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Bakery - Fast-growing market with thick 82% bread slice
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Wednesday, 01 March, 2017, 08 : 00 AM [IST]
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Srishti Sharma
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Bakery and confectionery industries have a wide variety of products under their umbrella. Cookies and biscuits production also falls under the baking category, along with breads that make up around 82% of the entire bakery manufacturing market. The remaining part includes cakes, desserts, and other sweet goods.
Bakery and confectionery are two separate categories technically, but most companies tend to cater to both the markets. It is not difficult to capture both areas with common machinery, especially, for small-scale and retail establishments. However, bakery companies manufacturing packaged goods in food processing generally produce slice cakes, varieties of cookies and biscuits, muffins, doughnuts, cinnamon buns, khari, slice bread, rusks and so on. Artisan breads and baguettes, birthday cakes and desserts which require refrigeration are not as popular due to constraints in shelf life, storage conditions and the cost and process of manufacturing itself.
Bakery Snacking
Most of on-the-go bakery snacks available in India are dry cakes like slice cakes, tutti fruiti cakes, plum cake, biscuits, cookies, khari, muffins (vati cakes), swiss rolls, cream filled bar and cakes. Some niche segment stores like Godrej Nature’s Basket keep doughnuts and brownies which are sourced locally. Bread is the second-most consumed product in India in the bakery sector, after biscuits and cookies, which largely includes sliced bread and khari. There is a niche market growing for artisan bread, gluten-free breads, diet breads and healthy breads.
There is clear indication that the demand for on-the-go sweet snacks is on the rise. Products those were previously available only in cities, like muffins and slice cakes, have now slowly made their way into the rural markets. Around 68% of India’s population is in the rural segment and companies are seeing this as a viable and profitable option as long as the products are within a certain price range. In their stead, the niche market is rising in the urban areas owing to more disposable income, rise of the middle-class income crowd and a search for different taste. Also, the food processing industry has been given importance in the past two years and is also included under the ‘Make In India’ project, which is a big encouragement for entering the baking industry.
Machinery and Equipments
Bakery machinery is diverse in essence to the product category, item and the size of the manufacturing unit. Small retail units tend to go for limited machinery that can satisfy most of their productions needs. But large scale, semi and fully automated companies may not have this advantage. They have to cater to production of scale for one product with or without variants. Any expansion they can think of has to be horizontal. For example, a bread making line may be able to produce different flavours of bread but it cannot produce pizza base or buns. For the last two, an altogether different production process is required. In addition, use of allergens may also require different machinery lines. A generic list of bakery machines would include
Dough Mixers: It includes high volume mixers like horizontal mixers, or retail use mixers like planetary mixers or spiral mixers.
Depositors: Cake batter depositors differ from bread and dough depositors, dough cutters and cookie depositors like rotary cutting machines or wire cut cookies.
Dough Moulders and Sheeters: These differ from product to product, like croissant, baguette and bread product and can be manual and semi-automatic with depositors.
Ovens: Again based on the size and product there are rotary rack ovens, deck ovens, steam ovens, convectional ovens and conveyor ovens.
Coolers: Conveyor belt coolers are mostly part of a production line in many places and have various kinds of wire meshes or cloth belts.
Packaging Machines: Depending on the product there are flow rapping packaging, shrink wrapping machines, lid sealing machines or hand stretch wrapping machines. Many retail units may not have any specified type of packaging and will differ with each product as it is generally done manually.
Free From Foods
Gluten-free bread, cakes, cookies and desserts are not just a fad or a trend. There are people who are intolerant to gluten and those who have Celiac disease. In both cases consumption of gluten can be fatal. The customer must be aware of what the product contains, whether it was made in a facility where gluten is also available and if there is any risk of cross contamination. Stringent laws by the government can protect the risk of cross contamination, as also hygienic practices done by the manufacturer at their end. The market for gluten-free products has grown very fast is expected to only expand further. Use of flours other than wheat provides some health benefit and also offers a different taste. But producing gluten-free on a production line is difficult due to erratic behaviour of the different flours used. The dough or batter is rather sticky to handle and poses a challenge to clean the machines used.
India is a nation where many people are strictly vegetarians which also includes use of eggs. Baking is a category which has not originated in our country and has extensive use of eggs, even in bread and cookies. Adapting bakery products to be egg-free is difficult and has become popular only in the last decade owing to replacements that mimic the properties of eggs. These replacements are derived from chemical isolation, like the use of poly glycerol esters or naturally like lecithin from soy. People are even allergic to eggs which are the reason for egg-free products to gain importance in foreign countries. It is included in the Big Eight Allergens of USA along with soy, which makes using soy flour or lecithin also difficult. Yet, there are various formulations of egg-free products which render soft cakes at the least. The chemistry of an egg- free product is always different from the original but research in this sector has at least made these products as similar as it possibly can and does not compromise in taste.
Sugar is to bakery as air is to humans. Desserts are not desserts without being sweet; and the same applies for cakes, biscuits and cookies. Yet it becomes extremely difficult and almost impossible for people who cannot consume sugar to have these products. People suffering from diabetics, people who have to limit sugars due to illnesses or lifestyle choice have to be far away from bakery products. Sugar is also an essential ingredient in bread because sugar is food for the yeast and also helps in crust formation with Maillard Reaction. Honey and agave are natural substitutes for sugar and have made their way into baking now. It is more popular in retail bakeries than commercial bakeries because it is expensive and hard to manage in formulations. There are also many substitutes for sugar called Sorbitols, like Xylitol, Maltitol which are high intensity sweeteners, almost 30 times that of Sucrose, and hence, require a very tiny amount to be used. Many sugar-free products are made by omitting sugar altogether. Sourdough and some European breads do not have sugar added either. Yet is it difficult to not have sugar in some form (like fructose or glucose) at all as many other ingredients inherently have sugar, like wheat.
Although food processing industry is rising at a breakneck speed and is encouraged to develop, consumers prefer food free from any kind of artificial preservatives. This is difficult to implement but can be achieved through various preservation techniques, like sourdough development and fermentation and also with packaging techniques like heat treatment. Research and development is crucial for this and must be invested in further.
Rise in obesity and cholesterol related illnesses have also moved the trend for fat-free, trans fat- free and cholesterol-free baked goods. Although baking is considered a healthy way of cooking, addition of fat in baked goods is essential. Alternative for the same are also being used like using cold pressed oils, olive or canola oils, avoiding margarine, but these are expensive options.
Biscuits Manufacturing
India is the second-largest manufacturer of biscuits and it also is the most popular product with the highest sales in bakery with around 33% of production. Some 70% of biscuit manufacturing is in the unorganised sector and the rest belongs to big players in the organised sector like Parle, Britannia and ITC.
Highest consumption of biscuits in India in 2015 was Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh, from which Maharashtra and West Bengal were leaders. Even the rural areas in these states were ahead in biscuits consumptions with around 55% of the entire state. Maharashtra and West Bengal also have a huge number of biscuit manufacturing units compared to other states, including the top companies. Parle’s main manufacturing unit is based in Haryana with more than 50 direct and indirect units scattered around the country.
Biscuits are easier to manufacture, have a long shelf life, are easier to transport and can be available everywhere. It is also profitable to sell in rural areas if the pricing of the packet is low and the size is individual.
Second-Largest Manufacturer of Biscuits in the World
India is the second-largest manufacturer of biscuits in the world, the first being the United States of America. It is also the largest consumer of biscuits in the world. The Indian biscuits industry has been rising steadily in the last decade. Being third-largest in 2005, after China, it has risen to being the second-largest in the world in 2016. According to sources, it is being valued at Rs 3,000 crore of turnover. The top players currently are Parle-G, Britannia, ITC, Priyagold and Anmol, among others. But the major chunk of the manufacturers are medium- and small-scale industries, locally situated which form the unorganised sector that accounts for more than 70% of the industry.
Previously, foreign players entered the market but could not sustain the heavy competition present at home. Despite this challenge, India is now among the top three markets for Cadbury’s Oreo brand, which is the world’s highest selling biscuit. Therefore, 2015-2016 is seeing many foreign brands that are targeting India as a viable market and are giving tough competition to in-house brands and also the unorganised sector.
The health segment in biscuits which consists of digestive biscuits is also growing at 15-16% every year.
Rise in Cost of Raw Materials
Most of the commodities in India have had a major price increase in the last five years, including butter, oil and sugar. Wholesale prices of sugar have climbed from Rs 2,397 to Rs 3,691 a quintal in a period of one year, according to data from the department of consumer affairs. Wheat flour has also seen a price rise in the last five years owing to higher import quantities too. Along with this shortage of products like chocolate and cocoa powder in the previous year has led to subsequent price increase in 2016. The impact of price increases as such is heavy on unorganised and small-scale sectors. It becomes increasingly difficult for bakeries to continue selling the products at the same rate, especially, bread products which have a tiny margin. Even MNCs like Britannia has had to contemplate price change. It had 10% lower sales the previous quarter, which it attributes to rise in raw material rates, among others. This is a major hurdle for bakery industry and results in slow growth and falling demand, if the prices of the final product are increased. Although the niche segment has been seeing growth, it still amounts to a very less percentage of the population and cannot drive the entire industry.
Fortification in Bakery
Due to variant lifestyles of many individuals today, addition of nutrients in bakery products is considered to help them achieve these nutrients. Although in India, bakery product consumption is still at a very low percentage, it is beneficial if every baker understands its’ need and implements it.
High fibre content is the next step to improving the quality of bakery products. Fortification of bakery products is done with addition of vitamins like thiamin, niacin, iron and calcium which are lost during milling of the flour. USA and New Zealand have approved the addition of folic acid for vitamin B in bakery products as well. Along with this, the current trend also remains to add soy flour or concentrated soy protein to breads. Addition of multiple grains, seeds like flax seeds and oats is also a popular and healthy trend. There is an option of using addition of various salts too, like mineral salts but it is still uncommon and may be expensive. In sweet goods, people are starting to shift from packaged and artificial flavoured substances to fresh fruits and fresh additions to the product. Nutrition and energy bars are picking up the market in urban India too.
Many vitamins and minerals tend to react in an adverse fashion and reduce the shelf life of baked goods. Some of them cannot sustain the heat imparted during the baking process. A clear example of this is a pure multigrain bread, which has a shorter shelf life than white bread and tends to give off flavours which is not accepted by consumers.
(The author is owner of Little Foods, Pune. She can be contacted at littlefoods.cake@gmail.com)
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