5 Finsbury Food Group Annual Report & Accounts 2019


Market Review


An overview of the markets we operate in, and a summary of the key trends we aim to take advantage of.


Our Markets


UK bakery is a large market valued at over £6.2 billion. In its broadest sense, UK bakery comprises the cake market and the bread and morning goods market. Both these markets straddle the grocery retail market and foodservice market, often also known as out-of-home eating.


We can break the whole market down further into smaller sub categories:


• Cake: sharing, bites, celebration and seasonal.


• Bread and morning goods: 'plant' (packaged or factory) bread, artisan bread, buns and rolls, seasonal hot cross buns, pastry, muffins, doughnuts, Italian and many more.


Both markets also have a wide range of ingredients that can be allergens – including wheat, dairy, eggs and nuts – in which there are growing sub markets such as Free From.


Cake The total UK ambient cake market (including prepacked cake and in-store bakery) is valued at over £969.0 million (source: IRI, 52 w/e 20 July 2019). We trade across all categories, with large presences in celebration, sharing and seasonal categories.


Bread The annual retail bread and morning goods market has a value of £4.5 billion (source: Kantar Worldpanel 52 w/e 14 July 2019). This market is further divided as plant bread (£1.6 billion) and the rest, bread and morning goods (B&MG) (£2.9 billion). We trade only in B&MG, with sizeable presences in buns and rolls, hot cross buns and artisan bread.


Free From The retail Free From bread and morning goods market is valued at £125.3 million (source: Kantar Worldpanel 52 w/e 21 April 2019). The retail Free From cake market is valued at £49.5 million (source: Kantar Worldpanel 52 w/e 24 March 2019).


Foodservice UK foodservice spans many sub-sectors including coffee chains, restaurants, pubs, hotels and the non-profit sector such as the prison service or education. Each has different routes to market.


The UK foodservice B&MG sector is worth £747.0 million per annum (source: Derived from MCA data 52 weeks to 31 March 2019). We have a significant presence in this sector, primarily with our buns and rolls business.


The UK foodservice cake and sweet treat bakery sector is worth approximately £918.0 million per annum (source: Derived from MCA data 52 weeks to 31 March 2019). Our presence in this sector is primarily within the coffee chains and, through the larger wholesalers, restaurants and pubs.


Overseas Our Lightbody Europe subsidiary has a significant presence in France as well as Belgium and Holland. The recent acquisition of Ultrapharm has given us additional markets of Scandinavia, Italy and to a lesser extent Germany, Austria and Switzerland. Through our UK retail customers, we trade regularly with their Irish businesses.


Broad Consumer Trends


Innovation and product development is essential to the Group’s strategy, helping our customers differentiate themselves and meet the needs of their end customers. Our challenge is to maintain a dynamic product portfolio that matches and satisfies macro consumer trends and niches. Relevant significant market trends are:


Economic Consumer confidence has been weak for some time, and price and value will remain important. Although consumers will remain cautious and price-conscious, they will continue to want affordable treats, so pricing policies need to reflect household economics.


Grocery and Convenience Channels Online and discount will be the two fastest growing grocery channels, and will account for 23.5% share of grocery expenditure by 2024 (IGD). The convenience channel is also forecast to see strong growth.


Out-of-home In the out-of-home market, volume growth has declined as weakening consumer confidence and general consumer caution mean people eat out less. The casual dining restaurant sector is likely to struggle, but fast-food outlets, coffee shops, supermarket cafés and food-to-go offers will see better growth.


Healthy Eating Consumers continue to pursue more healthy eating options generally, though indulgence is also a key trend in 'sweet-treating'. Media focus and regulatory pressure will continue to drive recipe reformulation and portion size. The ‘better for you’ market is proliferating rapidly, with protein, gut health, low sugar, vegetarian, plant health, grains and seeds, and slow energy release all growing in popularity over recent years.


Free From The overall Free From market (all types of food ranges and products) continues to grow, doubling in size in the past five years. Mintel forecasts it to grow by an additional 25% to £899.0 million by 2022. It is boosted by consumers who don’t cite a specific allergy or intolerance, but choose to avoid certain ingredients as part of a general healthy lifestyle. Dairy-free and gluten-free are the biggest sub-sectors. The Free From bakery market is valued at £172.0 million and has grown 16.5% year on year (source: Kantar Worldpanel 52 w/e 24 March 2019).


Artisan Bread The artisan bread market has grown due to the perceived health benefits, the wider trend of provenance and the ‘craft' movement. Consumers respond well to products they perceive to be less mass-manufactured.


Fragmentation Social and demographic trends have a major bearing on the food sector. These include smaller households, single-person mealtimes, an ageing UK population, urbanisation, and an increasingly mobile population with less time to eat. These are fuelling the growth of convenience, online and out-of-home channels. But the growing fragmentation of consumers, channels, eating moments and needs will also translate into increasing demand for personalised products to meet individual needs. Thus single-serve and individually wrapped products are becoming more prevalent and important.


Technology Technology is fundamentally changing the relationship between businesses and customers, who are increasingly using mobile devices to make purchases. Demand for anytime, anywhere purchasing and access to information will accelerate. Online ordering is not just for the weekly shop, it is also for top-up and 'dinner tonight' shopping.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94