Bakery on the rise

Euromonitor says growing retail sales of bakery items in Middle East and Africa, valued at $24.3bn by the end of 2010, is underpinned by gradual economy recovery

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BREAD and other baked food staples - heavily subsidised in most African and Middle Eastern countries - still remain important in day-to-day diets of consumers in the lower end of the bakery retail market, according to new analysis from Euromonitor International. At the same time, the market analysts report that health and premiumisation are making strides amongst middle- and upper-class consumers; this is driving demand for high added-value products in urban areas. This trend towards premiumisation will be underpinned by a gradual economic recovery in the region, which will increase the purchasing power of middle-class consumers. According to Euromonitor's Countries and Consumers database, GDP in Africa and the Middle East is predicted to grow by 5% in real terms in 2010, compared with the 2% increase registered the previous year Retail value sales of bakery products in the Middle East and Africa are predicted to increase by 6% from the previous year to reach $24.3 billion at end of 2010. Baked goods are the largest segment within the category in 2010, and set to account for 84% of total retail bakery value, followed by biscuits (12% of total retail value), and breakfast cereals (4% of total retail value). In terms of category, baked goods are predicted to grow by 3% in retail volume in 2010, whilst biscuits and breakfast cereals are set to grow by 3% and 4%, respectively. Recovery in economic growth and the expansion of Western consumer lifestyles in the region will be the main drivers behind breakfast cereals' strong performance. Biscuits, on the other hand, will benefit from demand for premiumisation and strong innovation in certain key categories, particularly filled and chocolate lines. Slower growth seen without subsidies Reduction in state subsidies in Egypt and Iran is likely to slow growth of baked goods in these countries. Retail volume sales of baked goods in Egypt are projected to grow by 1% in 2010, almost half a percentage point down on the previous year. This moderate slowdown in growth is partly down to a reduction in government subsidies to food manufacturers, which opted to pass on the increase in costs to consumers. Whilst cakes and pastries remain highly popular in the Egyptian market, bread will continue to account for the vast majority of baked goods sales (99% of total retail volume in 2010). Single portion cakes dominate sales of packaged/industrial cakes, which are predicted to account for over 82% of value sales in 2010. However, sales of multi-portion cakes are rising, reaching a value share of over 17% of packaged/industrial cakes in 2010, as these products are popular amongst working mothers due to their busy lifestyles. In Iran, sales of baked goods are predicted to grow by 4% in retail volume in 2010, down from the 6% registered the previous year. The main reason for this decline is due to maturity and consumers shifting from traditional Iranian meals accompanied by a large quantity of bread or rice to modern fast food options. Despite this slower growth, research shows that baked good sales will continue to be dominated by unpackaged/artisanal bread in 2010. Per capita consumption of unpackaged/artisanal bread, for instance, might decline dramatically, however, once the Iranian government begins to implement its subsidy removal programme for several key products, including fuel and bread. Packaged formats gain ground in Algeria Baked goods in Algeria are expected to see 5% retail volume growth in 2010 and a near 10% increase in current value terms. Both healthy rates are essentially due to an increase in packaged/industrial baked goods. Despite a small volume size these products are gaining sales rapidly even though they retail at considerably hiNike Ambassador 11