|Title:||United Kingdom top five brands of home-baking products by retail sales and sales growth in pounds sterling and percentages for the year ended February 29, 2012|
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Home baking: XX w/e XX February 2012
SPEND CHANGE [pounds sterling] y-o-y %
Jus-Rol X,XXX,XXX XX.X
Dr Oetker X,XXX,XXX XXX.X
Betty Crocker X,XXX,XXX -XX.X
Renshaw XX,XXX n/a
Fiddes Payne X,XXX n/a
Home baking is hot. In the past five years, the market has almost doubled in size from [pounds sterling]XXXm to [pounds sterling]XXXm, due to a measure of austerity, a handful of celebrities and a sprinkling of new opportunities--plus a big dollop of inflation.
And it's shown no sign of slowing, up XX.X% in value in the past year. Now XX% of Brits bake at least once a fortnight, and the average consumer eats home-baked goods X.X times every two weeks. "Home baking is one of the few categories that has continued to grow during the recession," says Moji Forde, Sainsbury's home baking category planner.
So why has the nation gone baking mad? What are the dynamics driving the market? How are retailers and suppliers responding? Which areas are benefiting most? And are there any further opportunities?
Without question, the explosion in media about bakery has helped the market. New TV programmes focused on baking have created celebrity TV bakers, and there are myriad magazines, websites and blogs devoted to the topic--not to mention a new exhibition, The Cake & Bake Show, scheduled for September in Earls Court. The tricks of the trade are all accessible, encouraging the uninitiated to try their hands at baking and the experienced to become more adventurous than ever.
In an age of austerity, home baking is a cheap thrill. It competes as much with a trip to Legoland as it does with Mr Kipling or Hovis or McVitie's. Indeed, insofar as it's much more focused on entertainment than the practical need for sustenance, you could even say home baking is the new rock and roll.
That means it is no longer just the domain of families and the over-XXs. A Dr Oetker U&A study, updated in 2012, shows that the fastest growing group is 'nervous bakers'--young and inexperienced, but keen. Indeed, Tesco chilled pastry and homebaking buyer Alexandra Tomalin notes that the number of XX to XX-year-olds buying cake decorations grew by XX% in the past year, "showing that baking is appealing to a younger audience". And looking specifically at cake decorations, the majority of households buying into the sector (XX%) are those without children [Kantar Worldpanel XX w/e April 2012]. "They are buying them for the office bake-off or the 'bake and booze' night in with their partners," says Edd Kimber (aka The Boy Who Bakes), winner of the BBC's first Great British Bake Off.
Nonetheless, Forde cautions against ignoring the core market of seasoned home bakers. "Innovation has not been a significant driver of growth, but it is a dynamic category where it is important to meet the demands of increasingly adventurous bakers for a more diverse product range," she says. "Innovation is relevant to core shoppers--hence the success of coloured icing, to meet the need to create stunning Jubilee cakes."
The Royal Wedding, the Diamond Jubilee (see pXX) and now the Olympics have been giving consumers new excuses to showcase existing skills or take their first faltering steps into baking. And, as Forde says, the Jubilee has inspired a lot of extra business in 'finishings', up XX% by value and XX% by volume since 2008, with X% value growth and X% volume growth in the past year [Kantar]. Of all the home baking sub-categories, only cake mixes has grown at a faster lick in the past year (see left).
But it's not all good news. While people are visiting the category more often and spending more per trip, the number of baking occasions has actually fallen by X% in the past year (with men aged between XX and XX the only group in growth). This suggests some growth, at least, is being driven by bigger--or more expensive--home-baked goods.
Value growth has also been flattered, to an extent, by price inflation. Some of this, and the X.X% volume uplift in the past year, has resulted from premiumisation. But the return of commodity-based inflation is having a material impact not only on prices, but on shopper behaviour.
Fruit & nuts
This is most evident in fruit and nuts, where price inflation was wholly responsible for its XX.X% value growth. Indeed, it's the only category to show a decline in volume, down X% on 2011. Over the five-year period, value sales have increased by XX%, but fruit and nut volumes have grown a paltry X%.
That makes the performance of category leader Whitworths all the more impressive. In a market in which own label accounts for XX% of volume, it doubled its share from X.X% to XX%, with value up XX.X%, and XX.X% growth in volume. As well as increased frequency of purchase, Whitworths put its success down to a continuing focus on taste. "I defy anyone to find a better-tasting juicy raisin than our Juicy Raisins," says Clinton Orchard, Whitworths' marketing director.
With XX new lines, including pre-soaked and cut fruits, and flaked, roasted and ground nuts, Whitworths' new essentials range also taps into another key trend in home baking: convenience. "The time it takes to chop and roast is often not included in recipes," says Orchard, "so this range is designed to make baking easier."
Flour, with values up ii% year-on-year versus X.X% volume growth, has also suffered from inflation. "The increase in the value of the flour sector is a combination of increased commodity costs and less deep promotions" says Edward Otero, marketing manager for home baking at Kerry Foods.
Own label dominates the category, but once again, the strongest growth has come from brands. Homepride, the fastest growing, has boosted value sales by XX%. Allinson, meanwhile, grew value and volume sales by XX% and XX% respectively, it says, by targeting bakers with a health and craft focus.
According to its CEO Claire Marriage, Doves Farm has also seen big growth in its specialist flours as "people become more adventurous with their baking, trying out spelt and rye flour for their breads". Doves Farm has also experienced a big uplift in gluten-free flour. And last year it introduced einkorn flour, using one of the earliest cultivated forms of wheat. Thought to have been born in the 'Cradle of Civilisation' around the eastern Mediterranean, and old enough to have been in decline by the time the Bronze Age rolled around, it makes spelt look young.
The hottest ingredient in flour, however, is the chia seed, widely hailed as a superfood. The seed contains more omega-X fatty acids than salmon, antioxidants and minerals, and is a complete source of protein. The first flour to employ chia is Amy Ruth's gluten-free baking mix, which contains XX% who-legrains, including chia seeds, quinoa, teff, brown rice and flax.
The sub-category with the highest rate of inflation has been baking sugar. "The sugar market has seen sharp cost increases caused by a shortage in EU sugar production in 2010/2011," says Jon Tanner, sales director at sugar distributor Napier Brown, "and it's expected to remain high."
Happily, rising prices don't appear to have had a negative impact on volume sales, which are up X.X% year-on-year and XX.X% over the past five years. That's partly thanks to growth in the use of specialist sugars such as caster and icing sugar, which now account for XX% of the total sugar category compared to XX.X% in 2010 -growth of XX.X% [Kantar].
With health another important trend, the change in the EU laws last November to permit the use of stevia, a natural artificial sweetener, has seen the launch of two brands--Truvia and Purevia--both of which are targeting the home baker.
But it's in cake mixes that the most significant and prolific innovation has been seen. It's the only sector to show real growth, with volume up XX.X% in the past year and almost XX% since 2008. Value growth of XX.X% year-on-year and XX.X% over five years suggests strong promotions have been a big factor in its success. We can only assume this is in own label (up XX.X% in the last year versus XX% growth for brands), because the innovation in the market has been geared towards greater convenience at a higher price premium.
Last September, Betty Crocker launched seven cake mix lines based on new trends such as whoopie pies and layer cake as well as old favourites. Within four months, the range added Lim in retail sales and helped increase penetration of the brand to a new XX% high [SymphonyIRI/TNS XX w/e XX January 2012].
The latest range, out this month, is Half Baked Cakes from Helen Colley, the former pudding entrepreneur. With an rsp of [pounds sterling]X, the range is clearly at the top end of the market--but consumers splashing out are rewarded with an easy-to-bake 'homemade' kit, in the form of fresh ready-to-bake wet chilled cake mixes, handily packaged with a cake mould and toppings.
"We expect to attract consumers who want to bake a cake, but don't feel confident enough to bake one themselves," explains Andy Hitchen, one of the co-founders of Half Baked Cakes.
Other examples of recent convenience-focused NPD include Dr Oetker's sachets of baking powder and bicarbonate of soda, which "offer an entry price point for new or 'nervous' bakers, while driving category value and frequency," according to Gill Davies, Dr Oetker UK marketing director.
And Jus-Rol's new bake-it-fresh dough products allow consumers to pull off more tricky baking feats, such as croissants, while its newish pastry sheets even do away with the ever-so-irksome need to roll out pastry.
Dairy brand Kerrygold, meanwhile, has introduced two new products with bakers in mind--'Block Butter now softer', which aims to meet the needs of the XX% of consumers who find block butter too hard [Omnibus survey 2012], and Kerrygold Lighter block butter, with XX% less fat.
With all this innovation (and more), perhaps the biggest surprise is that the size of the home baking aisle has remained more or less unchanged. Indeed, some believe the market could become bigger and more valuable still, especially if retailers and suppliers change the way they think about home baking.
Supermarkets are repeatedly accused of being overly reliant on promotions, not always fairly--but in this instance there may be some justification. While, as Renshaw head of marketing Ruth Stead explains, "trial offers are important as the number of new products increase", there seems to be agreement that deals don't grow the category.
"Due to the long shelf life of home baking products, promotions are not particularly effective at driving category growth," says Forde. "They tend to lead to cupboard-filling rather than increased consumption." And Forde argues that "availability is more important than price, as shoppers look for specific products to make a recipe."
Suppliers like Tony Lucas, marketing and development director at The Silver Spoon Company, agree. "Generally we find the home baking market not to be price-sensitive. Relative to shop-bought cakes, home baking represents excellent value."
Stead also argues that there are a number of products that are almost impossible to replicate at home. "Sugar decorations and ready to roll icing, for example, are the home baking equivalent of puff pastry, and this gives the sector a certain price elasticity."
On the other hand, it's simply not true that price is inelastic. Where retailers and manufacturers may be able to achieve better results, however, is through improving their promotions and merchandising.