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Bakery industry trends: Innovating to meet consumer demands

The global bakery industry is experiencing strong growth. With sales expected to reach $1.17 trillion by 2033, the bakery sector is expected to grow at a compound annual rate of 5.2% from 2024 to 2033. This growth is primarily attributed to rising consumer demand for new and innovative products. To capitalise on this growth and seize opportunities for market penetration, businesses in the sector must prioritise innovation and demonstrate a willingness to adapt to emerging bakery industry trends and market dynamics.

Bakery industry trends

Health and indulgence: One of the biggest challenges and opportunities facing the bakery industry is resolving the seeming paradox between growing consumer demand for healthier products and the inherently indulgent nature of treats. While rising health consciousness has made many consumers view traditional bakery staples like white bread as unhealthy, there is still a strong appetite for indulgence.

Low/reduced sugar claims are becoming especially popular in the bakery industry, while many brands are also launching products that are either sugar-free or substituted with artificial sweeteners. Products fortified with fiber, gut enzymes, and other healthy ingredients are also increasingly popular as consumers search for novel ways to fulfill unmet dietary needs.

Additionally, the steady growth in organic and plant-based diets worldwide has spurred a rise in demand for vegan breads, with reports estimating that 56% of consumers worldwide are interested in plant-based alternatives for sweet bakery items. This demand is particularly pronounced in the Middle East and Africa (74%), South America (70%), and several countries in the Asia-Pacific region (68%).

These figures underscore the growing demand for innovation in this area. Brands that can satisfy both needs – through fortified products using natural ingredients as well as effectively communicating the health benefits of their offerings – are more likely to be successful.

Variety and experiences: In addition to balancing health and indulgence, offering a wide variety of product choices is critical. Consumers’ tastes and preferences are rapidly evolving as they increasingly seek more variety, higher quality products, fresher ingredients, and unique flavours. Demand can vary widely depending on geography, climate, season, and even day of the week but by developing innovative and unique products that appeal to these consumers, brands can capture this lucrative and rapidly expanding market.

Convenience and nostalgia: Convenience remains vital for the bakery industry, with busy consumer lifestyles increasing the demand for “grab-and-go” snacking options. This trend underscores the importance of effective packaging, not only to preserve the freshness and portability of food but also as a means to provide nutritional information and expiration dates conveniently. Such packaging solutions enable consumers to make informed purchasing decisions, seamlessly connecting the need for quick and easy access to quality bakery products with informed consumer choice.

At the same time, nostalgic treats are on the rise, dovetailing with the home-baking trend sparked by the COVID-19 pandemic. The home baking trend shows no signs of waning, as people continue to spend more time in their kitchens, recreating recipes that remind them of simpler times or familial traditions. Providing home-baking solutions like pre-mixes and DIY kits can allow brands to capitalise on this consumer interest.

Sustainability mindset: As consumer awareness of environmental impacts grows, incorporating sustainably produced ingredients and eco-friendly practices into products and clearly communicating these efforts will be important for attracting sustainability-minded buyers. For example, sustainable packaging options, such as biodegradable, compostable, or recyclable materials, can provide differentiation and a competitive advantage.

Emphasising sustainable and transparent production can significantly bolster consumer trust in a brand. By providing detailed and transparent insights into the health benefits and sourcing of ingredients, businesses can demystify product content and reassure customers about the quality and sustainability of their purchases, fostering a deeper connection between consumers and the products they choose.

Innovations driving the industry

To keep pace with evolving bakery industry trends, many brands are adopting innovative approaches to their products, processes, and business models. Several innovative domains are shaping the future of the industry:

Ingredient innovations: Clean label, natural, and plant-based ingredients are in high demand as consumers prioritise health and sustainability. Many brands are exploring organic ingredients, plant-and-vegetable-based alternatives to conventional ingredients, as well as novel sources of fiber, protein and other fortifying nutrients. Equally, drawing inspiration from global cuisines allow brands to tap into consumer demand for variety and indulgent experiences that differentiate their products from competitors.

Process improvements: To balance cost efficiency with product quality, bakeries are adopting advanced processing technologies. Sensor-driven software, automated condition monitoring, and data analytics are optimising facilities and production lines. While at the same time improvements in food safety monitoring, active & intelligent packaging, and other preservation innovations are extending product shelf life of fresh products.

Business model shifts: The rise of in-store supermarket bakeries is a prime example of innovation in the bakery industry as supermarkets increasingly look to incorporate bakeries within their stores as a strategic way to diversify their offerings and attract more customers. By offering freshly made, high-quality bakery items that are convenient to purchase and tailored to the tastes of the local community, in-store bakeries are designed to enhance the shopping experience, encourage frequent visits, and respond to the growing consumer demand for fresh, artisanal, and locally influenced food options.

Direct-to-consumer e-commerce bakery brands are also gaining traction by offering both fresh and shelf-stable baked goods delivered nationwide. Subscription models provide these brands recurring revenue streams. Furthermore, the digitising of operations through online ordering platforms, automated production scheduling, routing software, and other technology is enhancing their operational agility.

The way forward

While bakery industry trends continue to shift, one certainty is that consumer interests in health, variety, experiences, sustainability, and ethical sourcing will only intensify. Brands willing to embrace innovation across their product pipelines and strike a balance between health, sustainability, and convenience are likely to see the strongest growth in the years ahead.

Planning your next move

The steady growth of the bakery & confectionery industry brings with it exciting opportunities to develop new products and enter lucrative new markets. At Farrelly Mitchell, our food and beverage consultants offer key insights into product design, food safety, and market entry & development, ensuring that our clients not only meet but exceed consumer expectations for quality, safety, and innovation.

Our specialists have a keen interest in emerging confectionery and bakery industry trends such as organic food ingredients & alternative proteins. By leveraging these insights, we help brands stay ahead of their competitors and create desirable and sustainable products without compromising on health. Reach out to our expert food and agribusiness consultants today to learn more.

Author

Nathan Davies

Managing Partner
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