The global flour market was valued at an estimated US$199 billion in 2015 and is predicted to grow by over 4% CAGR to US$255 billon by 2020. However, not all geographies and segments are experiencing such exponential growth.
Global Growth Dynamics
The global market for flour continues to grow with a forecasted value of US$255 billion by 2020. However, changing consumption dynamics such as increased demand for gluten-free food products has disrupted more developed markets and impacted negatively on sales of conventional flour products. This has resulted in a reduction of 2% -30% in developed consumer markets such as the UK, France, Germany and Russia. Other parts of the world have registered little or no growth in demand – see figure 1 on the following page.
However, there is one region of the world which has bucked this trend and that is ASIA, with a number of large-scale flour mills increasing capacity to meet growing demand on the back of rising populations across the region.
Also, initiatives such as the leading flour miller in China introducing cup noodles, has caused a noticeable positive shift in demand and has been a catalyst for increasing flour imports into the country.
Moreover, the development of the flour milling industry in the high-growth developing regions of the world such as Asia Pacific, the Middle East and Africa are significantly contributing to the growth and expansion of the global market for flour and downstream products, such as bakery and confectionery.
Expanding populations along with decreasing flour prices, which is being driven by increased milling capacity from the development of new mills, are helping to fuel market demand. This has also resulted in greater economies of scale and process and utilisation efficiencies.
These developments are also impacting on the wider wheat and flour downstream markets, with an exponential rise in the expansion and openings of new industrial and retail bakery outlets across the region. Wheat is the most widely produced cereal in the world with a diversified market application, mostly focused on the human food chain
Figure 1: Global Wheat & Wheat Products Production
Source: Farrelly & Mitchell Analysis
Wheat is the most widely produced cereal in the world with a diversified market application, mostly focused on the human food chain
Alternative Uses for Wheat & Flour
Wheat is the most widely produced cereal in the world with a diversified market application, mostly focused on the human food chain.
Flour’s more conventional use is as an ingredient in the making of bread, bakery items, and corn-based coating for fried food and fast food. In quick-serve-restaurants, the consumption of flour is high, as they serve food items such as donuts, burgers, cakes, and fried meat basedproducts. Demand for wheat and flour products will be further bolstered with the rising demand for bakery and fast food in high-growth emerging and developing markets.
The bread and bakery market segment is expected to continue to dominate the global landscape for wheat and flour until 2020, accounting for approximately 40% of the overall market value. In addition, the non-food application segment is anticipated to expand at a CAGRhigher than any other segment during the forecasted period.
Innovation to Drive Future Growth
The recommended strategy to increase market penetration is for companies to develop and launch new products. For example, the evolution of the value-added processed bakery industry in the Netherlands, Italy, Germany and France among others is estimated to drive future growth in the region, which is experiencing a decline in conventional sales of wheat based products.
New product development is accounting for 38% of the overall market growth. Also, bread and bakery products, noodles and pasta, animal/pet feed, wafers, crackers and biscuits and non-food applications such as bio-plastics, biomaterials, glue are gaining increased traction across the world. This is driving-up milling capacities through expansion of existing facilities and new operations. Other corporate strategies such as acquisitions, strategic partnerships and joint ventures are helping key players to remain competitive and develop more diverse and innovative product development pipelines.