Analyst forecasts long term growth but warns there are still challenging times ahead
FOLLOWING another couple of years of modest growth, biscuits and cakes sales will begin to perform better and by 2019 be worth £4.39bn in the UK, predicts market analyst Key Note.
It reckons biscuit sales will have increased by 9.7% in the five years to 2019 to a value of around £2.89bn, up 32.1% from 2010.
And it expects the cake sector to be worth £1.5bn, representing growth of 8.6% from 2015 and 18.3% from 2010.
But it adds: “Throughout this time frame growth is likely to be primarily attributable to inflated retail prices rather than increased volume sales; the faster rate of forecast growth between 2017 and 2019 reflects anticipated rises in the rate of inflation.”
Looking at the current situation the report says, despite continued popularity of biscuits and cakes, market conditions remain challenging.
“In addition to extreme competition and product saturation within the marketplace, UK biscuit and cake manufactures must also compete with confectionery, snack foods and ice cream products,” it says.
“To remain competitive amid a growing threat from cheaper private-label products, biscuit and cake manufacturers have had to sacrifice profitability in order to invest in new product developments, marketing campaigns and promotional activity.”
“Rising prices, rather than increasing volume, will be the key reason for growth in coming years”
Sweet biscuit consumption in the UK is said to be down while consumption of other biscuits is rising.
Volume sales of cakes is down, largely due to the trend for baking at home influenced by TV shows such as the BBC’s Great British Bake Off.
The report lists the three most influential factors in shoppers’ decisions to buy biscuits and cakes as price, convenience and health.
“The prioritisation of price has escalated since the onset of the financial crisis in 2008/2009, driving the demand for cheaper, private-label biscuits and cakes,” it says.
“Britons are living increasingly fast-paced lifestyles and their shopping habits reflect this.
“In the biscuits and cakes market, this is primarily driving the demand for products that can be eaten on-the go.”
Looking at the influence of health, it says: “Government initiatives and media attention have helped to raise awareness regarding the negative implications of an unhealthy diet and this is affecting buyer behaviour.
“In the UK biscuits and cakes market, this is driving the demand for low-fat and/or low-sugar products at the expense of more indulgent options.”
• Key Note Biscuits & Cakes Market Report 2015. £575 www.keynote.co.uk