UK home baking declined in value by 3.2% for the first half of 2014 and will continue on a downward trend for some time, says IRI.
The total value of the UK home baking sector dropped to £257.6m ($428m) for the 28 weeks up to July 19, 2014 – down 3.2% from the year before, according to IRI data. Volumes of the segment - flour, dried fruit, baking mixes and powders, decoration, icing and pastry – also dipped 6%.
Tim Eales, director of strategic insight at IRI UK, said the dip was unusual given the home baking boom over the past few years, but he added it was a decline likely to continue as consumers tightened purse strings.
The gap between food prices and wages in the UK was close to 10%, Eales told BakeryandSnacks.com, and so consumers had cut back spending – a trend likely to last for another three to five years.
“It’s taken us eight years to get to this point, and for wages to catch up to the point where we really start seeing it in spending, it’s going to take a good few years.”
“…Manufacturers are going to have to expect the market to be less dynamic than it has been over the last five years,” he said.
Value for money, simplicity and convenience
However, Eales said the home baking dip – possibly bought on by continued effects of the consumer recession – was a temporary one that could lift before the rest of the fast-moving-consumer-goods sector recovered, helped by innovation.
“It’s just going to be important for each of the brands involved to make sure they’ve got as many things right as they can do, in terms of price and promotion and their general offer, because I think we’re past the crest of the wave now,” he said.
Having good prominence in store would be crucial, he said, as well as products that consumers felt were good value. “It’s not necessarily about having the lowest price by any means, but certainly having a good offer in the sense of a good value proposition will be important.”
In addition, products that were straight-forward and easy to understand and use would appeal, he added. “Especially in these days of limited experience being passed down through families, which is happening in everything from DIY to cooking.”
Mintel research found that the number of UK consumers baking at home had fallen 8% in 2014 already.
TV could cure the dip
Most recently – in the two weeks ending August 23 – UK home baking sales in larger retailers had risen in value and unit sale terms. For the week ending August 16, sales were up 0.2% and unit sales rose 1.1%. For the week ending August 23, sales were up 1.3% and unit sales up 3.2%.
Eales said that while it was very hard to establish a cause and effect, this rise coincided with the start of the Great British Bake Off television program in the UK.
“There’s nothing much else happening in August that would affect bakery sales,” he said. “Markets are funny – they’re very predictable based on temperature. People don’t usually do things that require heat when it’s hot; they tend to make their stews and things like that when it gets colder. So, the fact that the baking market tends to fall in the first half of the year and then lifts up in August is a little bit weird. So it might well be that the Bake Off is stimulating an early growth in the market.”
IRI data from 2011-2014 showed a rise in baking sales during the Great British Bake Off airing each year, alongside more common peaks during Christmas, pancake day and Easter.