Gira recently published the fourth edition of its European Bakery Companies Panorama, encompassing all the fundamental industry and market data on the European bakery chain. Gira’s research analyzes all the major developments in this globally mature market, with an assessment of their importance for the future.

By Anne Fremaux, Bakery Director, Gira

Europeans are returning to their bakery favorites. The market is steadily growing and should exceed pre-pandemic levels by 2026. However, the new patterns symbolize not only growth but also change, as foodservice bounces back and retail strengthens its hold.

The Bakery Panorama separately covers the four major bakery products: bread, viennoiserie, patisserie and savory pastry, with key data on 29 European countries, plus Turkey. The analysis looks into markets, distribution channels, supply strategies and the events that are shaping the business environment. It concentrates on Europe’s bakery industries and situates the 200 major European industrial bakers in the context of their major competitors, by specialty products (fresh, packaged, bake-off).

The long-term impact of the COVID-19 pandemic

Total bakery consumption in the 29 European countries covered in the research was about 38 million tons in 2021, with a market value of almost EUR 167 bn (consumer price). Bread and fresh products account for a major part of consumption, with respectively 78% and 69% of total bakery consumption by volume in 2021.

European bakery consumption has been rather static during the past decade and was heavily impacted by the COVID-19 crisis, with total bakery consumption decreasing by 3% in total, between 2019 and 2021. Fresh and sweet bakery products have been the most affected with a 6% drop between 2019 and 2021, whereas bread consumption only saw a 3% decline in the same period. Packaged bakery products have been the main winner with a 3% consumption growth.

A renewal of the artisan sector is foreseen in the United Kingdom, Ireland as well as in Nordic countries.

To what extent will the market recover by 2026? European bakery consumption is going to follow a positive trend with an almost +1% increase per year expected between 2021 and 2026 (more catch-up than long-term growth). Therefore, in 2026 total bakery consumption is expected to reach 101% of 2019 volumes. Fresh bakery consumption is nevertheless expected to remain at only 99% of 2019 volumes in 2026.

Future drivers for bakery consumption:

• The development of out-of-home consumption is among the main drivers, including snacking and food-to-go (a growing fast food segment and bakery chains, meal delivery and click & collect, etc.);
• The search for authentic, artisanal, premiumization;
• Multiple consumption occasions throughout the day;
• Strengthening share of bakery goods for moments related to indulgence and for a genuine experience;
• Growing availability and range of fresh products in in-store bakeries;
• Healthier recipes.

Main restraining forces:

• Greater attention to the balanced nutritional values of products (the unhealthy image of indulgent bakery goods);
• High inflation may (temporarily) limit the premiumization trend and negatively impact the market value;
• Smaller formats/portions of bakery products.

The main consumption dynamics, by type of bakery product

• Bread: special recipes now account for almost 60% of fresh bread consumption, with the greatest share of special bread in eastern and northern European countries, whereas the share of white bread is declining in almost all countries. Flatbreads see ongoing development (both as fresh and packaged bread).
• Viennoiserie: consumption remains centered on French laminated recipes such as croissants (50% of all viennoiserie consumption). Doughnuts will see further premiumization.
• Patisserie: traditional and regional recipes account for the largest share of the market. However, US sweet pastries and branded licensed products are promising segments.
• Savory pastry: the multiplication of consumption occasions (as snacks, for a quick lunch, at breakfast, or in the mid-morning, for an aperitive, as an appetizer/starter, for buffets, seminars, outdoor events, as a meal accompaniment). Flexitarian/vegan trends to favor vegetables and/or cheese.

The main industrial bakers of Europe

The top 200 European industrial bakers have been ranked not only according to their total bakery turnover, but also by technology. The comparison with previous Gira reports highlights the emergent bakery groups and those divesting from bakery operations:

• Bakery companies that have kept their lead in the Top 10 (including Aryzta, Lantmännen Unibake and Barilla)
• Bakery companies that have grown stronger, through acquisitions or organic growth (e.g., Chipita/Mondelez, Bimbo and Europastry)
• Bakery companies that have lost some of their market share (such as Agrofert)
• The new bakery groups that have emerged, often with the financial support of investment funds (e.g., Forno d’Asolo and Novepan)
• And the disappearance of bakery companies/groups (e.g., Cerealto/Siro).

Future changes in distribution structure

In 2021, bakery distribution was split between retail (78% in volume) and foodservice (22%), compared to 75% vs. 25% in 2019. Retail channels and particularly modern retailers were favored in 2020/21 during the COVID-19 crisis as consumers preferred one-stop shopping. Modern retail is, by far, the first distribution channel for all bakery products, and by 2026 will continue to gain shares over traditional bakers for convenience reasons, whereas artisan bakers’ sales should decrease in most European countries. However, a renewal of the artisan sector is foreseen in the United Kingdom, Ireland as well as in the Nordic countries.

The foodservice sector has been strongly affected by the COVID-19 crisis. Overall, the segment saw a total decrease in bakery product sales of 16% between 2019 and 2021. Foodservice is now recovering from the pandemic crisis; but, bouncing back with contrasting trends: full recovery in 2026, compared to 2019 level, is not expected for social (especially the workplace sector) and commercial foodservice (especially table restaurants), whereas bakery chains will further expand, beyond the 2019 level.

Overall, some long-term trends are expected to remain, such as shopping locally, online sales and home deliveries.

Bakery product supply strategy options and impact on production structure

There are different options for fresh bakery product supplies at the point of sales:

• From-scratch baking (buying fresh ingredients and baking from scratch on the premises) remains the main supply method for artisan bakers, albeit decreasing. Scratch baking in the bakery chain sector is linked to the development of ‘artisan’ chain types. In other channels, it is primarily seen in hypermarkets and, to a much smaller extent, in some foodservice sectors.
• Buying fresh bakery products (from artisans or industrial bakers – for reselling) is still the main supply method in social and commercial foodservice. It is also a significant supply method in the bakery chain sector, with fresh bakery products often supplied by chain-owned factories.
• Bake-off (buying semi-finished bake-off products to be baked/thawed in-store) is gaining ground in all channels. It is widely used by modern retailers and bakery chains, whereas its lowest share remains in the artisan baker sector.

In the medium term, the shift towards bake-off will continue. However, the new trend away from international supplies to the benefit of domestic or local sourcing will be reinforced. Therefore, industrial fresh supplies will not decrease further in the future, as some modern retailers and many bakery chains still develop their own central plants delivering the nearby outlets with fresh products.

As of 2021, industrial supplies (packaged, fresh, or bake-off) accounted for 73% of the total consumption of bakery products in Europe, against 27% for artisanal manufacturers. By 2026, bake-off will become the number one supply method for total bakery products, outpacing industrial packaged ambient production. However, it must be outlined that the supply structure varies greatly between countries, with an ongoing high share of artisanal production in Southern European countries.

Photo: AdobeStock (#329082278)

This article was published in Baking+Biscuit International, issue 2 – 2023.