Bakery Market & Industryin EuropeOverview & Key Trends
LCI Bakery Seminar – 14 May 2019 - Nottingham
Céline ANSART – LE RUNSenior Agribusiness Expert
Economic Research Department : [email protected]
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
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14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 2
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
1
3
4
2
5
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 3
Four entities dedicated to agri-food and agro-industry
Unigrains Group
A full service offer adapted to the needs of clients
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 4
56 yearsprivate equity experience, dedicated
to agri-food and agro-industry
1 000 companiessupported since inception with 120 participations currently in portfolio
20 - 30 operationscompleted each year on average,
with €M 130 invested in 2018
Created in 2004
€M 1 400 raised17 investment professionals
Majority buy-out, mezzanine financing, senior debt
Created in 1963
€M +750 equity capital€M 1 000 under management
19 investment professionalsMinority growth capital
Growth Capital Transmission M&A Equipments
Created in 2007
50 transactions6 professionals
M&A and financial engineering advisory
Acquired in 2018
€M 100 annual revenues400 employees
World leader in equipment for industrial baking
25 countrieswhere the Group is present via direct
and indirect investments
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
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5
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 5
Bread
Viennoiserie (pastries)
Patisserie
Savoury Pastry
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 6
Bakery products
Fresh products
Pre-packed long-life products
Pre-packed to bake at home products
Type of productssold to consumers
Artisan bakers
Modern retailers (SM, HM, HD) and e-commerce
Convenience store and other retail outlets
Foodservice
Bakery chains
Distribution channels
Scope of the study
Biscuits are not included
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
1
3
4
2
5
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 7
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 8
Europe* is the world’s largest but declining market
BAKED GOODS BY REGIONAL MARKET 2013-2018Total Volume
Note : Bubble size indicates market size in tonnes* Western Europe includes Turkey ; Eastern Europe includes Ukraine and Russie
Source : Euromonitor
World CAGR : + 1,0 %
What exactly do we mean ?
The European bakery market
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 9
A European market dominated by bread and fresh products
Bread77%
Less in the UK because of greater
proportion of patisserie
Fresh71%
Less in the UK becauseof greater proportion of
pre-packed long life products
6 countries represent 2/3 of the market
Source : GIRA presentation at CIBM in 2018, Euromonitor
TOP 665%
1. Germany2. France3. United Kingdom4. Italy5. Spain6. Poland
39 mT in 2017
Bread
Other bakery products
The European bakery market
A mature market in terms of volume…
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 10
Source Unigrains according to GIRA presentation at CIBM in 2018 and Euromonitor
Trends in Bread Trends in other bakery products
…Butdifferent trends betweenbread and other bakery
products
Fresh
Pre-packed long-life
Packaged to bake
The European bakery market
A mature market in terms of volume…
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 11
Source Unigrains according to GIRA presentation at CIBM in 2017
Trends in Fresh
Fresh bakery products are increasing in countries where prepacked long-life is dominant
Trends in Packaged long-life
…Butdifferent trends in
technologies
The main food trends are driving the bakery market
The European bakery market
A more polarised market and a more complex consumer, shifting one’sbuying pattern throughout the day
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 12
Health, Wellness, Natural• Free from / Fortified• Vegetarian• Fewer ingredients• Organic• Freshness
New habits of purchasing and consuming• Practical• Quick and cheap meals• Snacking, on-the-go• Individualisation• Food community
Search for meaning• Transparency• Sustainability• Ethics• Responsibility
Globalisation & Anti-Globalisation• Exotism, new experiences• Tradition, nostalgia, local• Craft• Labels
Pleasure / Health & WellnessPremium / Cheap & Basic
New experiences / Back to the roots
NUMBER IN LAUNCHES** OF NEW BAKERY PRODUCTS IN EU28
UK WAS THE MOST PRODUCTIVE EUROPEAN COUNTRY IN NPD DURINGTHE 2010-2018 PERIOD
The European bakery market
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 13
…that boosts NPD*
* New Product Development** From 2010 to 2018, in supermarkets
Source Unigrains according to Mintel
THE BEST CLAIM IN NPD FOR EU28 … AND FOR THE UK
The European bakery market
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‘Suitable for’ and ‘Ethical’ claims are the most popular in baked goods
VegetarianNo additives/preservatives
Envt Friendly/RecyclingPackage Low/No/Reduced
Allergens
In terms of number of NPD during the 5 past years
In terms of growth during the 5 past years
Vegetarian
Envt Friendly/RecyclingPackage
Social media
* From 2014 to 2018, in supermarketsSource Unigrains according to Mintel
VegetarianEnvt Friendly/Recycling
Package No additives/preservatives
Envt Friendly/RecyclingPackage
Social mediaPremium
Low/No/Reduced
Allergens / Gluten Free
% OF HW BREAD SALES* BY COUNTRY % OF HW BREAD SALES* BY TYPE IN 2018
The European bakery market
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Rise of ‘Health and Wellness’ claims in mature markets
* Retail salesSource Unigrains according to Euromonitor
IN THE EU, MODERN RETAILERS HAVE OVERTAKEN THE ARTISAN BAKERS
IN THE UK, MODERN RETAILERS MUST COMPETE WITH NEWCOMERS
The European bakery market
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Distribution of fresh bakery : more competition between retailers
Modern retailers dominate fresh bakery productdistribution
The artisan bakers’ channel is virtually non-existentbut is developing
The growing fresh bakery segment will be supportedby convenience stores and foodservice (coffeeshops…)
Online retailing is also growing and represents nearly 5 % of the baked goods sales
Modern retailorsArtisan bakersCommercial foodservice
Bakery chainsSocial foodserviceOther retailors
Source GIRA presentation at CIBM in 2017
Total number of UK coffee shops outlets by type(Source : Allegra World Coffee Portal Research and Analysis 2016)
The artisan bakers are clearly the main losers,
except for new emerging concepts (mostly chains)
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
1
3
4
2
5
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 17
A European bakery production structure made up of contrasts, but tending to industrialise
The European bakery industry
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➢ In the UK, production is mostly industrialised
• Pre-packed long-life products dominate themarket but their market share is decreasing
• Industrial fresh bakery products see growingdemand from retail and bakery&sandwichchains
• Bake-off products are still increasing but toa lesser extent
➢ Artisanal supply will stay at a small scale,even if artisan bakers are seeing growingdemand
MARKET SHARE OF INDUSTRIAL BAKERSIN EUROPEAN BREAD SUPPLY
Industrial fresh Bake-offPrepacked long-life
Industrial fresh Bake-offPrepacked long-life
The European Bakery Industry
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A still highly fragmented industry, but the leaders are experiencing strong growth
TOP 30 BAKERY COMPANIES IN EUROPE - 2017
TOP 30 ~ 20 % of the EU28 MarketT/O: annual growth of 6 % over the past 5 years
EU28 Market Value
~ 150 €bn
Ranking CompanyGroup
Country
BVP T/O*
(€bn)
Ranki
ngCompany
Group
Country
BVP T/O*
(€bn)
1 ARYZTA CHF 3,80 16 COOP GENOSSENSCHAFT CHF 0,70
2 Dr OETKER DEU 3,14 17 DELIFRANCE FRA 0,67
3 ASSOCIATED BRITISH FOODS UK 2,64 18 BRIOCHE PASQUIER FRA 0,67
4 LE DUFF FRA 1,60 19 BIMBO EUROPE MXN 0,63
5 BARILLA ITA 1,60 20 BORGESIUS NDL 0,62
6 LANTMANNEN UNIBAKE DNK 1,10 21 FAZER GROUP FNL 0,61
7 GREGGS UK 1,09 22 EUROPASTRY SA ESP 0,60
8 HARRY-BROT DEU 0,97 23 WARBURTONS UK 0,59
9 AGROFERT CZK 0,93 24 HOVIS UK 0,53
10 HOLDER FRA 0,89 25 GRUPO SIRO ESP 0,49
11 CHIPITA INTERNATIONAL ELL 0,87 26 BAULI ITA 0,44
12 VANDEMOORTELE BEL 0,87 27 GIVESCO-GRUPPE DNK 0,43
13 EDEKA GRUPPE DEU 0,85 28 CERELIA FRA 0,40
14 LA LORRAINE BEL 0,78 29 NEUHAUSER FRA 0,38
15 MIGROS CHF 0,73 30 NORGESGRUPPEN NOR 0,36
* Global turnover (Europe + International) ; source Unigrains according to BackBusiness, Global 2018 and annual reports
Key strategies and means developed by industrial bakers to stay in the race
The European bakery industry
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Industrial bakers
Cost efficiency
To reach critical massTo improve process andlogistical cost efficiency
Internationalisation
ExportingSetting up internationally
Innovation & Differentiation
Products, ProcessServices
Niche market Specialisation
Niche products, Nutritional niches, Quality niches, etc.
External growth
Internal growth
R&D Investment
Source Unigrains
Partnership
The European bakery industry
The leading companies are looking for premiumisation to achieve added value
• A healthier profile for their products: low fat, less sugar, high proteins, vitamins &minerals fortified, fewer ingredients & clean label…
• Enlargement of the product range to serve most of the customers: gluten free,organic, new products/processes
• Usage of more premium ingredients: butter, sourdough…
• Inclusion of new trendy ingredients: ancient or sprouting grains, oats, fruits &vegetables, chia…
SMEs are focusing on attractive niche markets
• Regional products: macarons, cannelés, garlic bread, waffles, panettone, pretzel…
• Bread products inspired by world cuisines : naan, tortillas
• High premium side of the market
• Craft baked products
• Mini-bites, baked snacks, dipping products
• Free from, organic baked products
• New concepts of bakery chains: focused on a unique product (waffle, cookie,eclair…)
Investing in R&D to keep up with the market
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The European bakery industry
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Industrial bakers are very active in M&A…
M&A DYNAMICS IN THE EUROPEAN BAKERY MARKET
Major M&A deals in the EU28 (2017/2019)
• FORNO d’ASOLO by BC PARTNERS in Italy
• WBACK and C.H. GUENTHER in Germany
• EUROPASTRY and INGAPAN, BERLYS and BELLSOLA, SIRO and CEREALTO in Spain
• MADEMOISELLE DESSERTS in the patisseriesegment in France, UK and Netherlands
• PENAM and UNITED BAKERIES in Czeck Republic
Towards more consolidation, even if the market dynamics let opportunitiesfor SMEs to develop
A few examples in the UK
• MINISTRY OF CAKE by MADEMOISELLE DESSERTS
• SIGNATURE FLATBREAD by its Indian co-owner
• ULTRAPHARM by FINSBURY (gluten free)
• GREENCORE’s cake business by BRIGHT BLUE FOODS
• AUNT BESSIE’S by NOMAD FOODS
The European bakery industry
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Also investing continuously in production facilities…
ANNOUNCED PROJECTS IN THE PRESS OVER €10m BETWEEN JANUARY 2018 AND MARCH 2019
2018 VILLAGE BAKERY
2018 WILLIAM JACKSON FOOD
2019 BRIGHT BLUE FOODS
2019 GEARY’S
2018 ABCD NUTITION
2018 GRUPO BIMBO
2018 BRIDOR
2018 PARIS BAGUETTE
2018 TRAITEUR DE PARIS
2018 BERLIDON
2018 TIPIAK
2018 BRIOCHE PASQUIER
2018 ERHARD
2019 DELIFRANCE
2019 HARRYS
2019 LA BOULANGERE
2018 MEYER
2018 Dr SCHÄR
2019 COPPENRATH & WIESE
2019 DITSCH
2018 PANIKE
2018 GRUPO BIMBO
2018 EUROPASTRY
2018 PANALCA
2019 PANSTAR
2019 VANDEMOORTELE
2018 BALOCCO
2019 RESCH+FRISCH
2018 LANTMANNEN
2018 LANTMANNEN
2018 VEL PITAR
Source Unigrains
The European bakery industry
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… And expanding beyond their borders
EXAMPLES OF PLANTS SET UP OR ACQUISITIONS OUTSIDE THE EU FOR EUROPEANBAKERS IN 2017 & 2018
EUROPASTRY
ARYZTA
DULCESOL
CERELIA
LANTMANNEN
LANTMANNEN
BAULI
Source Unigrains
EUROPASTRYARYZTA
BAKKAVOR
The European bakery industry
Animal welfare
• Cage-free/ Free-range eggs
Energy saving & carbon footprint
Environmentally-friendly packaging, recycling
Reducing waste
• Reducing size, recycling (circular economy)
Partnership alonside the whole supply chain
Integrating new values beyond the sole product
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Traceability, Quality, Local supply
CSR&
Sustainability
« 44 % of all bread produced in the UK is thrown away »
Ellen MacArthur Foundation
The European bakery industry
Impact of Brexit?
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Many uncertainties
Customs TariffsNew trade agreements
Labour market
Impact on Trade ? Impact on Consumption ?
Impact on growth strategyImpact on margins &
profitability
Devaluation risk
Exporting to IrelandImporting baked products and ingredients
from EU
Rise of production costsRise of consumer prices
The winning companies? Local supply, premium & new products
Improving productivity
Foreign companies:more investments in the UK?
UK companies: More consolidation, new export destinations ,
more investment outside?
Some projects are postponed …but others are boosted
Who is Unigrains ?
Scope of the study
The European Bakery MarketSpecial focus on the British Bakery Market
The European Bakery IndustrySpecial focus on the British Bakery Industry
Summary and looking ahead
1
3
4
2
5
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 27
Main challenges for the European Industry in EU28 and UK
14 05 2019UNIGRAINS - The European Bakery Industry - LCI BAKERY SEMINAR 28
The European Bakery Market :A mature market that becomes more and more complex to handle
Long-term trends Short-term trends
• Price: a key factor in food purchasing• « We eat as we live »: less time to cook
and to eat, more on-the-go food, new distribution channels
• Growing values and trends: transparency, health, animal welfare, sustainability, dietisation, medicalisation
• Tastes , colors & shapes• Some new products (hybrid
pastries…)• Some ingredients
• Regulations• Proximity, circular economy• Do it yourself• Some diets like veganism,
gluten free…• Some distribution channels
Long or short term ?
The European Bakery Industy : the main challenges to face
Competitivness Agility Flexibility Service
Beingmarket-driven
Working hand in hand withgood suppliers and distributors
HOW TO ADAPT ?
Unigrains23 avenue de Neuilly75116 Paris - FranceTel.: +33(0)144311000
Twitter@UnigrainsGroup
Websitewww.unigrains.fr
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DisclaimerThe present note, circulated free of charge for information purposes, was produced by Unigrains based onpublicly available data or gathered through interviews. Unigrains cannot be held liable for any errors,inaccuracies, and all their direct and indirect consequences.