Niche bakery potential in Germany for small scale manufacturers – investment agency

Germany Trade & Invest (GTAI) said that the bakery market in Germany, worth €10.5bn in 2009, was a competitive landscape open to SMEs as well as multinationals.

Niche bakery​

Daniel Lindel, food and beverage industry analyst at GTAI told BakeryAndSnacks.com: “The German bakery market is distinguished by an especially large product variety, 300 bread and 1,200 pastry types exist, therefore the potential for niche products cannot be denied.” ​

“Consequently, the potential for niche products also means that there are business opportunities for small-scale or independent manufacturers,”​ he said.

However, he added that niche products would have a limited influence over the entire market, but as traditional bakeries were losing market share, it could open opportunities for SMEs to expand product ranges to include functional snacks.

Lindel’s comments came in a follow-up interview after the publication of GTAI’s report on The Food & Beverage Industry in Germany, Issue 2011/2012 in July. (See here)

“The key challenge for new market entrants is securing access to distribution channels, because existing well-known brands are strong and shelf space in supermarkets is limited, therefore investment in brand building is necessary before market entry,” ​Lindel continued.

Functional and convenient​

He said that functional products giving health benefits such as low cholesterol, added vitamins or less sugar would appeal to Germany’s ageing population. Goods baked with natural ingredients would also perform well, he said.

“Organic foods have achieved mainstream acceptance in Germany. Consumers expect at least a small organic product selection in every supermarket, even discount markets. Many Germans choose organic products for their health benefits, and the price of organic food in Germany is lower than in many other countries due in part to its widespread consumption,”​ said Lindel.

According to GTAI, German organic foods sales amounted to €5.8bn in 2009, making it the largest organic food market in Europe by some distance.

“The increasing internationalization of the German food market is creating especially interesting opportunities for certain specialty foods from abroad,”​ added Lindel.

He gave Mediterranean bread as an example of a country or region specific speciality.

GTAI has forecast 7.9% growth in the domestic market for bread and rolls by 2015.

“Convenience food is an overall trend in Germany due to the accelerated lifestyle of modern society which leads to the consumption of meals and snacks on the go,”​ said Lindel.

He said products with smaller packaging would also perform well due to an increasing number of single households.