Food Bites Baked Products

1. Food Bites Baked Products • Annual Market Quantification • September 2011

2. Setting the scene The baked products industry, as categorised by BMI Research, comprises bread and baked confectionery. Bread is the major product of the baking industry with approximately 80% of all flour produced used for bread baking. Bread is purchased by both final consumers (retail) and trade consumers (foodservices), and is the second most important supplier of energy in the national diet after maize products. It provides approximately half of the kilojoules provided by maize products. Baked products are produced by three types of bakeries, namely; • The plant/industrial baker • The in-store bakery and • The stand alone retail bakery The industry is controlled by four major players who, collectively make up approximately 40-45% of the market. These companies also produce close to 90% of the local wheat flour market and supply flour to their bakeries as well as other independent bakeries. The confectionery industry makes up the remainder of the baked market. It contributes approximately 8% to the total baked products market. The confectionery market comprises smaller producers. 2

3. 2010 Category Share 3

4. 2010 Category Distribution The majority of baked products are consumed by the retail market, as many outlets sell direct to the consumer, instead of sending to other channels. Some of the larger bakeries export products to the rest of Southern Africa, such as Namibia, Lesotho, Swaziland and Botswana. 4 Note: Industrial and export volumes are too low to accurately represent.

5. Annual Growth Rates Recession- related 5

6. Market for baked products stable Overall, the baked products market showed only limited growth during 2010 and looking further back has been fairly stable. During the base year, there were raw material price increases that pushed the overall cost of product through to retail. This implied relatively high unit prices compared with previous years. Many producers cited this as the main reason for the slow growth in 2010. Of all distribution channels in 2010, foodservices direct declined whereas the rest remained fairly stable. This year also saw the introduction of the industrial channel as some of the smaller manufacturers channeled products to that segment of the market. Regional distribution is driven predominantly by local production, with many smaller manufacturers in the smaller provinces closing down in recent years and not being replaced. However, the larger manufacturers grew during the base year, bolstering volumes especially within the larger provinces. The majority of baked products are packaged in plastic bags, while paper bags are used by smaller boutique cafes. Confectionery is packed primarily into boxes, foam trays and plastic dome trays. Paper usage is expected to grow over the next few years, as more people become environmentally aware and the upper end buyer looks to attractive presentation. 6

7. Food Bites Baked Products For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za