the impact of bread subsidies on baked goods … · 2016. 10. 21. · iran, egypt, algeria, saudi...
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THE IMPACT OF BREAD SUBSIDIES ON BAKED GOODS DECEMBER 2014 – IAOM MIDDLE EAST & AFRICA
PINAR HOSAFCI – PACKAGED FOOD ANALYST AT EUROMONITOR INTERNATIONAL
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STATE OF THE BREAD MARKET
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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Bread is the biggest part of the region’s daily diet
STATE OF THE BREAD MARKET
0%
7%
14%
21%
28%
35%
42%
49%
0
5
10
15
20
25
30
35
Middle East and
Africa
Western Europe
Latin America
Eastern Europe
Asia Pacific North America
Australasia
% i
n p
ac
ka
ge
d f
oo
d
Mil
lio
n t
on
ne
s
Retail Consumption of Bread by Region 2014
Bread Retail Volume Bread % Per Capita in Packaged Food
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Some of the world’s biggest bread eaters come from MEA…
STATE OF THE BREAD MARKET
0
20
40
60
80
100
120
140
160
Ret
ail
Co
nsu
mp
tio
n o
f B
rea
d –
Kg
pe
r C
ap
ita
Putting Middle Eastern & African Bread Consumption in Context, 2014
Kg per capita World Middle East and Africa
Saudi Arabia
Egypt
Iran
Algeria
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…However they consume the cheapest bread
STATE OF THE BREAD MARKET
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2009 2010 2011 2012 2013 2014
US
$ p
er
kg
- 2
014
Australasia North America Western Europe
Latin America Asia Pacific Eastern Europe
MEA MEA artisanal MEA packaged
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Artisanal dominates bread sales…
STATE OF THE BREAD MARKET
Artisanal Bread
Packaged Bread
Bread Substitutes
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2009
4 million tonnes
2014
5 million
tonnes
But its consumption is declining…
STATE OF THE BREAD MARKET
2014
27 million tonnes
2009
30 million tonnes
Artisanal Bread Packaged Bread
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Subsidies
Availability of
substitutes
Decline in artisanal
bread
WHY?
STATE OF THE BREAD MARKET
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STATE OF THE INDUSTRY
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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Bread consumption shows significant variation across the region
BREAD SUBSIDIES AND THEIR IMPACT
Kg per capita
60+
30-60
15-30
5-15
0-5
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0%
7%
14%
21%
28%
35%
42%
0
2
4
6
8
10
12
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as a
% s
ha
re
of
tota
l b
re
ad
mil
lio
n t
on
ne
s
Iran: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread Packaged as a % of Total Bread
Iran : End of government subsidies leads to less bread wastage
BREAD SUBSIDIES AND THEIR IMPACT
US$
0.24
US$
0.50
US$
0.47
2010
2011
2014
US$
0.91 US$
0.77
US$
0.63
2010
2011
2014
ARTISANAL BREAD
PACKAGED BREAD
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Retailer discounts
Promotions
Modern grocery dominance
South Africa: Retailer subsidies define packaged bread growth
BREAD SUBSIDIES AND THEIR IMPACT
50%
54%
58%
62%
66%
70%
0
0.3
0.6
0.9
1.2
1.5
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as
a %
of
tota
l b
re
ad
Mil
lio
n t
on
ne
s
South Africa: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread
Packaged as a % of Total Bread
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50%
54%
58%
62%
66%
70%
0
0.3
0.6
0.9
1.2
1.5
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as
a %
of
tota
l b
re
ad
Mil
lio
n t
on
ne
s
South Africa: Packaged vs Artisanal Bread
Packaged Bread Artisanal Bread
Packaged as a % of Total Bread
South Africa: Retailer subsidies define packaged bread growth
BREAD SUBSIDIES AND THEIR IMPACT
Rising input costs
Affordable substitutes
Value-added substitutes
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0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
0.0
2.0
4.0
6.0
8.0
10.0
2009 2010 2011 2012 2013 2014
Pa
ck
ag
ed
as a
% o
f to
tal
br
ea
d
Mil
lio
n t
on
ne
s
Egypt: Packaged vs Artisanal Bread
Artisanal Packaged % Share of Packaged in Total Bread
Subsidized flour
New subsidy system
Reduced bread wastage
Egypt: End of cheap bread?
BREAD SUBSIDIES AND THEIR IMPACT
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Reasons for artisanal bread’s decline
BREAD SUBSIDIES AND THEIR IMPACT
Promotions and Discounts
South Africa
Availability of Cheaper or Added-Value Substitutes
South Africa, Iran, Algeria, Nigeria etc.
Market Maturity
Iran, Egypt, Algeria, Saudi Arabia
Reduced Bread Wastage
Iran (potentially Egypt?)
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STATE OF THE INDUSTRY
BREAD SUBSIDIES AND THEIR IMPACT
OPPORTUNITIES AND PROSPECTS
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7% volume CAGR 2009-2014 Key markets: South Africa, Nigeria, Kenya Affordability Exoticism
0.1 kg per capita Key markets: UAE, South Africa Lack of time Westernisation
4.6 kg per capita Key markets: Cameroon, Algeria, Morocco Shift to packaged food Affordability
1.2 kg per capita Key markets: Iran, Egypt, UAE Convenience Versatility
Rice Pasta
Noodles Breakfast Cereals
Competing Staples for Bread Vary Across MEA
OPPORTUNITIES AND PROSPECTS
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Packaged pastries have several unique selling points
OPPORTUNITIES AND PROSPECTS
Dynamic growth
Shelf-stable
Satiety
Indulgence
Portion control
On-the-go
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-56%
-48%
-40%
-32%
-24%
-16%
-8%
0%
8%
-2,800
-2,400
-2,000
-1,600
-1,200
-800
-400
0
400
High Fibre Bread
Artisanal Bread
% C
AG
R
‘oo
o t
on
ne
s
High Fibre Bread Growth
Absolute Volume Growth 2009-2014
% CAGR 2009-2014
Higher unit price
Longer shelf life
Modern grocery
High Fibre Bread Promises Added Value
OPPORTUNITIES AND PROSPECTS
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What can bread learn from other convenient packaged foods?
OPPORTUNITIES AND PROSPECTS
Convenience food category Retail Volume CAGR 2009-2014
Drinking yoghurt 7.2%
Instant noodles 6.6%
Sweet and savoury snacks 5.8%
Snack bars 6.1%
Total bread -0.7%
Examples of convenience products Opportunities for bread
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Maturity
End of subsidies
Discounts
Substitutes
Convenience
Versatility
Health and Wellness
Portion control
Incr
ease
in
alt
ern
ati
ves
Declin
e in a
rtisan
al b
read
Key takeaways
OPPORTUNITIES AND PROSPECTS
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THANK YOU FOR LISTENING Pinar Hosafci
Food Analyst