Hot from the oven and smelling fresh
Health and indulgence are the two contrasting threads affecting consumer choice in biscuits. Global biscuit sales also display varying growth priorities in emerging and developed nations, with these influencing sales trends in terms of both geography and product category. A highly fragmented and localised competitive environment allows contradictory trends to exist but also results in a confused pipeline for product development from specialist manufacturers.
Global bakery sales
In 2011, Euromonitor International’s research reports that biscuits reached €61.4bn in retail value globally, with two to three per cent growth during the year. Biscuits represent about 16 per cent of total bakery retail value sales. With around three sweet biscuits sold for each savoury one, global sales reached overall retail volumes of 16 million tonnes for biscuits in 2011.
Cookies and savoury biscuits take gold stars in terms of global growth performance, growing at four per cent and three per cent respectively. However, in 2011, sweet plain biscuits remained the backbone of global sales, accounting for just over half of total retail volumes.
Consumers tend to trend up in value spend over time, consuming higher value products in place of plain biscuits. However, the continued economic uncertainty in Europe has reduced consumer spending power, which could have caused consumers to decrease their value spend on biscuits as small treats. This could explain the small growth spike in more moderately indulgent chocolate coated biscuits since 2009 in the region.
Meanwhile, successful reformulation initiatives continue to substantially reduce sugar, fat and salt in biscuits. This benefited manufacturers such as the UK’s United Biscuits, with its McVities and Go Ahead ranges, by renewing consumer interest in health benefits while maintaining a focus on taste. With grain and cocoa prices both trending upwards in global ingredients in 2012, however, financially pressed consumers may have to seek an alternative type of favourite biscuit to those containing both of these ingredients.
Emerging economies
As consumer incomes and living standards increase in developing economies, in direct correlation with gross domestic product (GDP) levels, biscuit consumption is also increasing. Regionally, consumers in Asia Pacific are munching through biscuits more quickly than anyone else to drive global retail sales growth, with Latin America following closely behind. Asian growth is coming primarily from China and India. However, Euromonitor International’s Countries & Consumers research indicates that the Argentineans have the highest biscuit consumption by country, eating 24kg per household in 2011.
The Western health and indulgence trend is also beginning to emerge in Asia Pacific, with high fibre savoury biscuits consumed alongside decadent cookies. Indian biscuits are particularly innovative, where Parle Products leads with a 35 per cent market share.
Indian consumers traditionally lean towards sweet biscuits. Expanding grocery chains and specialist cookie stores in India have diversified value spending on cookies, which are preferred by children, and also increased the brand diversity available. However, healthy products have also increased in importance, with the launch of PepsiCo’s FritoLay baked crackers and Parle Products sugar free cream crackers, as well as oat based and wholegrain biscuits.
Conversely, dynamic growth for all biscuit types in Romania and particularly a 19 per cent growth for sandwich biscuits has tipped the balance in favour of indulgence rather than health in the country. Traditional favourite sandwich biscuit brands, such as Dobrogea Biscuit SRL’s Eugenia, have been extensively rebranded in order to increase consumers’ perceptions of quality.
Developed countries
In more developed countries, persistent concerns over obesity and maturing consumer demand allowed manufacturers to add value by differentiating on points of health and convenience. High fibre biscuits represent one such example and are rapidly becoming established in the US as well as in other countries including France.
Germany and the US are also benefiting from a raft of gluten free biscuit introductions, with these not yet seen in developing economies during 2011. In North America, gluten free sales are dominated by the US but geographic distribution rather more diverse in Western Europe.
Within convenience formats, increasingly established sales of premium breakfast biscuits in the UK now look set to move into other countries. Kraft Foods’ Belvita Biscuits have an explicit breakfast positioning and also contain high levels of protein and fibre. The range was launched in the US in 2012, after a successful debut in the UK that encouraged consumers to move away from their traditional breakfast food comfort zones.
With original and chocolate flavours, Kellogg Co’s high fibre All Bran biscuits also launched a high-fibre competing range in the UK. In Spain, meanwhile, Galletas Artiach introduced its Marbú range in mid-2011. This features a wide choice with a range of four healthier breakfast biscuits, with high fibre, zero sugar, multigrain and reduced fat biscuit varieties.
Healthy breakfast biscuits look well placed to achieve dramatic sales. However, alternative formats could yet present challenges. In April 2012, Peijnenburg BV’s Overheerlijk indulgent breakfast cake was launched in the Netherlands, featuring chocolate and nuts to give a distinctively modern twist in comparison to the country’s traditional Ontbijtkoek.
Significant corporate activity
With strategic acquisitions including LU and Cadbury in the last five years, Kraft Foods extended its reach in global biscuits. As of 2010, the company controlled 18 per cent of global biscuit retail value sales. These recent acquisitions also enhanced the company’s retail presence and distribution capabilities in lucrative Indian, African and Chinese sales, where Cadbury is traditionally very strong.
On a regional level, shares are more evenly spread. A leader in many regions for various biscuit categories, Kraft Foods clearly leads in its home region with 42 per cent retail value share in North American biscuits, compared with 20 per cent for second placed Kellogg. This competitive gap also reflects Kellogg’s traditional strategic preference for breakfast cereals. Campbell Soup Co also stands out as a clear leader in Australasian biscuits, but with a less weighty presence in other regions, including small or fractional shares in North America and Middle East Africa.
One dominant manufacturer in a region can cause new entrants to struggle to gain share, limiting innovation and product development. In India, international entrants focused on premium high end biscuits, instead of mid-range offerings such as sandwich biscuits, thereby limiting their consumer base. In Latin America, there is a wider share spread, with fewer companies controlling larger shares, while in Eastern Europe, large numbers of companies control miniscule shares in an extremely fragmented environment.
Healthier biscuits
Health benefits may be offered simultaneously with taste but in other cases health can be superseded. According to Carillo et al’s small study of 90 consumers in April 2012’s Food Research International, when offered ten types of normal or healthier versions of biscuits consumers will only buy a healthier biscuit if it still tastes good. However, trusted brands tend to alleviate consumer concerns that the taste will remain the same.
Manufacturers of biscuits have the choice to follow a carrot or stick approach to resolve health issues. The process of challenging obesity is voluntary in the UK, with the government working alongside manufacturers to reduce sugar, salt and fat contents. Other countries took a different approach, with Denmark, Hungary and the US at different stages in the process of imposing fat and soda taxes on manufacturers and foodservice outlets. Going forward, it would appear that the state will become increasingly involved in biscuit marketing activities.
Indulgent products
Cookies represent an exciting product globally, although these products face some challenges from other indulgent formats such as cupcakes. In addition, bite sized biscuit formats are increasingly popular in China for sharing and pleasure occasions with family and friends, with Haoduoyu and Moguli from Orion both very well received.
Consumers certainly wish to have their biscuits and eat them too, with product formats becoming increasingly blurred between health and indulgence. The new crossover trend between confectionery and biscuits is well-represented by Nestlé’s Aero biscuits launch in the UK and Ireland, targeting women aged from 25-44. The product offers a bubbly chocolate coated biscuit but also has a health aspect, containing only 99 calories per item. A similar offering is McVities Medley bars, also in the UK, suggesting that products combining health and indulgence could also be key in the future.
Future opportunities
High population densities in China, India and Indonesia are primary reasons why these countries remain attractive in developing global biscuit sales. Asia Pacific will continue to underpin global biscuit sales growth from 2011 to 2016, leading to a predicted global value of €106.5bn with two per cent compound annual growth rate (CAGR).
Savoury biscuits and cookies are expected to be neck-and-neck in their forecast global growth rates at three per cent CAGR and these will remain the most attractive categories until 2016. Manufacturers should cater for local consumer tastes in their product developments, with fragmented biscuit shares encouraging this local focus.
Social media sites such as Facebook are becoming increasingly important as marketing tools, benefiting manufacturers such as Kjeldsens & Co and Kraft Foods Hong Kong in launching new products such as its Chewy Gooey Cookies. Moving forward, each region is breaking with tradition by reporting higher forecast growth rates for savoury biscuits and crackers compared with sweet biscuits, indicating that consumers are demanding greater choice and flexibility. Time will tell whether biscuit consumers will move towards exploring more savoury tastes for health reasons, challenging luxury sweet biscuits to change their future directions.
By Dr Deborah Cross, food analyst at Euromonitor International
