On the rise?
Growth rates in the bakery sector are expected to soften as the market continues to mature, but sales growth is expected to continue in line with population growth.

The average unit price of baked goods is expected to increase by 5% over the coming year driven by rising raw material prices. Wheat and sugar prices are expected to rise and manufacturers will continue to attempt to pass the cost on to consumers.

There is a threat to the standalone though as Euromonitor International says it expects supermarkets and hypermarkets will continue to gain retail value sales share.

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However, traditional bakeries will remain popular for special occasions, particularly Ramadan, when demand for traditional pastries and breads peaks.

This is not only because traditional bakeries are viewed as offering higher quality products, but also because families have a tradition of visiting particular bakeries on special occasions.

For bakeries to succeed, especially standalone outlets, it is important they cater to these changes in taste, cater to dietary requirements and find a niche that cannot be replicated by supermarkets with in-store offerings according to Shabayk of Aramtec.

He says the strength of the marketing campaigns and the reputation attached to franchised operations will always make it tougher for standalones to compete. He adds that he has seen many withdraw from the market already.

“The only way to stand against big bakery/pastry chains is to upgrade quality and target new segments of the market and offer different products,” he adds.

Health Matters
Outlets will have to focus on introducing healthier products as increasing consumer awareness of the health benefits of multigrain flour is likely to result in a demand for such products, particularly bread.

In other areas of baked goods, such as pastries and cakes, reduced-fat or reduced-sugar products have been dominated by international players. It is likely that the popularity of diet products in biscuits and snack bars will translate into an influx of diet-orientated baked goods. Domestic players have been warned to update their product portfolios in keeping with these trends, in order to maintain their competitive edge.

The expanded offering of multi-grain artisanal breads will appeal to health-conscious consumers, particularly in light of the government’s diabetes and obesity awareness campaigns.

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