Consumers have long enjoyed the convenience of baking mixes, and their promise of all the smells and tastes of traditional home baking without the necessity of many man-hours over a hot stove. Mintel’s Megan Lance takes a look at where the industry’s going, and asks whether it risks burning as more consumer-convenient competition turns up the heat.
The baking mix market, a subset of the overall US baked goods industry, is viewed positively by consumers as a time-saving route to their favourite home baked goods, but market watchers know it is in a prolonged slow-growth phase. One of the biggest challenges to the industry stems from an evolving marketplace, and just as branding is crucial to the success of any one product, the baking mix market must be creative if it is to maintain or regain market share.
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When baking mixes were first introduced, they became the undisputed convenience option, requiring little effort and few additional ingredients. Over the last year, however, consumers have seen an increase in the number of baking mixes geared to an upscale market, as the market players make creative bids to maintain their market share.
Steady growth
Over the past five years US manufacturers of baking mixes have enjoyed steady growth, recording sales of US$1.4bn in the year 2000. While the baking mix market faces competition from pre-packaged snacks, and the rising popularity of in-store bakeries, it holds a strong place in this highly competitive food arena. The demand for baking mixes is generated by consumers who are tempted to provide home-baked gourmet foods.
It is the promise of a “fresh baked aroma” that draws customers to the mixes and the fact that baking is a favourite past time for many families will help keep a steady increase of sales. Cakes, cupcakes and pies represent the largest segment in the market, accounting for nearly one-third of total baking mix sales in 2000, equating to sales of US$4.5m. Homemade cakes and pies are American emblems – and with the addition of several new product lines, baking mixes offer Americans the chance to create more gourmet and extravagant sweets. Baking mixes such as cakes, cup cakes and pies are representative of various celebratory occasions: for example, cakes for birthdays, pies for Thanksgiving and cupcakes for children’s parties.
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By GlobalDataThe next largest segment is muffins, a classic and quick breakfast alternative that accounted for US$2.28m in sales in 2000. . Muffin mixes appeal to many parents, as they provide a family-friendly appeal and are simple to prepare. Most mixes also provide a dozen muffins for a low cost.
Pancake and waffle mixes have grown to show the overall trend for baking mixes. This is one segment that holds slightly more promise than other segments in the market because it does not face competition from in-store bakeries. If consumers are short of time and money, a breakfast mix is a better alternative than going out to breakfast. This market also appeals to the ‘cocooning’ desire of consumers to stay close to home following the events of 11 September 2001.
Many consumers are baking breakfasts at home, but coffeecakes, gingerbreads and pastries show a decline of sales, which is largely attributed to the rise of in-store bakeries and upscale coffee shops. These mixes require a baking time of 45-60 minutes and many require extra time to apply toppings. Many consumers are willing to pay extra for a pastry that tastes good and requires no preparation during the hectic morning hours.
Convenient competition
Convenience plays an important role in the mixes market and the baking mixes market faces serious competition from the rise of in-store bakeries. In-store bakeries challenge consumers to choose from the convenience and ease of an in-store bakery or the time consuming task of baking at home.
Many grocery chains are expanding their in-store bakeries to tempt the busy consumer with his/her favourite gourmet baked goods and snacks. Even though the prices of baked goods are considerably higher (for a purchased cake costing US$10-20, a comparable cake mix and canned frosting would total US$4-6) consumers are willing to pay the higher price for attractive baked goods.
On the other hand, US consumers find baking from scratch time constraining, so many turn to baking mixes to reproduce their favourite homemade goods. Over half of the people who do not bake select these mixes as an enticement to bake. Market analyst Mintel’s exclusive consumer research reveals an overall positive attitude towards baking mixes, with two-thirds of respondents using these products to bake goods, from cakes to biscuits.
According to Mintel’s consumer research, consumers who bake are more likely than non-bakers to think that ready-made products do not taste as good and are poor in quality. Meanwhile, more than half of non-bakers (52%) agree that products baked from baking mixes are superior to ready-made products. This represents potential new customers for the baking mix industry.
On the convenience front then, perhaps the biggest trend in the baking mixes is that of complete kits containing everything one needs to make, bake and decorate cookies or other sweet treats. These kits come complete with cookie cutters, decorating gels, cookie mix and frosting with minimal requirements for added ingredients.
Another growth potential in this arena is the changing quality in microwave mixes. Even though these mixes existed in the late 1980’s and 1990’s, the poor quality turned many consumers away. Manufacturers who revisit this market and prove themselves able to raise the quality levels of the baking mixes will benefit from the increased convenience factor and regain some of the market share lost to in-store bakeries.
Mixing pot of companies
The US baking mix market is a combination of large and small companies. Food giant General Mills is the category leader and in November 2001 acquired the number two baking mix company, Pillsbury. This will, however, create an even bigger gap between the smaller companies and the top manufacturers. Part of the deal compelled General Mills to sell Pillsbury’s baking mix line to International Multifoods. Before the deal, International Multifoods did not appear a leader in this market, but many assume that they will take over Pillsbury’s number two spot in sales.
Other companies holding a strong market share are mainly smaller regionally based manufacturers, which develop baking mixes from a milling background. Each company holds a small niche market, such as Sturdiwheat’s whole-wheat pancake mixes and the Wildflour Baking company’s line of wildly gourmet baking mixes. While it is possible that these companies are simply too small to be of serious interest to a food giant like General Mills, any market leader can benefit by adding some of these smaller brands to round out their portfolio of baking mixes.
Growth slowdown?
Baking mixes have not grown significantly since 1996, but still they are considered convenient, good quality and kid-friendly by a large majority of consumers and are staples in many households. The projected slowdown in the growth of the population of children during 2000-05 will no doubt have a negative impact on the baking mix industry, however. Mintel’s research shows that households with children are more likely to purchase baking mixes than households without children.
Nearly all the major players in the food industry have been involved in a major merger and acquisition during 1999-2001. Companies will probably divest or discontinue brands that are unlikely to reach the number one or two slots. Some of the smaller companies might make perfect combinations, with new brands and product lines giving competition to in-store bakeries and large competitors in the market. Between 2001 and 2006, total retail sales of baking mixes are expected to increase 9%.
By Megan Lance
