THE IMPACT OF BREAD SUBSIDIES ON BAKED GOODS … · 2016. 10. 21. · Iran, Egypt, Algeria, Saudi...
Transcript of THE IMPACT OF BREAD SUBSIDIES ON BAKED GOODS … · 2016. 10. 21. · Iran, Egypt, Algeria, Saudi...
THE IMPACT OF BREAD SUBSIDIES ON BAKED GOODS DECEMBER 2014 – IAOM MIDDLE EAST & AFRICA
PINAR HOSAFCI – PACKAGED FOOD ANALYST AT EUROMONITOR INTERNATIONAL
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EUROMONITOR INTERNATIONAL London
Singapore
Shanghai
Dubai
Vilnius
Cape Town
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Tokyo
Sydney
Chicago
Bangalore
Sao Paulo
STATE OF THE BREAD MARKET
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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Bread is the biggest part of the region’s daily diet
STATE OF THE BREAD MARKET
0%
7%
14%
21%
28%
35%
42%
49%
0
5
10
15
20
25
30
35
Middle East and
Africa
Western Europe
Latin America
Eastern Europe
Asia Pacific North America
Australasia
% i
n p
ac
ka
ge
d f
oo
d
Mil
lio
n t
on
ne
s
Retail Consumption of Bread by Region 2014
Bread Retail Volume Bread % Per Capita in Packaged Food
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Some of the world’s biggest bread eaters come from MEA…
STATE OF THE BREAD MARKET
0
20
40
60
80
100
120
140
160
Ret
ail
Co
nsu
mp
tio
n o
f B
rea
d –
Kg
pe
r C
ap
ita
Putting Middle Eastern & African Bread Consumption in Context, 2014
Kg per capita World Middle East and Africa
Saudi Arabia
Egypt
Iran
Algeria
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…However they consume the cheapest bread
STATE OF THE BREAD MARKET
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2009 2010 2011 2012 2013 2014
US
$ p
er
kg
- 2
014
Australasia North America Western Europe
Latin America Asia Pacific Eastern Europe
MEA MEA artisanal MEA packaged
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Artisanal dominates bread sales…
STATE OF THE BREAD MARKET
Artisanal Bread
Packaged Bread
Bread Substitutes
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2009
4 million tonnes
2014
5 million
tonnes
But its consumption is declining…
STATE OF THE BREAD MARKET
2014
27 million tonnes
2009
30 million tonnes
Artisanal Bread Packaged Bread
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Subsidies
Availability of
substitutes
Decline in artisanal
bread
WHY?
STATE OF THE BREAD MARKET
STATE OF THE INDUSTRY
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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Bread consumption shows significant variation across the region
BREAD SUBSIDIES AND THEIR IMPACT
Kg per capita
60+
30-60
15-30
5-15
0-5
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0%
7%
14%
21%
28%
35%
42%
0
2
4
6
8
10
12
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as a
% s
ha
re
of
tota
l b
re
ad
mil
lio
n t
on
ne
s
Iran: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread Packaged as a % of Total Bread
Iran : End of government subsidies leads to less bread wastage
BREAD SUBSIDIES AND THEIR IMPACT
US$
0.24
US$
0.50
US$
0.47
2010
2011
2014
US$
0.91 US$
0.77
US$
0.63
2010
2011
2014
ARTISANAL BREAD
PACKAGED BREAD
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Retailer discounts
Promotions
Modern grocery dominance
South Africa: Retailer subsidies define packaged bread growth
BREAD SUBSIDIES AND THEIR IMPACT
50%
54%
58%
62%
66%
70%
0
0.3
0.6
0.9
1.2
1.5
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as
a %
of
tota
l b
re
ad
Mil
lio
n t
on
ne
s
South Africa: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread
Packaged as a % of Total Bread
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50%
54%
58%
62%
66%
70%
0
0.3
0.6
0.9
1.2
1.5
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as
a %
of
tota
l b
re
ad
Mil
lio
n t
on
ne
s
South Africa: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread
Packaged as a % of Total Bread
South Africa: Retailer subsidies define packaged bread growth
BREAD SUBSIDIES AND THEIR IMPACT
Rising input costs
Affordable substitutes
Value-added substitutes
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0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
0.0
2.0
4.0
6.0
8.0
10.0
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as a
% o
f to
tal
br
ea
d
Mil
lio
n t
on
ne
s
Egypt: Packaged vs Artisanal Bread
Artisanal Packaged % Share of Packaged in Total Bread
Subsidized flour
New subsidy system
Reduced bread wastage
Egypt: End of cheap bread?
BREAD SUBSIDIES AND THEIR IMPACT
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Reasons for artisanal bread’s decline
BREAD SUBSIDIES AND THEIR IMPACT
Promotions and Discounts
South Africa
Availability of Cheaper or Added-Value Substitutes
South Africa, Iran, Algeria, Nigeria etc.
Market Maturity
Iran, Egypt, Algeria, Saudi Arabia
Reduced Bread Wastage
Iran (potentially Egypt?)
STATE OF THE INDUSTRY
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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7% volume CAGR 2009-2014 Key markets: South Africa, Nigeria, Kenya Affordability Exoticism
0.1 kg per capita Key markets: UAE, South Africa Lack of time Westernisation
4.6 kg per capita Key markets: Cameroon, Algeria, Morocco Shift to packaged food Affordability
1.2 kg per capita Key markets: Iran, Egypt, UAE Convenience Versatility
Rice Pasta
Noodles Breakfast Cereals
Competing Staples for Bread Vary Across MEA
OPPORTUNITIES AND PROSPECTS
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Packaged pastries have several unique selling points
OPPORTUNITIES AND PROSPECTS
Dynamic growth
Shelf-stable
Satiety
Indulgence
Portion control
On-the-go
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-56%
-48%
-40%
-32%
-24%
-16%
-8%
0%
8%
-2,800
-2,400
-2,000
-1,600
-1,200
-800
-400
0
400
High Fibre Bread
Artisanal Bread
% C
AG
R
‘oo
o t
on
ne
s
High Fibre Bread Growth
Absolute Volume Growth 2009-2014
% CAGR 2009-2014
Higher unit price
Longer shelf life
Modern grocery
High Fibre Bread Promises Added Value
OPPORTUNITIES AND PROSPECTS
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What can bread learn from other convenient packaged foods?
OPPORTUNITIES AND PROSPECTS
Convenience food category Retail Volume CAGR 2009-2014
Drinking yoghurt 7.2%
Instant noodles 6.6%
Sweet and savoury snacks 5.8%
Snack bars 6.1%
Total bread -0.7%
Examples of convenience products Opportunities for bread
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Maturity
End of subsidies
Discounts
Substitutes
Convenience
Versatility
Health and Wellness
Portion control
Incr
ease
in
alt
ern
ati
ves
Declin
e in a
rtisan
al b
read
Key takeaways
OPPORTUNITIES AND PROSPECTS
THANK YOU FOR LISTENING Pinar Hosafci
Food Analyst