Poor performers squeezed out of competitive bakery market
and acquisitions squeeze out under-performing firms and enable
stronger companies to seize sales, according to market analysts
Plimsoll Publishing.
A new report from the researchers shows 98 per cent of last year's sales growth was divided between just 79 firms while 91 others are struggling in the increasingly competitive market.
Consolidation within the sector has led to the creation of so-called 'super companies' which are dominating the market.
The report classes bakery giants such as Inter Link Foods and Warburtons as 'super companies'. But, while most of the 79 companies in the 'super' category boast sales over £10m (€15m), there are several smaller firms in the mix, indicating that size is not the only factor.
Senior analyst David Pattison told bakeryandsnacks.com: "There are many ways to define a 'super' company, they are those businesses evaluating the market, making sales decisions and surfing the growth wave.
"The good news is there is a buoyant market there and some companies are prospering but the worry is that others are getting left behind."
According to the report, 94 of the worst affected companies saw sales fall by an average of 8 per cent over the year and a total of 355 firms are facing expulsion from the market despite cost-cutting tactics such as removing staff or selling investments.
Pattison explained: "Innovation in the market is driving the industry, you've got changing consumers and changing needs, but the costs associated with this do not always lead to financial success.
"The harsh reality is that a lot of businesses that are alive today will not be alive in 10 years if they carry on the way they are going. We will continue to see companies getting left behind."
The full report contains individual analysis of the top 940 companies in the UK bakery market. It is available from Plimsoll Publishing priced £350.
