To maintain and develop market share, bakery and cereals manufacturers have been forced to address the ‘staple’ image of their products. In doing so, manufacturers have innovated by reformulating to make products more indulgent, fortifying products with functional ingredients to make them healthier and developing innovative delivery methods. ‘Growth Strategies in Bakery and Cereals: Key trends and future product opportunities’ is a new management report published by Business Insights that analyzes the drivers and major trends currently influencing the bakery and cereals market including health, premiumization, guilt-free indulgence, convenience and ethical consumerism. This report provides detailed market insights at global, regional and category level to forecast trends accurately to 2009. Best-practice examples of new products launched between 2004 and 2006 are assessed and recommendations are made for future innovations. Create more effective new product development strategies and increase returns on investment with this new report.

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Some key findings from this report
• The US will show the strongest growth in market value at 14.1% between 2005 and 2009 to reach a higher overall value than is forecast for France, Germany, Italy, Sweden and The Netherlands.
• The cookie category held the largest share of total new product launches in the bakery and cereals sector in 2006 (33.1%). Pastries and baked goods held second place, falling from 23.5% in 2004 to 19.2% in 2006.
• Nearly a third of industry survey respondents stated that the breakfast occasion will offer the most growth potential for manufacturers over the next five years driven by new products including ready to eat and on-the-go cereals and health concerns relating to obeisty and other health issues.
• Kellogg is the most innovative bakery/cereals company according to industry executives with nearly a quarter of respondents selecting Kellogg as the most innovative company. Nestlé was in second place at 10.3%.


Growth Strategies in Bakery and Cereals
Key trends and future product opportunities
To maintain and develop market share, bakery and cereals manufacturers have been forced to address the ‘staple’ image of their products. In doing so, manufacturers have innovated by reformulating to make products more indulgent, fortifying products with functional ingredients to make them healthier and developing innovative delivery methods.
Growth Strategies in Bakery and Cereals: Key trends and future product opportunities is a new management report published by Business Insights that analyzes the drivers and major trends currently influencing the bakery and cereals market including health, premiumization, guilt-free indulgence, convenience and ethical consumerism. This report provides detailed market insights at a global, regional and category level to forecast trends accurately to 2009. Best-practice examples of new products launched between 2004 and 2006 are assessed and recommendations are made for future innovations.
Create more effective new product development strategies and increase returns on investment with this new report.

This new report will enable you to
• Assess the key trends in bakery and cereals innovation based upon this report’s analysis of Productscan data from over 10,000 product launches between 2004 and 2006 detailing regional contribution, category coverage and product claims.
• Benchmark leading executives’ opinions on the future of bakery and cereals innovation using this report’s analysis of our proprietary global survey detailing the key issues affecting the future of NPD and innovation in the bakery and cereals market.
• Predict future growth areas in bakery and cereals using this report's forecasts to 2009 of market values and volumes by category and sub-category across Europe and the US.
• Target new and emerging market opportunities using this report’s extensive analysis of the most innovative new product launches, trends in NPD and convergence.

Key issues examined in this report
• Healthy and tasty. Bakery and cereals products can be positioned as healthy, indulgent or healthy and indulgent. Manufacturers are increasingly opting to extend their brand portfolio to satisfy each of these consumer demands.
• Ethical consumerism. Issues such as food miles, organics and Fairtrade are driving consumers to question the provenance – and quality - of their food and drinks.
• Rise in homebaking and cooking from scratch. From 2004 to 2006 the share of bakery and cereal product launches in the ‘cake mixes, frosting and decorations’ category increased from 1.6% to 3.6% and the ‘mixes, baking and other non-baking’ category rose from 4.6% to 4.9%.
• Opportunities in targeting snacking occasions. 10% of industry executives rated mid-morning as the consumption occasion that will offer the most sales growth potential over the next 5 years, whilst 1% believed mid-afternoon and 4% evening.

Your questions answered...
• Who are the leading players in the bakery and cereals market?
• How will the rise in ethical consumerism impact on the bakery and cereals market?
• What are the most popular and successful flavors used in bakery and cereals NPD?
• Can brands target other consumption occasions such as snacking without losing share of the breakfast market?
• How can bakery and cereals brands target children effectively without attracting criticism or regulatory interference?
• Which is the leading category in terms of NPD over the past two years?
• Which countries offer the best opportunities for investment?

Table of Contents
Growth Strategies in Bakery and Cereals
Executive Summary 10
Market developments 10
The bakery and cereals market 11
Innovation and NPD 12
Key trends in bakery and cereals 13
Conclusions 14
Chapter 1 Introduction 16
Research methodology 16
What is this report about? 16
Report structure 17

Chapter 2 Market developments 20
Summary 20
Introduction 20
The role of bakery and cereals in the obesity debate 21
Healthy line extensions of indulgent brands 23
Importance of high quality ingredients 24
Opportunities in healthy indulgence 26
Increasing the importance of breakfast 27
Taking an ethical interest 29

Chapter 3 The bakery and cereals market 34
Summary 34
Introduction 35
The growing potential of the bakery and cereals market 35
Bakery and cereals market value in Europe and US 35
Value of the bakery and cereals market by category 36
Bread and rolls 37
Breakfast cereals 38
Cakes and pastries 39
Cookies 40
Crackers 40
Morning goods 41
The bakery and cereals market volume and growth, by country 42
Company shares 44
The dominance of artisanal producers and private label 45
Top 10 innovative bakery and cereals companies in the world 47
Case study: Sara Lee 48

Chapter 4 Innovation and NPD 52
Summary 52
Introduction 53
Share of new product launches within bakery and cereals 54
Category analysis 55
Bread 56
Case study: Hovis 58
Cakes 61
Cereals 62
Cookies 64
Crackers 66
Mixes and other baking 68
Regional analysis 69
Europe 71
Asia-Pacific 72
Americas 74
Middle East & Africa 78
Future growth potential by region 80
Innovative bakery and cereal brands 81
Formulation 81
Positioning 82
Packaging benefit 83
Case study: Alara 84
Innovation by category 85
Product tag analysis 86
Flavor trends 89

Chapter 5 Key trends in the bakery and
cereals market 96
Summary 96
Introduction 97
Health 97
Natural and fresh 99
Low fat / low calorie 102
Functional 103
Glycemic Index 106
Indulgence 107
Gourmet and luxury 108
Private label 110
Home cooked meals and authentic ingredients 111
Convenience 113
Eating out and on-the-go 114
Impulse purchasing 116
Customization and individualization 117
Targeting children in today’s highly sensitive market 120

Chapter 6 Conclusions 124
Summary 124
Introduction 125
Innovation opportunities, barriers and solutions 125
Health 126
Indulgence 127
Convenience 128
Targeting consumer groups 129
From breakfast-time to all-the-time 131

Index 133

List of Figures
Figure 2.1: Healthy line extensions – offering choice to the consumer 24
Figure 2.2: Combining health and indulgence in new products 26
Figure 2.3: The importance of ethical trends in bakery and cereals NPD over the next 5 years 30
Figure 3.4: Bread and rolls, sub-category segmentation by value, 2009 38
Figure 3.5: Breakfast cereals, sub-category segmentation by value, 2009 39
Figure 3.6: Cakes and pastries, sub-category segmentation by value, 2009 39
Figure 3.7: Cookies, sub-category segmentation by value, 2009 40
Figure 3.8: Crackers, sub-category segmentation by value, 2009 41
Figure 3.9: Morning goods, sub-category segmentation by value, 2009 41
Figure 3.10: Bakery and cereals market value versus volume forecast, 2009 43
Figure 3.11: Bakery and cereals top 5 company shares, (%), by region, 2004 45
Figure 3.12: Market shares of artisanal and private label manufacturers, (%), by region, 2004 46
Figure 3.13: Company types expected to have the most influence on innovation levels in bakery and
cereals now and in five years 47
Figure 3.14: Sara Lee EarthGrains bread 49
Figure 4.15: Share of bakery & cereal product launches, by sector, 2004-2006 54
Figure 4.16: Percentage growth in market value bakery and cereal categories are likely to
experience over the next five years 56
Figure 4.17: Bread products made with natural and healthy ingredients 58
Figure 4.18: Hovis products 59
Figure 4.19: Innovative frosting products 61
Figure 4.20: Innovative cereal products 64
Figure 4.21: Right Direction Chocolate Chip Cookies 66
Figure 4.22: Healthy crackers 68
Figure 4.23: Crayola Crafty Cooking Kits 69
Figure 4.24: Percentage share of bakery and cereals products launched by region, 2004 versus 2006
70
Figure 4.25: New product launches in Europe 72
Figure 4.26: Gluten Free Choc Cake Mix 74
Figure 4.27: New product launches in the Americas 77
Figure 4.28: Anytime Crumpet Mix 79
Figure 4.29: Regions expected to experience the most growth in bakery and cereals market value
over the next 5 years 80
Figure 4.30: Innovation in formulation - Sultana Hartig 82
Figure 4.31: Bimbo Mr Dipps 83
Figure 4.32: Alara’s packaging 84
Figure 4.33: Percentage of innovative bakery and cereals products launched in each category, 2004-
2006 85
Figure 4.34: Buitoni Fresh Rolled Dough 86
Figure 4.35: Pasco Mainichi Seni Bread 88
Figure 4.36: Flavors and ingredients that will experience the most growth usage in bakery and
cereals over the next five years 92
Figure 5.37: Importance of health trends in bakery and cereals NPD over the next five years 98
Figure 5.38: Yaya’s Raw Rah Organic Kracker 99
Figure 5.39: Barilla Fratelli’s Molino Bianco cereals 102
Figure 5.40: Low calorie and portioned products 103
Figure 5.41: Sales growth potential of bread types over the next five years 104
Figure 5.42: Country Harvest Prairie Bran Loaf 105
Figure 5.43: Importance of indulgent trends in bakery and cereals NPD over the next five years 108
Figure 5.44: Duchy Originals gourmet bread and biscuits 109
Figure 5.45: Gourmet private label bakery products 111
Figure 5.46: Bob’s Red Mill Gluten Free Bread Mix 113
Figure 5.47: The features of most importance to the success of a bakery or cereal product 113
Figure 5.48: Dai Ichiya White Café Ogura Milk 115
Figure 5.49: Impulse product for the on-the-go breakfast market 117
Figure 6.50: Vitalicious Foods 126
Figure 6.51: Tohato’s Tohato Hitokuchi Kuro Goma Cream Sando Biscuit 127
Figure 6.52: Frozen Fruit Filled Snack Pie called Pie-Oh-My! 129
Figure 6.53: Consumer groups expected to provide the most sales growth potential for bakery and
cereal manufacturers over the next five years 130
Figure 6.54: Sales growth potential of consumption occasions for bakery and cereal manufacturers
over the next five years 131
Figure 6.55: Nestlé’s Ski Up & Go 132

List of Tables
Table 3.1: Value of the bakery and cereals markets by key product markets, $m, Europe and US,
2005-2009 36
Table 3.2: Value of bakery and cereals market by category and sub-category, $m, Europe and US,
2005-2009 37
Table 3.3: Volume of the bakery and cereals markets by key product markets, kg m, Europe and
US, 2005-2009 42
Table 3.4: Top 10 innovative bakery and cereals companies 48
Table 4.5: Diversification within the Hovis bread range 60
Table 4.6: Bakery and cereal product innovation by type, 2004-2006 81
Table 4.7: Top 25 product tags on new product packaging, % of bakery and cereal products
launched, 2004-2006 87
Table 4.8: Top 20 flavors in bakery and cereal product launched, % of product launches, 2004-
2006 90
Table 5.9: Percentage and total number of natural and fresh (including organic) food and drink
consumers by usage status, Europe and US, 2004 and 2009 100
Table 5.10: Percentage and total number of natural and fresh (including organic) food and drink
consumers by usage status, Europe and US, 2004 and 2009, continued 101
Table 5.11: Family structures across Europe and the US, (m), 2000-2005 118
Table 6.12: Innovation opportunities and potential barriers in bakery and cereals NPD to 2009 125