaged flat bread, which has seen developments in the use of alternative grains. Bread sales increased by a CAGR of 2.0% over 2016-21, valued at US$9.6 billion in 2021 and forecaste to grow 2.7% over 2021 to 2026 to US$11.3 billion in 2026.

As pandemic restrictions have eased, opportunities for celebrations involving cakes and pastries have become easier as larger gatherings are permitted, leading to growth in sales of these products. Dessert mixes have been in decline and despite healthier ingredients and new recipes, consumers have been opting for either home-made or shop bought desserts. Much of the diminishing popularity of this category stems from its unhealthy image as more consumers are endeavouring to reduce their sugar intake. Cakes are expected to grow fastest of all baked goods by a CAGR of 3.3% over 2021 to 2026, followed by bread (2.7%) and pastries (1.0%).

New product launches

From 2017 to 2021, 8,766 baked goods products were introduced in France, with the highest number of new products launched in 2019. The most popular product claim was environmentally friendly package followed by recycling, organic. The companies with the highest number of new product launches was Mondelez, followed by Scamark, and De Neuville.

Examples of new products

Spain

Market overview

Consumer trends that emerged during pandemic restrictions have persisted following the easing of restrictions in spring 2021, with many employees continuing to work from home. As a result, the rate of growth in sales of baked goods is expected to increase over 2021 to 2026, with demand continuing to shift from unpackaged to packaged baked goods due to hygiene concerns.

Consumers continue to enjoy leisurely breakfasts working from home, supporting increased consumption of products like bread and pastries. People are also cooking more at home and thus consuming more bread, in particular flat breads like tortillas, as an accompaniment to meals. Bread sales are expected to increase by a CAGR of 1.8% over 2021 to 2026 to US$3.9 billion in 2026. Frozen baked goods are forecast to see the fastest growth of all baked goods by a CAGR of 3.0% over 2021 to 2026, followed by pastries (2.9%) and bread (1.8%).

Organic and other health and wellness offerings are expected to continue growing in importance in baked goods. Price remains a major barrier but retail chains are launching private label organic baked goods, in addition to stocking more branded organic offerings, such as Oroweat Bio by Bimbo.

New product launches

From 2017 to 2021, 3,785 baked goods products were introduced in Spain, with the highest number of new products launched in 2021. The most popular product claim was Low/No/Reduced Allergen. Followed by environmentally friendly package and recycling. The companies with the highest number of new product launches was Aldi, followed by Mercadona, and Lidle.

Examples of new products

Poland

Market overview

Sales of baked goods in Poland remain mostly artisanal from bakeries, as their popularity is driven by the perception of higher quality and use traditional Polish recipes, perceptions that have been prominent during the pandemic. Polish consumers are not expected to change this habit and are increasingly choosing packaged products, which has prompted some companies to invest in frozen artisanal products, which are then sold to retailers to be re-baked in-store. Despite this, packaged flat bread is growing in popularity in Poland, especially corn packaged flat bread, which is popular in Mexican cuisine. Flat breads are also used as a wrap for making sandwiches and as employees return to the office, demand is expected to grow. Bread sales are expected to increase by a CAGR of 3.8% over 2021 to 2026 to US$5.2 billion in 2026.

Pastries are forecast to see the fastest growth of all baked goods by a CAGR of 5.9% over 2021 to 2026, followed by dessert mizes (4.8%) and bread (3.8%).

New product launches

From 2017 to 2021, 2,464 baked goods products were introduced in Poland, with the highest number of new products launched in 2017. The most popular product claim was low/no/reduced allergen, followed by organic, and gluten free. The companies with the highest number of new product launches were Lifle, followed by Jeronimo Martins, and Aldi.

Examples of new products

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Resources

• Euromonitor International:
  • Baked goods in Italy (December 2021)
  • Baked goods in Germany (December 2021)
  • Baked goods in France (December 2021)
  • Baked goods in Spain (December 2021)
  • Baked goods in Poland (December 2021)
• Mintel, Global New Product Database (accessed Sept, 2022)

Baked goods in the European Union – Focus on top five markets
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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