As customers in the Middle East shift from baking to buying bread, the key trends driving the bakery sector are a desire for higher quality, healthy products, innovative packaging and convenience. Francisco Redruello reports.

Euromonitor International recently estimated that 2005 retail sales of bakery products in Africa and the Middle East will have increased by 10.2% on the previous year. Per capita expenditure will have amounted to US$12.2, quite low when compared to developed markets such as Western Europe and North America, which sit at around US$265 and US$215 per capita respectively, according to the company's latest research.

Despite the massive gap between Africa & theMiddle East and the developed world, Euromonitor international's research has identified a number of emerging trends, suggesting a growing sophistication in some segments of the market. Premiumisation, new packaging and functionality are all beginning to play an important role in the region.

Unpackaged/artisanal bread maintains primacy

Unpackaged traditional bread is the most important category in bakery products. It accounts for nearly 60% of total bakery retail sales in the Middle East, according to Euromonitor International's estimates. Its low price make it the most competitive prooduct in the market and thus unbeatable by packaged bread, which is considered expensive by the average consumer. It is also noted that in Morocco many households continue with the traditional custom of preparing their own bread at home and then taking it to public ovens. The persistence of this traditional behaviour is due to the low cost of homemade bread and also the conviction that it is healthier.

Bread: a strategic commodity

Bread is also very important to Egypt. Popular dishes, such as fool and taameya, are always consumed with artisanal bread as well. Egyptian food is usually full of sauce which is eaten with bread. The Egyptian state needs to secure its supply of bread as it is the basic staple meal for the majority of the low-income population. Therefore, artisanal bread is considered a strategic and political commodity.

Israel is another country where the state plays an important role to ensure bread availability. This product can be classified into two major categories: bread where prices are under government supervision and bread sold without such supervision. Products under supervision include sliced/whole grain bread and challa (special Jewish bread for Saturday meals). The consumption of supervised and unsupervised bread is strongly correlated with the economic situation. In times of recession, the share of supervised products grows. In economic growth periods, the share of unsupervised bread grows and the desire for higher quality, more expensive products increases significantly, as has been the case in 2003 and 2004.

Packaged bread gains ground in Saudi Arabia

Despite the dominance of unpackaged bread, packaged bread is gaining moderate ground in some countries such as Saudi Arabia, where there is a growing demand for bread with added-value properties, such as whole wheat bread or brown bread and low-sugar or low-salt bread. According to Euromonitor International, brown bread is already the second most popular type of bread, commanding 12% of total packaged bread sales in 2004.

Interestingly, packaged bread in Egypt is sold in areas where middle and high income groups do their food shopping. Euromonitor International estimates that retail sales of packaged bread in Egypt are still in their infancy worth US$56 million, for a population of 75 million. The main reason for low level of sales for packaged bread is that unpackaged bread is considered better as it is fresh, and many upper class consumers consider it clean enough to meet high income households' standards of healthiness, quality and flavour. Similar reasons apply to Morocco, where manufacturers have tried to introduce, unsucessfuly so far, packaged bread.


Table: Sales of packaged/industrial bread Vs unpackaged/artisanal bread: 2004 % retail value breakdown

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Multipack trend in high per capita income countries

Another interesting trend to highlight in the region is the increasing popularity and growing demand for multipacks in high per capita income countries. These products are considered to be better value for money by large families. One of the countries where this trend appears to be more relevant is Saudi Arabia, where 52% of total retail sales of packaged industrial cakes are marketed in this format. The industry in this country has therefore prioritised the introduction of new multi-pack lines. The latest example was the launch by National Food Industries Co of a new sandwich biscuit line in early 2005, available in a wide range of flavours and in an attractive multipack format. In Morocco, however, Euromonitor International's research has spotted a packaging trend favouring smaller single packs, particularly in biscuits. These mini-size lines are very low-priced, and are targeted at low-income consumers who want to treat themselves to a snack without having to pay the high price that regular size products will fetch.

Premiumisation trend in Israel and Saudi Arabia

Premiumsation, one of the key trends in more developed markets such as Western Europe and North America, is appearing, to a certain extent, in the Africa and Middle East region as well. One of the main examples is Israel, which has seen growing demand for added value quality products. The improved economic situation and the increase in disposable income moved many Israelis to consume several new quality products instead of basic bakery products.

Bagel & Bagel was the first company to identify this trend and launched the premium Metoukies biscuit brand in 2003. Another company that followed suit was Elite, which expanded its Hagiga brand to include premium products. The company differentiated its new premium brand from the regular Hagiga products with black and gold packaging, which has proved quite popular among high-income Israeli consumers.

Saudi Arabia has seen a premiumisation trend in the biscuit segment as well. Master Foods, for instance, in late 2003 launched a brand new line of biscuits coated in layers of different chocolate and marketed as a premium brand. This trend is also seen in cakes. One of the latest examples was the introduction, by Master Foods again, of Galaxy Vanilla Cake, in early 2005. The new line consists of a vanilla-flavoured sponge cake, coated in chocolate, and is presented in premium packaging.

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