Market Profile: Sweet Tooth Sustainability
The global cake market — which includes mouth-watering products like cupcakes, sponge cakes, and dessert cakes — was valued at $42.94 billion in 2019, according to the industry report. Despite it being an age-old industry, people still have a sweet tooth for baked goods, and apparently (like bread), interest has been on the rise over the past few years.
“The trend of celebrating various types of special occasions, success or any festivals, such as birthday, wedding, marriage anniversary, [V]alentine’s [D]ay, Christmas, pet’s birthday, work anniversary, [M]other’s [D]ay, and [C]hildren’s [D]ay, has been increasing significantly across the globe,” notes the analytics firm. “Consumers have been increasing spending on purchasing occasion specific cakes, which is expanding the market scope.”
As this is not a new industry, and no major societal developments have driven explosive interest toward it, growth has been slow and steady since 2016 — but slow and steady is still growth.
Growth has happened worldwide for a plethora of reasons. Namely, there has been an increased demand for bakery products, which compounds an already high demand in Europe and North America, because of their attraction to rapidly urbanizing populations. As people continue to embrace busier and busier lifestyles, these foods, which now come in many different forms (cake, pastry, biscuit, pita bread, etc.), have proven themselves to be instant, accessible, and delicious. Furthermore, an increased adoption of Western-style nutrition has driven demand for cakes in Asian and Middle Eastern countries.
Europe was the largest regional market for cakes in 2019, accounting for 30% of the industry’s revenue. It’s estimated that Asia-Pacific accounted for nearly half of the market’s 2019 global revenue, and, per the report, offers a great potential for future growth.
Key Players: Crème de la Crème
In all the key markets — Europe, North America, and Asia — leading manufacturers predominantly dominate the market. This makes sense considering the market’s age, which has left ample time for big companies to establish brand presence and keep getting bigger.
The leading players globally are (parentheses clarify where they are based):
- Finsbury Food Group Plc (UK)
- Yamazaki Baking Co., Ltd. (Japan)
- McKee Foods (US)
- Grupo Bimbo (Mexico)
- BreadTalk Group Limited (Singapore)
- Hostess Brands, LLC (US)
- Monginis (India)
- George Weston Limited (Canada)
- Campbell Soup Company (Pepperidge Farm) (US)
- Britannia Industries Limited (India)
This is not an industry typically disrupted by new players, meaning many of these companies have held top spots for years. However, due to changing taste buds, there has not been industry stagnation, and the majority of these manufacturers have been forced to adapt.
Future Growth: Changing Taste Buds
Future growth will rely on this movement. Grand View Research expects the international cake and pastry market to grow at an average annual rate of 3.3% from 2020 to 2027, which will require evolution.
A key driver of this will be a trend toward healthier eating: “A growing trend of healthy intake is anticipated to increase the focus on quality and low-calorie products. A large number of bakers are offering healthy alternatives to high-calorie and high sugar products, which is anticipated to be a primary factor for market growth.”
Major manufacturers have already begun tacking onto this trend to offer healthier alternatives for sugar-adverse customers. For example, at the end of last year, Hostess Brands announced it would acquire Voortman Cookies, a wafer specialist, in a bid to diversify its healthy options.
Moves like this will allow big companies to thrive while making room for smaller, specialty brands to get their foot in the door. The key takeaways here are that your cakes, cookies, and cupcakes aren’t going away any time soon. Although, prepare yourself for the possibility that your favorite brand may dip its toe into the wondrous world of wafers, too.
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.