With digitization, changing consumer behaviour and thrust on rural development, bakery industry is undergoing major changes in the last two decades. Though there is a consumption slowdown, the budget 2020 came across as the silver lining for the baking products. The proposed reduction in personal taxes and special focus on agriculture, irrigation and rural development are fuelling growth. The rural consumption has superseded industry expectation and the size of modern retail estimated to grow 3 times in the next 5 years
Even consumption patterns have evolved rapidly in the last five to ten years. The consumer is trading up to experience the new or what he hasn’t. The consumer is looking for products which are innovative, quality driven, value for money and various factors. A new report by Booz & Company for the Confederation of Indian Industry (CII), called FMCG Roadmap to 2020: The Game Changers, spells out the key growth drivers for the Indian fast moving consumer goods (FMCG) industry in the past ten years and identifies the big trends and factors that will impact its future. The bakery products market majorly covers the products such as cakes and pastries, biscuits, bread, morning goods and they sell through hypermarkets/ supermarkets, convenience stores, speciality stores, online retailing, other distribution channels.
Nonetheless, the changing market dynamics bring with it an array of products for customer loyalty and attention. Here is a look at how the future of bakery market would be:
Evolving Consumer behavior
The bakery products have long been basic food products for human nutrition. The convenience, accessibility and nutrition profile associated with them are the major factors of their sustenance in the modern market. Their significance as a major portion of diet has been prevalent in middle to lower income group countries. Bread has been a staple diet of many local cuisines worldwide and has shown a remarkable growth even during the period of global economic crisis. The rising trend of “Natural nutrition”, “healthy living” and “organic products” has significantly raised the consumers’ demand on whole wheat, light, natural and additive-free products. In recent years, the growth in sales of packaged, whole wheat, whole meal, gluten-free and natural products is an important indication of this new and healthy living sense.
Rural market: The key focus
Increasing smart phone and internet penetration have been helping people in the rural areas to get easy access to online shopping on various e-commerce websites. Availability of easy mobile payment options has led to increase in the number of orders from tier 2 and tier 3 cities which enables people to get timely delivery at their doorstep. If we talk about the future, products such as fruit juices, low-calory cookies and breads which had no demand in the rural markets earlier have suddenly started establishing their presence. While most FMCG players have succeeded in establishing sufficient access to their products in rural areas, the next wave of growth is expected to come from increasing category penetration, development of customised products and up-trading rural consumers towards higher-priced and better products.
Categories are evolving at a brisk pace in the market for the middle and lower-income segments. With their rising economic status, these consumers are shifting from need- to want-based products. The global bakery product market is highly fragmented, particularly with the significant presence of numerous global and regional players. The market share analysis does not account for revenue from artisan bakeries, but the revenue for retail channels. The strategy for expansion and partnership agreement has been the crucial strategy.