After three years of decline, retail volume sales of baked goods have increased in 2020, along with even higher current value growth, due to the same pattern being seen in the largest category, packaged leavened bread. With Circuit Breaker measures kicking in as the government made efforts to curb community COVID-19 transmission, Singaporeans were asked to work and study from home and many foodservice outlets were closed.
In 2020, during the Circuit Breaker, Singaporeans turned to home-baking as a form of entertainment and stress relief from prolonged isolation. The baking frenzy in Singapore thus led to shelves empty of flour, baking soda and cocoa powder, as the restocking lead time could not equal the rate at which these products were sought.
Bricks and mortar distribution channels have remained dominant for sales of baked goods, as they ensure the freshness of such products. However, during the COVID-19 Circuit Breaker, companies such as Chinatown Food Corporation found e-commerce to be a helpful tool to expand their consumer reach as much as possible, to offset the loss of sales through the closure of foodservice outlets.
As Singapore is gradually transitioning back to normal, with more businesses, schools and foodservice outlets reopening, packaged bread is set to return to its less favourable position against other breakfast and snacking options offered by foodservice outlets and artisanal products. Therefore, packaged leavened bread is expected to return to retail volume decline in 2021, which will continue for the rest of the forecast period.
The home-baking trend amongst Singaporeans may slow down as people gradually return to working in the office, thus foodservice outlets and bakeries are expected to see their sales slowly return. However, as COVID-19 is likely to remain present moving into the forecast period, this is expected to hamper the return to growth for foodservice volume sales.
As previously mentioned, e-commerce can support baked goods companies to expand their consumer reach and secure more sales, as online platforms are increasingly popular amongst Singaporeans for their convenience and increasing credibility. Given the freshness of products is considered an important factor when consuming baked goods, frozen baked goods producers such as Chinatown Food, which set up its account on Shopee Mall at the beginning of 2020, are likely to benefit from what e-commerce can offer.
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