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bbi-2020-05-Covid-19 Crisis: Impact on European Bakery Markets

The COVID-19 crisis, the lockdown period and all the measures taken to limit the spread of the virus have led to considerable disruption and fear, touching every aspect of business and social life.

The food industries are facing challenges of an unimaginable scale. There are lessons to be learned, challenges to be shared, and a process of trying to understand how the global industry and markets are reacting. At a professional level we are all facing similar challenges, and the industry must go through a series of steps:  Breakdown ” Handling the direct impact ” Rebuilding in a fragile consumer market.
In this crisis analysis, Gira has put the first markers down, looked for the early lessons and built a base of insight for us all to move forward from.
We thought we had returned to a certain “New Normal” this summer, but now things are accelerating again. What has been the impact of this crisis for the food industry, and what will be the consequences in the months to come?
The objective of this new Gira report “COVID-19 CRISIS – IMPACT ON EUROPEAN BAKERY MARKETS” is to provide clear insight into the impact of the global COVID-19 crisis on the European bakery markets, while updating the last Gira figures and forecasts published end-December 2019 in the “BAKE-OFF BAKERY MARKETS IN EUROPE” report.
This report lays out, at European level and for the 14 main European countries:
+ The evolving situation in Europe: the impact of the COVID-19 crisis at each level of the bakery chain:
• Consumer purchasing behaviour: from fresh to packaged bakery products, from indulgence to staple products, coming back to home-baking
• Shopping habit changes and consequences for the different channels
• Foodservice downturn impact on the consumption of bakery products
• Switch in supply method strategies for fresh bakery products
• The consequences of all these changes for the fresh and bake-off bakery markets, at each level of the bakery chain

+ Implications for the future: given a recovery process and the possible scenarios for the evolution of the pandemic, what will the consequences be for fresh, packaged and bake-off bakery products’ consumption, distribution and production.
European bakery product consumption down by 7% in 2020.
The assessment of consumption trends by 2020 quarters shows a 14% decrease in the overall bakery product consumption in Europe in the 2nd quarter of 2020 compared to the same 2019 period, -7% over the 3rd quarter. Developments are contrasted however, depending on the type of product, the technology, or the country. For example in 2Q 2020:

+ Savory snack products suffered the most with -25% in Q2 2020 compared to 2019 – followed by viennoiseries (-22%) and patisseries (-17%). Bread has been less affected, and consumption only fell by -12% over the same period

+ However, in Q2 2020, fresh bakery product consumption fell by -23%. In the same period, ambient packaged products (long shelf life) saw an increase of +10%; and packaged products to bake at home +8%.

+ Spain and Italy experienced the biggest drops in consumption in Q2 2020 (beyond -20%), while consumption of bakery products stagnated or even increased in the United Kingdom and Sweden, due to the importance of packaged products in these countries.

Overall, Gira anticipates an overall -7% to -8% drop in European bakery consumption over the year 2020 compared to 2019. Packaged products should experience over +6% growth in 2020 compared to 2019, while the consumption of fresh products could decrease by -11%, or even more depending on the magnitude of the second COVID-19 wave.
Packaged long-life ambient products are therefore the big winners of the COVID-19 pandemic, especially packaged bread, which has seen double digit growth during lockdown. Protective packaging has given consumers great reassurance, and this is a trend that should continue in the long term. In many countries, packaged bakery products have also been favored by supermarkets, as fresh bakery counter staff have often been assigned to other departments and many in-store laboratories have closed, at least temporarily. Packaged products to be baked at home have indirectly benefited from the renewed interest in home cooking.
During lockdown, consumers favored fresh bakery products allowing better conservation (large formats of bread, sourdough breads, special breads), and core product lines (croissants, chocolate breads, to the detriment of donuts). Snacks and festive products have almost disappeared from the shelves.
It is not expected that the COVID-19 crisis will change consumption habits in the long term. However, it will accelerate the existing trends: demand for healthier products, functional food, continued support for local purchase and local production, search for clean label, organic products etc.
One of the main impacts of the COVID-19 crisis will be increasing concerns about food safety and hygiene – and this will require more protective packaging. This will obviously have an impact on fresh bakery products in the medium term.

Disruption in fresh bakery product distribution

According to the Gira 2019 study on European fresh and bake-off bakery markets, it was expected leading up to 2023 that the foodservice sectors would be the winners in fresh bakery distribution, especially commercial foodservice and bakery chains. But those channels have suffered the most from lockdown, with a drop of -60% in fresh bakery product distribution for commercial foodservice, in Q2 2020. The social foodservice sector (-45%) and bakery chains (-36%) were also largely affected in Q2 2020.
Retail stores also saw their sales of fresh bakery products falling over the same period, but less dramatically than foodservice sectors: supermarkets benefited from stockpiling purchases early on in lockdown while artisans and small retail stores were favored by consumers due to their proximity, small store size and being local. However, many stores have reduced their opening hours and limited their offers to core lines.
Nevertheless, at European level Gira anticipates a drop of -6% to -7% in fresh bakery retail sales in 2020, and beyond -25% for the foodservice sectors. The development of click & collect, online shopping and home deliveries will continue in the near future, including for fresh bakery products, which until then had been little concerned by digitalisation.

Fresh bakery product supply strategies reconsidered during lockdown

The COVID-19 crisis has also had an impact on fresh bakery product supply strategies. In most European countries, the use of bake-off increased to the detriment of scratch baking on the premises, which faced problems of labor shortages and new sanitary constraints.
However, even in bake-off stations, habits have been changed: more baking batches throughout the day to reassure consumers about product freshness and, to reduce wastage, systematic packaging of fresh products after baking.
Alternatively, the delivery of fresh bakery products (for resale) has decreased during lockdown, due to the difficulties of ensuring a daily service. There were a few exceptions however:
+ In Eastern countries, where large fresh industrial bakeries are very competitive in price compared to bake-off products

+ In some Nordic countries, where dynamic artisans and bakery chains have developed direct deliveries to supermarkets, arguing the local manufacturing of their products

+ Finally, some modern retailers relied more on their own central fresh baking units.

At European level, Gira forecasts for 2020 indicate a -15% decrease of artisanal fresh bakery product production (artisans bakers, in-store bakeries and restaurants), whereas industrial production (packaged, fresh and bake-off products) could only see a -5% reduction.
The sharpest fall in industrial bakery production could be seen in Spain, Italy and Germany (-8% down to -10% in 2020 vs 2019). Alternatively, Sweden, the United Kingdom and Poland may experience an increase in industrial production (+1% up to +3% in 2020 vs 2019).
Will these trends continue over the medium term? What would be the consequences for bake-off manufacturers?
According to Gira interviews, on the one hand, many channels are determined to resume with their initial pre-crisis supply methods with the “new normal” situation. On the other hand, channels who started using bake-off during the crisis are likely to continue to use those types of products, at least for part of their supplies.
While retailers and caterers have expressed their gratitude towards suppliers who have managed to maintain deliveries during lockdown despite difficult conditions, some additional requirements could however remain: increased demand for more regional supplies, greater transparency and monitoring of the supply chain, more packaging for fresh products to avoid contamination. Bake-off manufacturers will now have to take these requirements into account.
The potential development of own central manufacturing plants by modern retailers or bakery chains (supplying fresh bakery products to owned stores) should be closely followed by bake-off suppliers: these potential competitors should not be minimized.
European bake-off manufacturers were not spared by the pandemic. Bake-off is the most promising sector (growing by more than + 3% per year before the pandemic) in a steady European bakery market, but it should also see a drop in volumes in 2020. Companies most affected were those manufacturers specializing in foodservice channels or in sweet or savory products.
In the future, the winning manufacturers will be those who will be able to decrease their level of exposure to a specific channel (e.g. foodservice), their degree of product specialization, and who will have the ability to switch from one technology to another. (fresh vs. packaged, or different bake-off technologies).


Gira – A Girag & Associates Company is a strategic consultancy and market research firm that operates in the drink and food sectors and the food-based retail chain throughout the whole of Europe and worldwide.
Anne Fremaux, Director Bakery
Girag & Associates, 13, chemin du Levant, F-01210 Ferney-Voltaire,