The global baking industry is currently facing opportunities as well as challenges created by the economic crisis, according to a new report from Global Industry Analysts, Inc. The still volatile financial scenario is changing the way bakers approach their businesses.

On the consumption front, similar to the U.S., the bakery industry in Europe is witnessing a decline in traditional bakery products. However, the decrease in demand is being offset by rising purchase of bite-sized sweet goods, on-the-go breads, between-meal snacks, easy-to-carry sandwiches and other products. There is an increase in the number of on-the-go bakery product introductions and new flavors to meet the requirements of the extremely mobile population of today.

With consumer preferences undergoing tremendous changes, bakers are literally on their toes suiting the product rollouts to dynamic consumer preferences. Meeting the demands of the fast paced consumer lifestyles are single-serve, small-size bakery products, leading to an increasing demand for breads and rolls, donuts and pastries.

There has also been a noticeable shift toward natural and healthy bakery products comprising of vitamins, whole grains and fibers. Bakers introduced organic baked goods, breakfast cereals, breads and biscuits, enriched with nutritional and natural ingredients in single-serve and portable packaging. Private label products gained considerable importance in retailing strategy of savory snacks, in spite of the disadvantage of ownership and management of inventory. In recent years, however, the bakery industry has been plagued with high costs of production and increase in raw material costs in real terms in many markets. Intense price pressure is another feature of the bakery products marketplace in many developed markets of the world.

Several companies eliminated preservatives and artificial flavors in their products in a bid toward image changeover as makers of healthier and natural bakery products. About 35% of the global cereal product launches in the year 2009 claimed to be functional cereals with health benefits. The market for breakfast products in the U.K. sailed past the recession with ease, and the country witnessed an increase in the number of bakery businesses during the period. Baking industry in the U.S. remained moderately unaffected by the economic crisis. Bakers did however, experience decline in sales in private labels, particularly for products that were not promoted.

The global market for bakery products is being increasingly consolidated through the penetration of major multinational food companies. As a result, international brands like Oreos of Nabisco are expected to explore into hitherto unexplored territories.

With the tumbling of the global economy in the year 2009, an increasing number of consumers are pinching pennies and looking for low prices that would allow them to stretch their finances The recession resulted in price increase of bakery raw materials in the last few years.

Europe, driven by Germany, France, Italy, Spain, Finland and Sweden among others constitutes the largest regional market worldwide, as stated by the new market research report on Bakery Products. The United States and Latin America trail behind as the next important market in terms of overall size. However, with respect to long term growth potential, the Asia-Pacific market is projected to take the lead, expanding at the highest CAGR of more than 5.0% through 2015. The segment Bread/Rolls represents the largest and most popular bakery product, while the Morning Goods segment is likely to emerge as the fastest growing market over the assessment period 2007-2015.