Baker & Baker predicts cost-of-living, HFSS, sustainability and the possibility of a new Government will influence the UK's bakery market in 2024

By Gill Hyslop

- Last updated on GMT

Pic: GettyImages/Firmafotografen/J Studios
Pic: GettyImages/Firmafotografen/J Studios

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There certainly is a desire for baked goods that are better-for-you, but consumers are not prepared to sacrifice on taste. There’s also a growing desire for sustainable options, but how is that fairing in the current economic climate?

2024 is expected to emulate 2023, according to Baker & Baker category lead UK Stuart Galbraith.

“We expect that shopper value – and the perceived value attained from the point-of-view of the consumer – will remain the key driver of volumes throughout 2024 in fresh bakery,” he told Bakery&Snacks.

“Unless we see dramatic shifts in the macro-economic climate or consumer spending habits, consumers will continue to see instore bakery as a category that offers them an affordable, permissible treat – as long as they feel they’re getting value at the till.”

As such, promotions will be the key mechanic that allow shoppers to access that value, a reason why instore bakery performed well during the cost-of-living crisis – and likely do so again this year.

However, the UK’s HFSS legislation​ – which continues to evolve – remains a big challenge for retailers.

The restriction of HFSS products by location​ came into force on October 1, 2022, in the UK. This means HFSS foods are banned from being placed in key locations (store entrances, aisle ends and checkouts) in retail stores that are over 185.8m2​ (2,000 square feet), along with the equivalent key locations online.

The ban on advertising HFSS products online and on TV before 9pm is planned to start in January 2025, while the placement of promotions instore and multibuy promotional offers will be restricted from October 2025.

Wales is also introducing similar legislation this year (to be rolled out across the nation by 2025), while Scotland has launched a consultation​ to seek out views on the detail of proposed regulations. This consultation closes on 21 May 21, 2024.

“HFSS remain a key driver of change within retail and the bakery category as retailers grapple with the varying requirements,” said Galbraith, adding the possibility of a new Government this year, too, throws another challenge into the mix.

“With a general election on the horizon – and the possibility of a Labour Government – we expect to see new regulation being proposed and hotly debated towards the end of the year as part of a renewed health agenda.”

Sustainability vs cost-of-living

Out of pocket Getty
Pic: GettyImages

While shoppers are extremely keen to explore and interact with the notion of sustainability, in the current climate, the average consumer is not able or is willing to pay a premium for products with a sustainability claim.

“This is evidenced by data suggesting that niche products and tastes have taken a downturn in fresh bakery over the past year,” said Galbraith.

“The challenge for both the larger retailers and smaller brands is how to embed positive sustainability considerations into their product portfolio whilst still offering value. As and when the overall economic environment does begin to improve – perhaps at the tail end of the year – expect this trend to reappear and begin to gain momentum.”

Baker & Baker’s UK director of R&D Jonathan Adams noted the shoppers chasing the niche sustainable treats typically seek out products through specific outlets rather than from big box retailers.

“This is part of the appeal: bucking the trend; finding something new; something that not everyone has access to – almost to the extent that a product ceases to be special when it has mass appeal and availability,” he said.

Adams believes this trend – while underlying – will need to gather significant momentum before it will be considered viable by the bigger retailers.

“2024 is likely to be the year mandatory food waste reporting is finally adopted,” he said.

If so, “brands and manufacturers alike will need to be both transparent with their reporting and bold in their efforts to reduce their food waste.

“When such reporting becomes public – and consumers become better informed about the volumes of food waste within supply chains – there’s likely to be a clamour for industry to pull together and make serious efforts to tackle waste.

“Another sustainability prediction we expect to see growing momentum is eco-labelling. There are currently many players in the market developing approaches to eco-labelling and most are loosely similar to existing nutritional labelling on-pack.

“But as the climate crisis continues to garner headlines, we can expect consumers to demand more information on pack, along with their impact on the climate.

“ IGD’s eco-labelling proposal appears to be the frontrunner – despite inevitable criticisms around their approach – but either the current Government or a new one is likely to take on the challenge of a uniformed approach to the topic with renewed vigor.”

Health vs indulgence

Health vs indulgence Getty Urilux
Pic: GettyImages/Urilux

Galbraith told us Baker & Baker has noted two distinct movements within customer circles.

“There is a clear interest in health and how this can find synergy within bakery. But equally, there is a significant shopper group for whom indulgence remains everything. This shopper doesn’t want to see health-related mitigation, but rather is chasing the pure and more artisanal approach, something that is acutely apparent in the artisan bakeries in and around London where the trend is prominent. We don’t expect to see much compromise within these demographics and the continued renaissance of the artisanal channel in the UK is testament to that.”

Finally, seasonality will continue to be a focus area for the larger retailers.

“This allows them to bring colour and relevance to the category and give shoppers new reasons to explore and interact with the sector. So we expect retailers to invest and provide theatre around Easter, Halloween and Christmas this year,” said Galbraith.

On the flavor front, Adams said blonde chocolate is on the rise in fresh bakery.

“It’s an intriguing flavor that delivers added indulgence, so expect to see more products developed with this flavor as a central feature,” he told this site.

“Within the artisanal bakery channel, we’re also seeing the use of ingredients such as pistachios more widely used, however, this may be associated with colour and presentation rather than the effect of flavor.”