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Bright future for baking industry
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Wednesday, 16 November, 2011, 08 : 00 AM [IST]
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Geeta Bector
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The baking industry in India is one of the fastest growing industries, perhaps third only to wheat flour, fruits and vegetables processing sectors. From small bakeries to airlines and railways, the demand for bakery units and products is rapidly growing. As per estimates of Bangalore-based University of Agricultural Sciences, the bakery industry in India generates around Rs 10,000 crore annually.
The emergence of a significant middle-class, urbanisation and the expansion of modern habits by busy, health-conscious and well-informed consumers are raising the consumption of bakery products in India. Economic growth is buoying the purchasing power of Asia's middle-class, which is set to fuel demand for bakery products in retail store, food joints, and coffee houses across India. The changing demographics are changing the way people are consuming bakery products be it cakes, sandwiches, pastries, puffs, pizzas, and croissants.
Demand drivers
The emergent middle-class is driving demand for new types of bakery products in both developing and developed markets riding piggyback on the fast food revolution sweeping urban India. The growing economy, increasing disposable income and retail boom have lured number of domestic and international bakery chains to expand their presence in the country. Additionally, a growing number of working women, young professionals living alone and greater exposure to Western food patterns make Indian consumers to go for food fried, baked or toasted straight from the freezer. The present day consumer looks for new products, better appeal, taste and convenience from bakery foods. Changing consumerism is witnessing product innovations and retail formats are going to be great platforms for product push in the near future. Bakery joints have emerged as popular hangout places. A typical trend is for a variety of bakery snacks, top quality products and value for money.
Currently, about 60 per cent of the bakery industry is in the organised sector, and the rest comprises unorganised tiny local units and small-scale units. Apart from the nature of the industry, which gravitates to the markets and caters to the local tastes, the industry is widely dispersed also due to the reservation policies (relating to the small-scale industries) of the government. However, in the recent past the entire retail market in India has evolved to create a robust environment where food retail has thrived. Over the years, the outlook of the bakery industry has rapidly evolved in that the shift has been is from standalone bakeries to bakery chains like restaurant chains. Many leading retail chains have food courts with bakeries and cake shops alongside. These bakery chains are serving a wide range of breads, buns, cakes, pastries, cookies, croissants and other bakery delicacies.
With the burgeoning of ready-to-eat culture, bakeries are making sure that they come out with healthier products. Consumers are increasingly concerned about their health and are well aware of the relationship between nutritious food and optimal health. Various concerns have caused consumers to demand for healthier bakery products.
Key concerns
Concerns like growing media coverage on health, rising incidence of health conditions (obesity, diabetes and cardiac problems), concerns over physical appearance, changing lifestyle and also soaring costs of healthcare. Some popular trends in the market are the introduction of low / light, functional, natural and organic products. The awareness of the virtues of products like whole grain, health breads, cholesterol-free products and such other health products has been on the rise in India.
Increasingly, consumers seek for luxury products with low fat, better appeal and better taste with more natural and organic ingredients like multi-grains and whole wheat breads.
In addition to healthier products, consumers also are purchasing products that satiate their taste buds. The taste enjoyment factor is vital in the marketplace, as the large range in bakery products available provides a wide range in consumer choice. With lifestyles becoming increasingly stressful, consumers may indulge in food for comfort. On-site manufacturing of bakery products in bakeries and supermarkets directly contributes to this trend, as it is well known that the smell of freshly baked breads and other products is a strong motivational factor in subsequent purchases. Indulgence / luxury products are becoming more pronounced as a key trend in the bakery industry. Consumers increasingly seek for premium, gourmet and exotic products to satisfy their desire to indulge. Cakes, pastries and biscuits are the typical indulgent products within the bakery sector.
Upgrading equipment
This in turn has resulted in technological advancement in bakery industry and bakeries have been constantly upgrading their equipment which is eco-friendly, safe and economical. Increasingly, bakery businesses across the country are deploying latest technology such as infrared burners, which use about 30 per cent less fuel than other ovens and also emit lesser pollution. In technological aspect, the early 21st century has proved to be a landmark for the bakery industry. There is a new generation of bakery equipment which is central nervous system (CNS-based) and teflon-coated materials that provide better durability and ensure more hygienic processing conditions.
One of the key deterrents of a faster food retail revolution is the lack of well-developed cold chain logistics solution providers. However, the key to building brands in the bakery industry is an effective cold chain distribution. Although the technology for packaging products and increasing their shelf life is being developed and adopted rapidly, the high transportation cost is a concern for bakery chains. The bakery products have to be transported to outlets in cold vans and vehicles, twice or thrice in day, which is a costly affair. There are other challenges too like procuring highest quality of ingredients, maintaining consistency in standards of food, managing efficient service in terms of hospitality, high inventory carrying cost, high taxation and high packaging costs. Going forward, the future of bakery industry in India looks bright with more than 60 per cent of the market still served by the unorganised segments, there is a huge potential waiting to be tapped.
(The author is VP, research & development, Mrs Bector’s Cremica)
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