The global cakes market is poised to depict a substantial growth, at a CAGR greater than 3% over the forecast period. Growing urbanization coupled with an increase in disposable income is expected to favor the growth. With more than 40% of the world population living in urban areas, the industry is likely to witness an upsurge over the next seven years.
The industry has always been a growing sector owing to globally increasing population, but the recent trend of the western-styled bakery in the Asia Pacific region may further fuel demand. Globally, the Asia Pacific account for more than 50% revenue as the growing population provides a stable nesting ground for bakers. Since the majority of the players are small privately owned businesses, expansion into different economies could be a challenging task. However, the upsurge of logistics providers may offer solutions for local players to expand their reach.
The market is segmented into artisanal and in-store bakers. While the artisanal cakes have been a unique selling point in fuelling the demand, the upcoming trend of in-store bakeries may further provide growth opportunities. The in-store bakeries offer a one-stop-shop solution offering pastries and other bakery items. Recent trends of designer product and continuous innovations in product offerings are likely to keep the industry alive. For Instance, Bimbo Bakeries’ Minion-shaped cake, produced under license from Illumination Entertainment and Universal Pictures, is one such example.
Consumer preference for food acts as the biggest driving factor for any food related industry. The market may take a hit if user’s eating habits change over time owing to such dependencies. Healthy diet trends may impede the industry growth. However, continuous innovations to bake healthy products with low-calories may sustain growth. Some bakers offer small bite-sized pastries for people preferring on-the-go snacks. The high convenience provided by such product is also expected to catapult demand over the forecast period. The pastries section is expected to be the highest contributor of revenue over the forecast period.
Food perishability remains a key challenge the industry faces. Thus, players need a constant supply of raw materials. Although the cakes market does not face excessive demands, any delay in the supply chain may immediately lead to reduced sales. This acts as a challenge for artisan cake makers who do not bake their own bread. A dependency on supplier thus works an enormous problem which may impede growth for individual players.
Globally, the North American and European economies have been the key revenue generators, followed by a substantial share coming from Asia-Pacific. The growing population of the Asia-Pacific region may provide long-term opportunities for bakers. Although small bakers may not be able to capitalize on these opportunities, larger bakery chains may have the competitive advantage to reap benefits from India and Turkey. The online product delivery services offering various customization options are expected to further catalyze growth. The industry is mostly localized with regional suppliers commanding market share. Competitive pricing and product offerings play the differentiating factor for successful bakers enabling them to extract high profit.
The ongoing trend of healthy eating is expected to add focus on bread quality and product innovation. A high number of bakers offers healthy alternatives to high-calorie products and is expected to be a key factor increasing market share. The introduction of new flavor is also anticipated to positively impact industry growth. However, the market is highly fragmented in nature with numerous players operating in a region leading to fierce competition on the basis of product offerings, pricing, brand recognition and technology.
The industry is expected to witness rising number of consolidated online stores with offerings from various bakers. The aforementioned initiative has increased presence for local brands, thereby increasing their market share. Key players in the market include Artisan Cake Company, Little Venice Cake Company, Ele Cake Company and The Blue Cake Company. Innovative designs and new flavors are expected to maintain a healthy demand from consumers leading to high growth.
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