The Australian cake and pastry business is worth about $1.6 billion, according to IBISWorld’s latest report, but making a buck isn’t a piece of cake.
Players in the market must contend with changing consumer trends such as health and nutritional awareness, volatile commodity prices and a saturated market, according to the reseacher.
If that’s not enough, rising input prices – especially for wheat – and intensifying external competitive pressures have posed some serious challenges to the industry over the past five years, according to IBISWorld.
For instance, traditional manufacturers have faced strong competition from retail bakeries and in-store supermarket bakeries, as well as private-label products in some segments, such as fresh pies and savoury pastries.
It says, however, that the industry still outperforms the economy during recessionary years, despite reduced consumer discretionary spending.
IBISWorld points to the entrenched position of the major players, coupled with enviable levels of brand and customer loyalty.
Aggressive price-cutting tactics and heavy discounting by the major players has also constrained growth in industry revenue over the past five years.
