Analyst Pinar Hosafci said Euromonitor International’s preliminary research revealed UK bread sales had fallen by 5% in value terms over 2014, and were forecast to decline by a further 4% by the end of 2015.
The decline in packaged bread was even greater in value terms at 8% in 2014, the biggest dip the category had seen in a decade, while artisanal bread increased in sales value by 4%.
The report came after FoodManufacture.co.uk revealed Asda was losing £500,000 in bread sales per week across its 525 stores, despite spending £30M on reformulating its core products and refreshing it bread aisles.
The report also said that Warburtons, Hovis and Allied Bakeries, which command a combined 60% of the UK’s packaged bread market, saw sales plummet by £148M in 2014.
Hosafci noted: “With value sales falling faster than volume, the slump has been driven by the sharp decline in retail prices, which has taken 15p off the average price of a loaf of bread.
“The bread category has seen successive price cuts and promotions across the UK’s key retailers in 2014, intensifying in 2015.”
In April, Tesco cut the price of an 800g wholemeal loaf from 90p to 75p, and Asda has reduced its own-label wholemeal loaf from 85p to 79p and introduced the 40p Smart Price loaf.
Manufacturers had also been hit with delistings, with seven Hovis stock keeping units (SKUs) dropped by Asda in late 2014, and all Kingsmill branded bread delisted by Tesco in March this year, although two SKUs returned to Tesco shelves last month.
The manufacturers responded to the decline by bringing out new products, such as Warburtons’ sandwich thins and the Good Inside Range from Hovis, which will launch next month and contains natural omega-3, wheatgerm and fibre.
While sales of the thins have been promising, Hosafci warned that bread consumers displayed little appetite for change.
Gluten-free products are also increasingly popular, with sales growing 25% to £102M in 2015, but Hosafci commented: “Gluten-free bread accounts for only 3% of total bread sales while boasting four times the unit price of an average loaf. As long as these high prices persist, it is naive to assume that gluten-free alone will reverse bread’s overall decline.”
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