The health and wellness bakery market continues to grow and is moving from a niche specialty sector to mainstream in various areas of the world. Fortified/functional bakery products such as those containing omega-3s, as well as organic and high-fiber baked foods, are just some of the key trends in health and wellness, according to global business intelligence provider Euromonitor International, Chicago, Illinois, USA.
OMEGA-3 BREAKTHROUGH. According to Euromonitor International data, combined global value sales of fortified/ functional bread, biscuits and breakfast cereals were US$20 billion in 2007, up from US$15.4 billion in 2002. North America and Western Europe accounted for 65% of these sales.
Not surprisingly, breakfast cereals, where fortification has long been the industry standard, account for more than 70% of fortified/functional bakery value sales, which explains why Kellogg leads the category with a value share of almost 16%. Kellogg was one of the first companies to launch a probiotic breakfast cereal — Kashi Vive — in 2006. It could now be on the cusp of another breakthrough innovation — the integration of DHA omega-3 into dry cereals.
Kellogg signed a contract with DHA producer Martek, which resulted in the October launch of Kellogg’s Live Bright Brain Health Bar. DHA omega-3 has well-established brain and heart health benefits. On the other hand, ALA omega-3 from linseeds, which is usually added to breakfast cereals claiming to have a high omega-3 content, does not possess those properties and cannot make the FDAapproved health claim that it lowers the risk of coronary heart disease. Therefore, any breakfast cereal producer that succeeds in launching the first DHA-fortified lines targeted at children or the hearthealth market stands to benefit greatly from the first-mover advantage.
GUT HEALTH. Apart from the expected entry of DHA into breakfast cereals, Euromonitor International has identified two more key opportunities for fortified/ functional bakery products in 2009 — probiotic cereals and biscuits aimed at children and weight management offerings. For child-targeted probiotic cereals and biscuits to succeed, manufacturers should put an emphasis on "healthy tummies" and resilient immune systems, and they should also highlight that probiotic bacteria can improve the assimilation of minerals such as iron and calcium from the diet. Nutritional deficiencies and foodborne infectious diseases, particularly in children, are rife in developing countries. Biscuits are among the most affordable fortified packaged foods for low-income parents, so there are real opportunities for fortified/functional bakery products to make inroads outside of Western Europe and North America.
Functional weight management ingredients have not yet realized their potential within the bakery products sector. Unlike omega-3 fatty acids, which have successfully found their way into bread, other innovative functional ingredients such as hydroxycitric acid, conjugated linoleic acid, chromium and green tea extract have not quite made it yet. However, weight management products ideally need to have a daily presence in consumers’ lives if they are to stand any chance of being effective, thus products like bread and breakfast cereals offer a golden opportunity.
WESTERN ADVANTAGE. Better-for-you (BFY) is probably the most well-established of health and wellness packaged food categories. Global value sales of reduced-fat and reduced-sugar bakery products amounted to a combined US$3.9 billion in 2007, with reduced-fat bakery sales doubling those of reduced-sugar bakery.
The best performing growth sectors of 2007 were reduced-sugar biscuits and breakfast cereals, with global value growth rates of 14% and 11%, respectively. A significant portion of products in these sectors are targeted at children, fueled by concerns over childhood obesity. In contrast, reduced-sugar cakes, which are mainly targeted at adults, delivered a sluggish 2% value growth in 2007.
So far, BFY bakery products are heavily concentrated in Western Europe and North America, with 95% of sales originating from these two regions. The penetration of BFY products is closely linked to the degree of development of the overall packaged food sector, more so than other health and wellness categories. As this progresses, particularly in Latin America, Eastern Europe, China and India, so will the success of BFY bakery products.
ORGANIC SECTOR. After fresh fruit and vegetables, bakery is one of the most popular organic food sectors. Although value sales of global packaged organic bakery product stand at US$3.9 billion, this figure hides the market’s true size because many organic baked foods are sold unpackaged through bakeries. This is especially true for bread, which is already by far the largest sector in (packaged) organic bakery with global value sales of US$2.3 billion in 2007.
Not surprisingly, the types of leading organic bakery products (and types of manufacturers) vary according to differing bakery consumption habits in each country. For example, in the US, where breakfast cereal consumption is highest, organic breakfast cereal manufacturer Nature’s Path leads the organic bakery market with a 23% value share. In the UK, which has a higher consumption of packaged industrial bread than any other European country, the bread manufacturer Warburtons is in the lead with a 29% share.
Because of the economic downturn, the organic bakery category’s phenomenal 94% growth rate achieved during the 2002-07 review period is unlikely to be repeated in the foreseeable future. Organic bakery manufacturers will have to work hard to offer products of superior quality, rather than just relying on the organic label to command a premium. High-end organic companies such as UK-based Duchy Originals performed well with its biscuits, which are not only organic but of excellent quality and packaged accordingly to convey their premium positioning. In difficult times, consumers will increasingly be looking for affordable treats, so companies like Duchy will swim rather than sink.
HIGH-FIBER FACTOR. Bakery products made from whole grains have long been appreciated as "naturally healthy" because they are rich in fiber, as well as in vitamins and minerals. Euromonitor International data shows that the global market for naturally healthy high-fiber bakery products amounted to more than US$28 billion in 2007, which is up nearly 60% from 2002 sales. High-fiber bread accounted for two-thirds of sales, highfiber breakfast cereals for almost onefifth, and the rest was made up by highfiber biscuits. Growth rates held steady over the review period, and the overall category achieved a dynamic 8% value increase in 2007, which shows that the high-fiber boom is far from over.
North America, with 2007 value sales of US$8.1 billion, is still catching up with Western Europe’s impressive US$13.8 billion. The US high-fiber bakery products market will be boosted by the fact that in May 2008 the US Food and Drug Administration (FDA) finally conceded that brown rice, in line with other whole grains, should also be allowed to make the claim that "diets rich in whole-grain foods and other plant foods and low in total fat, saturated fat and cholesterol may reduce the risk of heart disease and some cancers." Previously, brown rice had been considered too low in dietary fiber by FDA to qualify for the claim.
Although brown rice is not suitable as a main ingredient for most types of bakery products because of its lack of gluten, there is plenty of potential in breakfast cereals, snack bars and brown rice snacks. However, major breakfast cereal players are clearly not making the most of brown rice.
For example, General Mills, which introduced whole grains into its cereals in 2004 with great fanfare, is still relying on a proportion of highly-refined grains. The company’s Rice Chex, for example, contains some whole-grain brown rice, but white rice is listed as the product’s first ingredient. Market leader Kellogg’s Rice Krispies, the country’s eighth most popular breakfast cereal brand, is made entirely from refined white rice. Swapping white for naturally healthy brown would be a prudent strategy in children’s cereals such as Rice Krispies, which are frequently lambasted for their nutritional shortcomings.
The health and wellness bakery market contains a number of opportunities for growth and expansion in upcoming years, providing leading players keep an eye on key trends and continue to take advantage of consumer health and wellness needs and demands.
Simone Baroke is a research analyst for Euromonitor International. For more information on market data and research analyses, go to www.euromonitor.com or call (+1) 312 922 1115.