Developments in the Belgian bakery market
In stark contrast to the Netherlands, the local craft baker is still king in the Belgian bakery market, but the crisis has had far-reaching effects there too, with a sudden increase (and subsequent decrease) in the at-home consumption of bread and more widespread use of bake-off products. Baking & Biscuit magazine takes a look at the latest developments in this interesting market.
Since the second half of 2007, one crisis has followed the other in Belgium. Consumers initially responded by consuming more bread at home rather than buying it from out-of-home channels. In fact, in 2008 the at-home consumption of bread was 5% higher than in 2006. In the years since 2008, however, the consumption of bread at home has decreased by 11%, with a 2% decrease in 2012. This decline was part of a general decrease in food consumption as more and more Belgians adjusted their eating habits as a result of the crisis, paying more attention to what they buy – buying less and wasting less.
The consumption of koffiekoeken (Belgian “coffee cakes”) at home has shown the same evolution as loaf breads in recent years, namely an increase in 2008, with an annual decline since then. In 2008, the average Belgian still bought 27.3 coffee cakes, while this number was 26.0 in 2011. In 2012, there was a 7% rise to 27.7 units per capita. The at-home consumption of both pastries and cakes remained stable in 2012, at 8.3 and 3.7 units per capita, respectively, following a predominantly positive trend in the previous years.
The at-home consumption of baguettes has been fluctuating at around 5 to 6 baguettes per Belgian. In 2011, this consumption averaged out at 5.8 baguettes. In contrast, the at-home consumption of sandwiches and rolls have long shown an upward trend, but in 2012, this consumption plummeted from 101 to 94 rolls per person.
Pre-baked bread rolls were sharply on the rise in the early '00s, showing a temporary peak in 2008, when the average Belgian bought 18.4 pre-baked bread rolls. This was followed by a sudden decrease in the at-home consumption of these rolls in 2009 and 2010, followed by a slight increase in 2011, and a sharp increase in 2012 when 18.3 pre-baked rolls were consumed per person.
As a result of the crisis, consumers have been purchasing more ingredients to make bread and pastries from scratch at home. So, for instance, the at-home consumption of bread flour showed an annual decline until 2011. In 2012 it rose by 4% to 2,8 kg per capita. Baking mixes have also shown a positive growth trend, with a consumption of 1,7 kg per capita in 2012.
Distribution of bakers and bakery products in Belgium
In 2012, both the consumption and production of bread showed a slight decrease in Belgium, with a total bread production of 620,000 tons and a consumption of 58 kg of bread per capita. While the neighbourhood bakery remains the place to be for bread and pastry, craft bakers are now competing with supermarkets and discounters. Fewer families are purchasing baked products from traditional bakers and those that do, do so with less frequency. In 2012, 27% of Flemish families reported not purchasing at bakers. Flemish families that do purchase at bakeries, typically more affluent families and well-to-do retirees, do so 48 times a year on average. Some 38% of Flemish families are relatively loyal to their baker – and this group provides 88% of bakers’ turnover.
These factors have all contributed to the decrease of craft bakeries’ market share (from 53.7% in 2009 to 48.7% in 2012). Regionally, craft bakers in Flanders showed the strongest market share (57%), compared with craft bakers in Brussels (28%) and Wallonia (38%).
According to market research firm GfK Panel Services Benelux, in 2012 the average Belgian bought 39 loaves of bread, 6 baguettes, 94 bread rolls and sandwiches, 28 coffee cakes, 8 pastries and 4 cakes or pies for at-home consumption. Compared with 2011, these percentages show a decrease of 2% for bread and 7% for bread rolls. The at-home consumption of baguettes rose by 2%, and remained stable for cakes, pies and pastries. Taking a regional perspective, the same evolution can be seen in Flanders, with the exception of baguette consumption, which stabilized. Compared with other Belgians, Flemings buy more loaves of bread, sandwiches and cakes and fewer baguettes, coffee cakes and pastries.
Regionally, there are big differences in the types of bread consumed in Belgium. Flemings typically prefer brown bread, while Walloons prefer white. In Wallonia, where there are fewer retail stores, wholesale distribution is much larger than in Flanders, where most bread and pastry (56%) is still bought from bakers. The market share of supermarkets in Brussels and Wallonia has risen to 72% and 64% respectively, compared to 44% in Flanders. There has also been an increase in alternative distribution channels, such as bread sold via petrol stations or bread vending machines on the street that give access to bread 24/7.
The market share of industrial bakeries in Belgium is 52%, compared with the European average of 44%, and the market share of craft bakers in Belgium is 48%, compared with the European average of 37%. Their relative market share is decreasing: both industrial and craft bakers have lost market share to retailers’ own production. In 2012 there were 68 large bakeries with 3,755 employees and 2,941 small bakeries with 15,833 employees, a sharp decline in numbers when compared with 2000, when there were 123 large bakeries with 3693 employees and 4347 small bakeries with 18,063 employees in Belgium. In July 2013 there were 60 industrial bakeries and 3,100 craft bakeries in Belgium. Plant bakeries now employee some 3,800 employees who work 38 hours per week with an average wage of Euro 14 per hour.
Bakery trends in Belgium
Sales of baked goods are governed by a move back to basics, with a trend towards authentic and naturally healthy products, exemplified by the ongoing development of the ‘clean label’ trend, with products free of additives and ingredients such as palm oil and transfats. In addition to consumer interest in authentic, natural products, there is also a trend for convenient and indulgent food. In Belgium the discussion around the nutritional benefits around bread is on-going. The bake-off of bread in retailers (ALDI, LIDL and Colruyt) is increasing in order to improve consumer perception of “freshness” in the store.
There is high price competition at a retail level and high price pressure on the producers, which means that the margins are becoming smaller. Baked goods have the most fragmented competitive landscape of all packaged foods, due to the overwhelming share of artisanal* and private label products, in the region of 87% of value sales in 2013.
The biscuits category enjoyed a sudden recovery in 2013, notably thanks to the indulgence trend. Before 2012, the biscuits category suffered because of changes in consumers’ habits and the decline of traffic in grocery retailers. Belgian people were increasingly using the internet to buy their grocery products. Consequently, they frequented the aisles of hypermarkets or supermarkets less, and therefore, were less tempted to buy what doesn’t appear on their shopping lists. Private label led the biscuits pack with a 47% value share in 2013 and the leading branded player is LU Benelux/General Biscuits België.
Outlook for Belgian bakery market
Optimistic sources seem to think that the switch back to basics should fuel sales of baked goods in coming years. Indeed, over the last decade, Belgian consumers turned to bread alternatives such as biscuits, breakfast cereals, sandwiches and other snacking products. However, prevailing health advice from nutritionists and the recession of 2009 is enticing Belgians to go back to basics, notably for breakfast. This could means that the consumption of bread could continue to slightly recover. However, baked goods is a mature category, probably one of the most mature of the whole packaged food market, and therefore, when one of its sub-categories enjoys appreciable growth, this is often at the expense of others. This cannibalisation could also continue within all cereal-based products in bakeries.
Looking forward, new projects with strong advertising support from players such as Mondelez International, could rejuvenate sales in the category. However, some manufacturers remain pessimistic about the scope for development in biscuits. Until 2012, the lifecycle of novelties was increasingly short and launching new products to sustain sales was less and less cost effective. Moreover, consumers are becoming more aware of the gloomy economic climate and thus are more price-sensitive. Therefore, private label products are posing an increasingly serious threat to A-brands. The offensive of private label ranges should further reduce the range of branded biscuits available on shelves, all the more since private label products can copy the latest innovations increasingly quickly, even in premium ranges.
Sources: FGBB (Federation of Big Bakeries in Belgium), VLAM (www.vlam.be), RSZ (Social Security Figures), Euromonitor Executive Summary (March 2014), AIBI Bread Market Report (July 2013)
*Artisanal products include some baked goods sold in supermarkets and hypermarkets (all unpackaged goods and notably those baked in-store) and the majority of baked goods available in traditional bakeries.
author: Karin Engelbrecht
This Country Report was researched by our baking+biscuit international editorial department. A collection of recent market profiles was published in the European Bakery Market Review.