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Cakes, Cake Bars and Sweet Baked Goods: Inc Impact of COVID-19 - UK - April 2020

OVERVIEW
What you need to know
Key Issues Covered in this Report
Products covered in this Report
THE IMPACT OF COVID-19 ON CAKES, CAKE BARS AND SWEET BAKED GOODS
 SHORT, MEDIUM AND LONG-TERM IMPACT ON THE INDUSTRY
Figure 1: Expected impact of COVID-19 on cakes, cake bars and sweet baked goods, short, medium and long-term, 5 May 2020
 OPPORTUNITIES AND THREATS
COVID-19 unlikely to have long-term negative impact
Opportunities lie in targeting evening occasions
Brands should emphasise how cake can bring people together (virtually)
Focus on health is expected to endure
 IMPACT ON THE MARKET
2020 will see cakes, cake bars and sweet baked goods sales hit
The market will begin to recover in 2021
Figure 2: Forecast of UK retail value sales of cakes, cake bars and sweet baked goods (adjusted for COVID-19), 2014-24
Supermarkets struggled with availability
Figure 3: Not being able to buy out-of-stock products and shopping more from local businesses since the start of the COVID-19/coronavirus outbreak, 26th March 2020-9th April 2020
Local bakeries explore delivery
Impulse purchases hit as people limit supermarket visits
Figure 4: Trying to limit time spent in-store and cutting back on non-essential spending since the start of the COVID-19/coronavirus outbreak, 26th March 2020-9th April 2020
 SHIFTS IN CONSUMER BEHAVIOUR
Focus on health is expected to endure
Figure 5: Change in priorities regarding eating healthily since the start of the COVID-19/coronavirus outbreak, by age and presence of children,16th-23rd April 2020
Support for local producers holds potential beyond the crisis
Figure 6: Change in priorities regarding one’s local community since the start of the COVID-19/coronavirus outbreak, by age and presence of children,16th-23rd April 2020
 IMPACT ON KEY CONSUMER SEGMENTS
Full-time workers are core cake users
Number of children set to increase but benefit to market will depend on parents’ income
Figure 7: Frequency of eating slices of whole cakes, by age and presence of children in the household, December 2019
Over-55s warrant greater attention
 HOW A COVID-19 RECESSION WILL RESHAPE THE MARKET
2008/09 recession saw own-label benefit
 IMPACT ON THE MARKETING MIX 
Opportunities in dessert occasions
Middle of the market will see increasing price competition
Emphasising the inexpensive treat role of cakes could appeal
Local bakeries may have earned long-term custom
 COVID-19: MARKET CONTEXT
EXECUTIVE SUMMARY
Impact of COVID-19 on Cakes, Cake Bars and Sweet Baked Goods
COVID-19 unlikely to have long-term negative impact
Figure 8: Forecast of UK retail value sales of cakes, cake bars and sweet baked goods (adjusted for COVID-19), 2014-24
Figure 9: Expected impact of COVID-19 on cakes, cake bars and sweet baked goods, short, medium and long-term, 5 May 2020
Income squeeze could see own-label resurgence
Opportunities lie in targeting evening occasions
The market
2019 sees modest growth continue for cakes, cake bars and sweet baked goods
Small cakes continue to outperform, hot cross buns leap ahead in sweet baked goods
Figure 10: UK retail value sales of cakes, cake bars and sweet baked goods, by segment, 2017-19
Category looks set to fail PHE sugar reduction and reformulation target
Number of children set to rise but older consumers could prove a barrier
Companies and brands
Mr Kipling sees rebranding and product innovation pay off in cakes and cake bars
Figure 11: Leading brands’ sales and share in the UK retail cakes and cake bars market, by value, 2017/18-2018/19
Warburton’s leads in brands but own-label remains dominant in sweet baked goods
Figure 12: Leading brand owners’ sales and share in the UK retail sweet baked goods market, by value, 2017/18-2018/19
Spotlight on health stimulates more better-for-you variants, but these remain niche
Own-label continues to push the boundaries in seasonal offerings
Innovation responds to growth in plant-based movement
Low adspend due to private-label dominance
The consumer
Cakes and sweet bakes are enjoyed almost universally
Figure 13: Frequency of eating cakes, cake bars and sweet baked goods, December 2019
Dessert and evening snacks offer category potential new eating occasions
Figure 14: Reasons for buying cakes, cake bars and sweet baked goods, December 2019
More convenient formats could do well
Figure 15: Factors considered important to have in a perfect cake, cake bar or sweet baked good, December 2019
Creating a local bakery feel could win favour with consumers
Figure 16: Cakes, cake bars and sweet baked goods eating and buying behaviours, December 2019
What we think
ISSUES AND INSIGHTS
New snacking occasions create opportunities for category
The facts
The implications
Healthier variants hold potential for keeping cakes and sweet baked goods on consumers’ menus
The facts
The implications
Providing the special feeling of a bakery will chime with consumers
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
2019 sees modest growth continue for cakes, cake bars and sweet baked goods
COVID-19 will have short term negative impact on cakes, cake bars and sweet baked goods
Cakes, cake bars and sweet baked goods expected to return to growth in 2021
Pre-COVID-19 forecast predicts market would have seen slight growth
Small cakes continue to outperform
Hot cross buns leap ahead in sweet baked goods
Category looks set to fail PHE sugar reduction and reformulation target
COVID-19 sees uplift in baking and lost eating occasions
Number of children set to rise but older consumers could prove a barrier
MARKET SIZE AND FORECAST
2019 sees modest growth continue for cakes, cake bars and sweet baked goods
Figure 17: UK retail value sales of cakes, cake bars and sweet baked goods, 2014-19
Outlook in light of COVID-19
COVID-19 will have short term negative impact on cakes, cake bars and sweet baked goods
Cakes, cake bars and sweet baked goods likely to recover in 2021
Figure 18: UK retail value sales of cakes, cake bars and sweet baked goods (adjusted for COVID-19), 2014-24
Figure 19: Forecast of UK retail value sales of cakes, cake bars and sweet baked goods (adjusted for COVID-19), 2014-24
Pre-COVID-19 forecast predicts market would have seen slight growth
Figure 20: UK retail value sales of cakes, cake bars and sweet baked goods (pre-COVID-19 forecast), 2014-24
Figure 21: Forecast of UK retail value sales of cakes, cake bars and sweet baked goods (pre-COVID-19 forecast), 2014-24
Forecast methodology
MARKET SEGMENTATION
Small cakes continue to outperform
Figure 22: UK retail value sales of cakes, cake bars and sweet baked goods, by segment, 2017-19
Hot cross buns leap ahead in sweet baked goods
Figure 23: UK retail sales of prepacked sweet baked goods, by type, 2017-19
MARKET DRIVERS
Category looks set to fail PHE sugar reduction and reformulation target
Minor progress as cakes and morning goods begin to reformulate
Figure 24: Percentage of sugar reduction achieved across selected categories within PHE’s sugar reduction and reformulation programme, 2015-18*
Most consumers are limiting sugar
Home baking will have greater impact on market due to COVID-19
Two in three people bake at home
COVID-19 sees uplift in baking
Number of children set to rise but older consumers could prove a barrier
Parents are core cake buyers
Figure 25: Frequency of eating slices of whole cakes, by age and presence of children in the household, December 2019
Strong interest in better-for-you kids’ snacks
Figure 26: Trends in the age structure of the UK population, 2014-19 and 2019-24
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Mr Kipling sees rebranding and product innovation pay off in cakes and cake bars
Warburton’s leads in brands but own-label remains dominant in sweet baked goods
Spotlight on health stimulates more better-for-you variants, but remain minority
Retailers continue to push the boundaries in seasonal offerings
Innovation responds to growth in plant-based movement
Mr Kipling sees a wealth of launches in 2019
Low adspend due to private-label dominance
MARKET SHARE
Mr Kipling sees rebranding and product innovation pay off in cakes and cake bars
Cadbury outperforms own-label dominated market
Figure 27: Leading brands’ sales and share in the UK retail cakes and cake bars market, by value, 2016/17-2018/19
Figure 28: Leading brand owners’ sales and share in the UK retail cakes and cake bars market, by value, 2016/17-2018/19
Warburton’s leads in brands but own-label remains dominant in sweet baked goods
Soreen boosted by advertising campaign
Figure 29: Leading brand owners’ sales and share in the UK retail sweet baked goods market, by value, 2016/17-2018/19
LAUNCH ACTIVITY AND INNOVATION
Spotlight on health stimulates more better-for-you variants
Sugar and fibre claims remain rare
Launches explore nutritious ingredients
Figure 30: Recent examples of healthy innovation within cakes and sweet baked goods, 2019
Mr Kipling expands Reduced Sugar range
Figure 31: Mr Kipling Angel Slices with 30% less sugar, front of pack and snack packs, 2019
Fibre One launches Red Velvet Cake Bar
Figure 32: Fibre One 90 calorie Red Velvet Cake Bars, 2019
Own-label continues to lead in launch activity
Figure 33: New product launches in the UK cakes, pastries and sweet goods market, by top 10 companies (sorted by 2019), 2015-19
Retailers continue to push the boundaries in seasonal offerings
Figure 34: Share of cakes, cake bars and sweet baked goods launches with a seasonal claim, 2015-19
Figure 35: Examples of flavour experimentation in seasonal baked goods, 2019
Figure 36: Examples of Waitrose’s hot cross bun launches, 2019
Innovation responds to growth in plant-based movement
Figure 37: Share of cakes, cake bars and sweet baked goods launches with a vegan/no-animal-ingredients claim, 2015-19
Premier Foods moves into plant-based snacking
Figure 38: Plantastic Orange & Parsnip Cake with Pecans, front of pack and back of pack detail, 2019
Oggs brings eggless cakes to the mainstream market
Figure 39: Oggs zesty lemon cakes front of pack and back of pack detail, 2019
Bells & Whistles cake slices look to combine health and indulgence
Figure 40: Examples of Bells & Whistles cake slice range, 2019
Vegan versions of traditionally un-vegan products appear
Figure 41: Further examples of vegan launches in the cakes, cake bars and sweet baked goods category, 2020
Figure 42: Vegan examples of seasonal sweet baked goods, 2019
Mr Kipling sees a wealth of launches in 2019
Signature Collection targets premium end of market
Figure 43: Mr Kipling Signature Collection Apple, Pear & Custard Crumble Tarts front packaging and back detail, 2019
After-dinner cakes expand into traditional dessert territory
Figure 44: Mr Kipling Signature Collection After dinner Mint Fancies front of pack and back detail, 2019
Mr Kipling goes mini
Own-brand and Baileys amp up indulgence
Figure 45: Recent examples of premiumisation and indulgence from retailers and brands, 2019
Issue of waste within industry spurs on action
Figure 46: Recent examples of a product using surplus bakery products, 2020
Baking celebrity ranges experience mixed fortunes
Figure 47: Mary Berry Celebration Rose Cake with piping tube to personalise, 2019
ADVERTISING AND MARKETING ACTIVITY
Low adspend due to private-label dominance
Figure 48: Total above-the-line, online display and direct mail advertising expenditure on cakes, cake bars and sweet baked goods, 2019 and Q1 2020
Soreen launches “Deliciously Squidgy Adventures” campaign
Aldi celebrates award win with hot cross bun advert…
…and M&S claims new variants are “not just hot cross buns”
Mr Kipling launches second range of Roald Dahl products with on-pack competition
Figure 49: Examples of the Mr Kipling Roald Dahl and Core ranges featuring the on-pack competition, 2019
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Cakes and sweet bakes are enjoyed almost universally
Over half of consumers buy these products to treat themselves
Potential for sweet baked goods to play more of a dessert role
Cakes and sweet baked goods could take advantage of evening snacking occasions
Taste leads among choice factors by a distance
More convenient formats could do well
Creating a local bakery feel could win favour with consumers
Nearly three quarters believe cakes can be healthy and delicious
USAGE OF CAKES, CAKE BARS AND SWEET BAKED GOODS
Cakes and sweet bakes are enjoyed almost universally
Figure 50: Frequency of eating cakes, cake bars and sweet baked goods, December 2019
Under-35s and parents are core users
Figure 51: Frequency of eating slices of whole cakes, by age and presence of children in the household, December 2019
Sweet baked goods and individual cakes enjoyed the most frequently
WHERE PEOPLE BUY CAKES, CAKE BARS AND SWEET BAKED GOODS
Supermarkets are top location for purchases
Figure 52: Location of purchase of cakes, cake bars and sweet baked goods, December 2019
REASONS FOR BUYING CAKES, CAKE BARS AND SWEET BAKED GOODS
Over half of consumers buy these products to treat themselves
Figure 53: Reasons for buying cakes, cake bars and sweet baked goods, December 2019
Opportunities for cakes for adults
Inspiration from chocolate and ice cream
Potential for sweet baked goods to play more of a dessert role
Figure 54: McVitie’s Jamaica Ginger Sticky Pudding cake with a hot or cold serving suggestion, 2016
Cakes and sweet baked goods could take advantage of evening snacking occasions
Indulgence and sweet flavours gain importance in snacks in the evening
Figure 55: Sainsbury’s Taste the Difference Triple Berry Hot Cross Buns emphasising sweetness of individual elements, 2020
Figure 56: Genius Gluten Free Apple Pies emphasising sweetness of individual elements, 2020
Injecting fun to cakes with packaging and language
Figure 57: Recent example of fun, bold packaging design from Oggs, 2020
Figure 58: Nestlé Quality Street Matchmakers Chocolates with  an on-pack game, 2016
CHOICE FACTORS OF CAKES, CAKE BARS AND SWEET BAKED GOODS
Taste leads choice factors by a distance
Figure 59: Choice factors of cakes, cake bars and sweet baked goods, December 2019
Convenience and healthiness are more important for frequent eaters
FACTORS IMPORTANT FOR A PERFECT CAKE, CAKE BAR OR SWEET BAKED GOOD
Demand for convenience offers opportunities for new formats
Figure 60: Factors considered important to have in a perfect cake, cake bar or sweet baked good, December 2019
Cake bars are well-established baked good that can boost convenience
Figure 61: Recent international examples of convenient formats of sweet baked goods, 2019
Less sweet cakes could help sugar reduction efforts
Scope to call out ‘less sweet’ proposition
Figure 62: Recent examples of products claiming to be “not too sweet”, 2020
Figure 63: Willie’s Cacao Pistachio & Date Bar stating not needing sugar due to fruit content, 2019
Opportunities to reduce sugar without sweeteners
BEHAVIOURS RELATED TO CAKES, CAKE BARS AND SWEET BAKED GOODS
Products bought from bakeries are seen as special
Four in five see bakery treats as special
Figure 64: Cakes, cake bars and sweet baked goods eating and buying behaviours, December 2019
More scope to call out artisan credentials
Figure 65: Waitrose Easter Spiced Panettone calling out a traditional family recipe, 2019
Figure 66: Popty Bakery Traditional Welsh Cakes regional brand emphasising the story behind the product, 2019
Retailers would do well to stock locally produced baked goods
Leading grocers support local suppliers
COVID-19 puts the spotlight on helping the local community
Nearly three quarters believe cakes can be healthy and delicious
Strong conviction that healthiness and taste can go together
Reducing sugar remains needed
Scope to explore better-for-you additions
Two thirds are open to more international cakes and baked goods
In-store bakeries’ flexibility facilitates new variants
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX - LAUNCH ACTIVITY AND INNOVATION
Figure 67: Share of new product launches in the UK cakes, cake bars and sweet baked goods market, by top 30 claims, 2015-19 (sorted by 2019)
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 68: UK retail value sales of cakes, cake Bars and sweet baked goods, best- and worst-case forecast (pre COVID-19), 2019-24
APPENDIX – MARKET SHARE
Figure 69: Leading brand owners’ sales and share in the UK retail sweet baked goods  market, by value, 2016/17-2018/19

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