FDBusiness.com

According to ‘Biscuits & Cakes’, a new Market Report Plus by market intelligence company Key Note, the value of the industry rose by 4.4% in 2012, as a result of price inflation and the rise of the breakfast biscuit.

The UK is a biscuit- and cake-loving nation. It has one of the most developed markets for the products, which were traditionally consumed at afternoon tea, but are now enjoyed at various occasions throughout the day. 2012 saw the rise of the breakfast biscuit, a concept that was engineered by Mondelez under its Belvita Breakfast Biscuits brand. Consumers are increasingly aware of the importance of eating breakfast, but do not have time to sit down for the meal due to their hectic lifestyle, preferring to eat breakfast on-the-go. Biscuits and cakes are also often included in packed lunches and are eaten as a sweet treat following both lunch and dinner, or as a snack throughout the day.

Biscuits and cakes manufacturers are capitalising on the snacking trend and the demand for on-the-go options by introducing their products in individually-packed formats. These variants are also appealing to consumers who are watching their waistlines, but who want to indulge in biscuits and cakes in moderation.

Although there is demand for biscuits and cakes and penetration has increased, brands are operating in difficult market conditions. Falling disposable incomes, as well as a focus on healthy eating, mean that buying frequency has declined. Moreover, cash-strapped consumers are prioritising value, meaning that a growing percentage of buyers are swapping brands for own-label equivalents. Supermarkets have invested in new product development (NPD) and now offer products of similar quality to brands, but at lower prices. This is putting significant pressure on brands to engage in promotional activity to remain competitive in the market and has hindered value sales.

Value growth has principally been driven by price inflation. Large-scale innovation is increasingly rare as manufacturers prefer to alter existing products to maintain market dynamism. Modified versions, new formats, sub-ranges and themed packaging have been the focus of NPD in the market.

Key Note expects that the UK biscuits and cakes market will continue to grow over the next 5 years. The value of the biscuits sector is forecasted to increase at a faster pace than cakes, and an emphasis on healthy alternatives is expected to be an important theme in the market. Overall, the industry is expected to rise by 17.7% between 2013 and 2017.