Bakery Markets & Industry in the Europe€¦ · 7 greggs uk 1,09 22 europastry sa esp 0,60 8...

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




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Four entities dedicated to agri-food and agro-industry

Unigrains Group

A full service offer adapted to the needs of clients


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




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Bread

Viennoiserie (pastries)

Patisserie

Savoury Pastry


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 ?

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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


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


A mature market in terms of volume…


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


A mature market in terms of volume…


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


A more polarised market and a more complex consumer, shifting one’sbuying pattern throughout the day


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



…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



‘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



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



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)

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A European bakery production structure made up of contrasts, but tending to industrialise

The European bakery industry


➢ 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


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



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 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




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



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



… 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


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


Traceability, Quality, Local supply

CSR&

Sustainability

« 44 % of all bread produced in the UK is thrown away »

Ellen MacArthur Foundation


Impact of Brexit?


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

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Main challenges for the European Industry in EU28 and UK


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

CopyrightNo part of this publication may be reproduced by any means whatsoever without the written permission ofUnigrains.

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.

Bakery Markets & Industry in the Europe€¦ · 7 greggs uk 1,09 22 europastry sa esp 0,60 8...

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