Wholesale Bakers Infiltrate German Retail Market
Art is not a lost cause in the baking industry, but commercially baked goods slowly are replacing it across the world.
Take Germany, for instance. For years, skilled, hands-on craftsmen dominated the $16 billion baking industry. In fact, there still are more than 283,000 artisan bakers who produce around 60% of all baked goods in this country.
Despite their dominance, the local bakery is seeing increased competition from wholesale baking companies as the quality of mass-produced products has improved and as fewer children follow their parents into the profession.
In the past, the German baking industry was made up of predominantly small entrepreneurs hand-producing products sold in an adjoining shop. Since the 1950s, however, the number of bakeries, which numbered more than 55,000 at that time in West Germany alone, has now decreased to about 17,500 throughout the whole of Germany.
Much of this decline has been due to the emergence of discount bakeries. Throughout Germany, in fact, several wholesale bakers operate large industrial bakeries that supply smaller retail outlets much in the way that Panera Bread and Dunkin’ Donuts increasingly rely on commissaries for production while projecting a local bakery image.
In some cases, the baked goods are delivered fresh each morning. Increasingly, these products are frozen and baked off because of labor shortages, lack of skilled labor and skyrocketing real estate costs.
In many instances, these discount bakeries offer a limited line of bread, cakes, and pastries. More often than not, they’re minimally equipped operations set in well-chosen locations in high-traffic areas. These bakeries can offer lower prices because the baked-off products are often sold in self-service cases.
Likewise, supermarket in-store bakeries are mimicking discount bakeries by selling baked-off bread and rolls, as well as thaw-and-serve cakes and pastries, at lower prices. The one-stop shops provide a convenient alternative for consumers who like to buy all their necessities in one trip.
Such a transformation in consumer shopping patterns has resulted in a consolidation of the market. In fact, iba 2006 organizers estimate that about 2% of German baking companies account for nearly half of all sales volume within the industry.
While discount bakers will continue to thrive, traditional bakeries — although fewer and farther between — still have a good chance of thriving because of their closeness to their consumers, their homemade fresh-baked image and a backlash by some people against mass-produced products.
Moreover, these smaller bakers are marrying advances in technology with the traditional art of baking to produce a greater amount of traditional baked goods without compromising quality.
For example, flour silos, larger mixers, gentle dividers and computer-controlled ovens with robotic loaders nicely blend automation with the processes of the past.
Additionally, frozen dough has become more accepted, even among ardent traditionalists, to produce lower margin products, which allows skilled workers to focus their time on more difficult-to-produce items that command a greater profit.
Every year, German bakers spend more than more than $600 million in capital expenditures. In Germany, there are 70 bakery equipment producers, many of which are small or medium-sized companies. Only the largest companies design and supply complete baking facilities. The majority of equipment manufacturers build individual components for the baking process.
A greater amount of this equipment is being sold worldwide. According to iba 2006 organizers, world exports of bakery products have grown by almost 15% over the last five years and now top $1 billion annually. Italy has about a 18% market share followed by Germany with 15% and Austria and France with about 10% share each.
On the whole, the global demand for bakery equipment is expected to grow in the next few years as consumption of baked goods increases, according to Euromonitor, the market research institute. Fueling sales will be a rise in ready-to-eat products and the proliferation of new baked goods. SF&WB
IBA 2006 Rapidly Approaching
Because iba 2006 begins on the cusp of Oktoberfest, bakers are advised to line up their travel arrangements way ahead of the show, which runs from October 3-9 in Munich.
The show will run daily from 9 a.m. to 6 p.m. at 10 halls at the New Munich Trade Fair Centre. Tickets cost 22 euro for a one-day pass, 30 euro for a two-day pass and 54 euro for a past to the entire show. All tickets to the fair include free travel to the show via local public transportation, which is the best way to get around the city considering the high price of taxis and difficulty in finding parking. Just take the U2 until you reach the “Messelgelande” stop.
For show pre-registration, hotel and exhibit information, visit iba 2006’s multilingual Web site at www.iba.de. This official Web site also has information on transportation, booking hotels, finding restaurants, sightseeing and even for scheduling conference rooms to hold business meetings during the show.