KN15333

KEY NOTE BREAD AND BAKERY PRODUCTS : MARCH 2003

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This report covers: white bread, brown bread, wholemeal bread, bakery snacks, ethnic breads, speciality breads, sandwich loaf, split-tin, farmhouse, batch loaf, cob, vienna, granary, softgrain, soda bread, naan, pitta, focaccia, ciabatta, baguette, cholla, morning goods, premium, malt loaf, fruit bread, French bread,

Companies covered include: Allied Bakeries, British Bakeries, Fine Lady Bakeries, Fletchers Bakeries, Frank roberts & Sons, Harvestime, Kears Group, Warburtons, William Jackson Bakery, Greggs, Lyndale Foods, Three Cooks,

TABLE OF CONTENTS

1	1. Market Definition 8
2	REPORT COVERAGE 8
3	MARKET SECTORS 8
4	Bread 8
5	White Bread 9
6	Brown and Wholemeal Bread 9
7	Ethnic and Speciality Bread 9
8	Bakery Products 10
9	MARKET TRENDS 10
10	Benefits and Drawbacks in Changing Eating Habits 10
11	The Price of Bread 11
12	A More Competitive Marketplace 11
13	A More Polarised Marketplace 11
14	MARKET POSITION 12
15	Table 1: A Comparison of the UK Bread Market and Other Major Food Markets by Value (£bn at rsp), 2001/2002 12
16	KEY TRADE ASSOCIATIONS 12
17	Federation of Bakers 12
18	Flour Advisory Bureau 13
19	National Association of British and Irish Millers 13
20	National Association of Master Bakers 13
21	The Scottish Association of Master Bakers 13
22	2. Market Size 14
23	THE TOTAL MARKET 14
24	Table 2: The UK Bread and Bakery Products Market by Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 14
25	BY MARKET SECTOR 14
26	Bread 14
27	Table 3: The UK White, Brown and Wholemeal Bread Market by Value at Current Prices (£m at rsp and percent), 1998-2002 15
28	White Bread 15
29	Table 4: The UK White Bread Market by Value at Current Prices (£m at rsp and percent), 1998-2002 15
30	Brown and Wholemeal Bread 15
31	Table 5: The UK Brown and Wholemeal Bread Market by Value at Current Prices (£m at rsp and percent), 1998-2002 16
32	Ethnic and Speciality Bread 16
33	Table 6: The UK Ethnic and Speciality Bread Market by Value at Current Prices (£m at rsp and percent), 1998-2002 16
34	Bakery Products 16
35	Table 7: The UK Bakery Products Market by Value at Current Prices (£m at rsp and percent), 1998-2002 17
36	Overseas trade 17
37	3. Industry Background 18
38	Recent History 18
39	NUMBER OF COMPANIES 18
40	Manufacture of Bread, Fresh Pastry Goods and Cakes 19
41	Table 8: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Bread, Fresh Pastry Goods and Cakes by Turnover Sizeband (£000, number and percent), 2001 and 2002 19
42	EMPLOYMENT 20
43	Table 9: Number of UK Local Units Engaged in the Manufacture of Bread, Fresh Pastry Goods and Cakes by Number of Employees (number of units and percent), 2002 20
44	REGIONAL VARIATIONS IN THE MARKETPLACE 20
45	Table 10: Major Plant Bakers by Number of Manufacturing Sites and Location of Operations, 2002 21
46	DISTRIBUTION 21
47	Table 11: Expenditure on Bread and Bakery Products by Food Type by Place of Purchase (£), 2000/2001 22
48	Table 12: The Leading Multiple Bakers by Number of Retail Units, 1996, 1999 and 2002 23
49	HOW ROBUST IS THE MARKET? 23
50	LEGISLATION 24
51	Below-Cost Selling 24
52	Control of Asbestos at Work Regulations 2002 24
53	4. Competitor Analysis 25
54	THE MARKETPLACE 25
55	Plant Bakeries 25
56	Table 13: Vertical Integration in the Milling and Baking Industry, 2001 26
57	In-Store Bakeries 26
58	Craft Bakeries 27
59	MARKET LEADERS 27
60	Allied Bakeries 27
61	Company Structure 27
62	Current and Future Developments 27
63	Financial Results 28
64	British Bakeries Ltd 28
65	Company Structure 28
66	Current and Future Developments 29
67	Financial Results 29
68	Fine Lady Bakeries Ltd 29
69	Company Structure 29
70	Current and Future Developments 29
71	Financial Results 29
72	Fletchers Bakeries Ltd 30
73	Company Structure 30
74	Current and Future Developments 30
75	Financial Results 30
76	Frank Roberts & Sons Ltd 31
77	Company Structure 31
78	Current and Future Developments 31
79	Financial Results 31
80	Harvestime Ltd 31
81	Company Structure 31
82	Current and Future Developments 32
83	Financial Results 32
84	Kears Group Ltd (Rathbones Bakeries Ltd) 32
85	Company Structure 32
86	Current and Future Developments 32
87	Financial Results 32
88	Warburtons Ltd 32
89	Company Structure 32
90	Current and Future Developments 33
91	Financial Results 33
92	William Jackson Bakery Ltd 33
93	Company Structure 33
94	Current and Future Developments 33
95	Financial Results 34
96	SPECIALIST RETAILERS 34
97	Greggs PLC 34
98	Company Structure 34
99	Current and Future Developments 34
100	Financial Results 34
101	Lyndale Foods Ltd 35
102	Company Structure 35
103	Current and Future Developments 35
104	Financial Results 35
105	Three Cooks Ltd 35
106	Company Structure 35
107	Current and Future Developments 35
108	Financial Results 35
109	OUTSIDE SUPPLIERS 36
110	Wheat Supplies 36
111	Table 14: Total UK Wheat Harvest (million tonnes), 1985/1986, 1990/1991, 1995/1996-2001/2002 36
112	Table 15: Wheat Usage by Area of Origin ( percent), 1985/1986, 1990/1991, 1995/1996-2001/2002 36
113	Flour Milling 37
114	Table 16: Flour Production by Type of Flour by Volume (000 tonnes and percent), 1997/1998-2001/2002 38
115	ADVERTISING AND PROMOTION 40
116	Table 17: Main Media Advertising Expenditure on Bread and Bakery Products (£000), Years Ending September 2001 and 2002 40
117	Table 18: Main Media Advertising Expenditure by Allied Bakeries, British Bakeries and Warburtons, (£000), Years Ending September 2001 and 2002 41
118	EXHIBITIONS 42
119	British Bread Month 42
120	5. Strengths, Weaknesses, Opportunities and Threats 43
121	THE TOTAL MARKET 43
122	Strengths 43
123	Weaknesses 43
124	Opportunities 43
125	Threats 44
126	WHITE BREAD 44
127	Strengths 44
128	Weaknesses 44
129	Opportunities 45
130	Threats 45
131	BROWN AND WHOLEMEAL BREAD 45
132	Strengths 45
133	Weaknesses 45
134	Opportunities 46
135	Threats 46
136	ETHNIC AND SPECIALITY BREAD 46
137	Strengths 46
138	Weaknesses 46
139	Opportunities 47
140	Threats 47
141	BAKERY PRODUCTS 47
142	Strengths 47
143	Weaknesses 47
144	Opportunities 48
145	Threats 48
146	6. Buying Behaviour 49
147	INTRODUCTION 49
148	Consumer Penetration 49
149	Table 19: Penetration of Bread ( percent of adults), 2002 49
150	Usage of Bread 49
151	By Type 49
152	Table 20: Usage of Bread by Type ( percent of adults), 2002 50
153	By Sex 50
154	Table 21: Usage of Bread by Sex ( percent of adults), 2002 50
155	By Age 51
156	Table 22: Usage of Bread by Age ( percent of adults), 2002 51
157	By Social Grade 52
158	Table 23: Usage of Bread by Social Grade ( percent of adults), 2002 52
159	By Region 52
160	Table 24: Usage of Bread by Region ( percent of adults), 2002 53
161	By Presence of Children 53
162	Table 25: Usage of Bread by Presence of Children ( percent of adults), 2002 54
163	Consumption of Bread 54
164	Table 26: percentage of Most Often Eaten Bread by Type of Bread and Gender ( percent of adults), 2002 54
165	7. Current Issues 56
166	BELOW-COST SELLING 56
167	CORPORATE DEVELOPMENTS 56
168	In-store bakeries 57
169	SUPERMARKET INITIATIVES 57
170	CONVENIENCE STORES 57
171	CRAft BAKERIES 58
172	NEW PRODUCT DEVELOPMENT 58
173	8. The Global Market 59
174	NORTH AMERICA 59
175	EUROPE 59
176	CHINA 60
177	9. Forecasts 61
178	Introduction 61
179	FORECASTS 2003 TO 2007 61
180	Table 27: The Forecast UK Bread and Bakery Products Market by Value at Current Prices (£m at rsp and percent), 2003-2007 61
181	FUTURE TRENDS 62
182	10. Company Profiles 63
183	Abf Grain Products Ltd 64
184	British Bakeries Ltd 66
185	Fletchers Bakeries Ltd 68
186	Greggs Plc 70
187	Harvestime Ltd 72
188	Kears Group Ltd 74
189	Lyndale Foods Ltd 76
190	Three Cooks Ltd 78
191	Warburtons Ltd 80
192	William Jackson bakery ltd 82
193	11. Further Sources 84
194	Associations 84
195	General Sources 84
196	Bonnier Information Sources 85
197	Government Publications 86

EXECUTIVE SUMMARY

The market for bread and bakery products has recovered from a period of relative decline during the late 1990s, which was brought about mainly by aggressive price-cutting by multiple retailers, most of which has now abated. During 2002, the market grew by 2 percent, reaching a total of £2.95bn.

The recovery within the white bread subsector, which suffered most from discounting, has been sustained during 2002, driven by new product development (NPD) in the premium category. However, despite a considerable amount of NPD by plant bakeries, the brown and wholemeal subsector has continued to decline. Conversely, sales of ethnic and speciality bread have continued to rise, though at a lower rate than in previous years as the subsector begins to mature. Bakery products is another area to have benefited from the end of discounting (although growth in 2000 was poor compared with other years).

The bread and bakery products market continues to be highly competitive, with manufacturers and retailers having to constantly innovate in order to retain their share of the market. Although the dramatic price cuts that dominated the bread market in the recent past are no longer apparent, it is still the case that most standard and economy loaves are sold by multiple retailers at below cost price. With the prospect of new EU legislation covering this practice - which is banned in some European countries - trade bodies have been acting to try and protect the interests of the UK bread industry.

The craft bakery category has reinvented itself in the face of competition from both plant bakeries and multiple retailers, now focusing as much on takeaway food and seated catering as on baking. However, currently it faces competition from coffee chains, which are themselves showing an interest in baking.

Despite there being little room for growth in the market, continued product innovation and, in particular, the development of added-value products within the speciality bread and bakery products sector, will help to provide steady, but unspectacular, growth during the next 5 years (to 2007). It is unlikely that the issue of persistent below-cost selling of standard loaves will be addressed in the near future. However, the surrounding debate may be beneficial to the industry, in that it can be used to draw the attention of the media and consumers to the potential negative effects of this practice.

Text © 2003 Key Note

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Last updated by Amanda Porteous July 2003