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Food and Nutrition Consumers are engaging with food and nutrition like never before. Our in-depth analysis examines the most important implications across the industry, providing market intelligence, original thinking and key insights.

Combining Health and Indulgence in the Sweet Bakery Industry

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Sweets are loved worldwide, as consumers are somewhat willing to overlook negative health aspects, which would deter them from other products, if a sweet good is sufficiently indulgent. Preferences of popular sweet goods varies from region to region. While Asia Pacific, Australasia and North America prefer pastries, Eastern Europe, Latin America, the Middle East and Africa favour sweet biscuits. Yet, Western Europe is the only region where cakes is the most consumed sweet baked good. The reasons for these different preferences are several factors including cost, tradition, and local taste. Although sweet biscuits are preferred by most of the world, pastries led sweet baked goods with global consumption of 15 million tonnes in 2016.

Asia Pacific is by some distance the largest market for sweet baked goods. The region is already the biggest consumer of pastries and sweet biscuits, and is forecast to be in cake consumption by 2021. On a country level, China is a major consumer of all three sweet baked goods variants and India is forecast strong growth. Use of cocoa derivatives remains unsaturated in these markets, while in India, the goods and services tax should increase demand for premium products.

Within the Asia Pacific, India is the largest sweet biscuits market, with a CAGR of 7% over 2011-2016. Plain biscuits made up 59% of Indian consumption in 2016. This is the most consumed biscuit variant globally, helped by low unit prices. The 2017 goods and services tax will see plain biscuits taxed at the same rate as more premium offerings such as cookies and filled biscuits, potentially changing consumers’ purchasing habits.

Sugar‘s role in obesity and other diet-related diseases is being scrutinised to a huge degree, both on a scientific level and in the media as consumers pay greater attention to what sweetens their products. There are sugar-free sweet baked good products available, however these tend to be targeted towards diabetics, rather than the general population, so are unlikely to be the solution. Instead, manufacturers will take steps to reduce sugar in current mainstream products, creating healthier products rather than a healthy product. However, consumer response to reduced sugar products tends to be muted, with reduced sugar biscuits recording a global volume CAGR of -1%. This could be resistance to the use of artificial sweeteners, which are used to create such products.

Increased veganism and links between eggs and high cholesterol levels have seen increased demand for egg free sweet baked goods. Manufacturers can also benefit as this trend mitigates aforementioned price volatility. Gluten free alternatives are also growing rapidly in sweet bakery, spurred on by an increasing number of consumers who perceive such products to be healthier for them, regardless of whether or not they suffer from coeliac disease. As such, both sweet biscuits and cakes saw strong growth in gluten free options between 2011 and 2016.

The relative inability of health to encroach on sweet bakery can be credited to consumers buying sweet baked goods as treats, not for their health properties. Manufacturers should always look to increase the indulgence of sweet baked goods, whether through the use of new flavours, more premium ingredients or creating completely new products. Ultimately, indulgence will drive sweet bakery growth, particularly in developed markets.

Overall, sweet goods will remain popular throughout all markets because many consumers are willing to indulge. Many sweet baked goods now incorporate spicy and savoury flavours, and tea and coffee flavours are gaining prominence. Hybridisation is also a prominent trend in bakery and has seen the rise of products such as the “cronut” and “duffin”, which originated in foodservice but are now being made available to the retail market. These incorporations and hybridization will lead to increase consumption and multiple variables consumers can choose from. As India sets to increase and dominate consumption, companies should start to focus on their preferred flavors and types of goods.

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