Say goodbye to healthy eating! Brits are gorging on cakes and biscuits like there’s no tomorrow. But not everyone is benefiting

Britain’s tooth is getting sweeter. As a nation, we’ve spent an extra £150m on cakes and biscuits in the past year, equating to an extra 80 million kg of the stuff [Kantar 52 w/e 16 June 2019]. Cake has delivered the greatest slice of this - the market is up 6.3% on volumes up 4.9%. All of which suggests the PM’s talk of Britain having its cake and eating it is rubbing off on shoppers. Biscuits aren’t doing too badly either, up 1.9% to just over £2.9m.

Not everyone’s cashing in, however. Britain’s biggest biccie brand, McVitie’s Chocolate Digestives, has seen sales crumble 13% as own-label lines enjoy strong growth [Nielsen 52 w/e 10 August 2019].

So, why are Brits filling up on cakes and biscuits? And what makes the difference between success and failure in this market?

This sudden gorge on cakes and biscuits has been bolstered by one macro trend: snacking. “We have seen consumers increasingly looking to treat themselves as snacking has returned to growth after long-term decline,” says Kantar analyst Ben Dixon. And when consumers do indulge in a snack, they’re turning to a cake or a sweet biccie.

The rise in sweet snacking may seem at odds with a society that is increasingly obsessed with healthy eating. But there are a number of factors at play.

Dave Ashton, sales director of Italian cake brand Balconi, says it’s partly down to “more fragmented eating occasions”. Indeed, at the end of 2017 Waitrose forecast consumers would start moving towards four meals a day, rather than three.

Then there’s the economic and political climate. As public concern grows around Brexit, so does a desire to seek comfort through more indulgent treats. It’s the same effect that propelled a 2.7% rise in sugar confectionery sales to £897.9m [Kantar 52 w/e 16 June 2019].

“Shoppers wanting to cheer themselves up are choosing cakes instead of healthier snacks”

“We’re seeing a real slowdown in what are perceived to be healthier snacks, with shoppers leaning towards the likes of cakes instead,” says Simon Browne, managing director of Burton’s Biscuits. “The last time we saw shoppers behaving like this was in the recession in 2008. People are trying to reduce their spending, but they also want to cheer themselves up.” 

That’s changing what consumers want from their cakes and biscuits. Mathew Bird, brand director for sweet treats at Premier Foods, has seen a shift towards more convenient formats. “Shoppers are increasingly looking for snacking products that are easily transportable and can last for a number of hours while they are out and about,” he says.

One obvious winner from this snacking boom is cake bars. Sales have surged a whopping 32% in the past year to £87m [Kantar]. That equates to an extra £20m. Leading brands McVitie’s and Mars report 9% sales growth for their respective cake bar ranges over the past year.

Convenience is a driving force behind that performance. Six in 10 cake bar shoppers buy the products because they are easy to take out of home, found a Streetbees poll of 1,260 consumers conducted for The Grocer last month. The same percentage said they ate cake bars on the move.

 

Cake bars get a boost: cake value sales

Cake value sales   
       
  Value (m) % change Market share 
Small cakes   £578.8 9.4% 34%
Whole cake   £348.4 1.6% 20%
Slices   £114.4 7.7% 7%
Mince pies   £105.1 4.3% 6%
Small tarts   £94.2 5.1% 5%
Cake bars   £82.7 32.0% 5%
Small swiss roll   £71.0 6.6% 4%
Muffins   £59.1 2.6% 3%
       
Branded £607.2 10.6  
Own label £1,110.6 4.1%  
       
Source: Kantar, 52 w/e 16 June 2019      
       
 Retailer performance   
  Value share % change  
Tesco   23.1 4.2  
Asda   13.0 7.1  
Sainsbury’s   12.0 0.5  
Morrisons   9.6 0.5  
Co-op 7.2 11.1  
Iceland   1.7 7.5  
Waitrose   4.3 9.8  
Aldi   5.8 9.8  
Lidl   5.9 11.8  
Bargain Stores   3.6 20.2  
Marks & Spencer   7.4 9.1  
  • The cake market is in 6.3% growth, driven largely by higher prices and consumers shopping the category more often.
  • Cake bars continue to drive market growth, up 34%, as more people buy into the sector.
  • Another sector seeing double-digit growth is fruit loaves (up 27% year on year), dominated by Soreen, as people buy more often and at a higher price.
  • The majority of cake sectors are seeing price increases, with the average price per pack up 5.6% on last year despite a rise in temporary price reduction deals, with brands outperforming own label over the year.
  • This has been in no small part down to premium names such as Fibre One and Graze boosting the category and appealing to shoppers despite higher price points, according to Kantar analyst Ben Dixon.
  • Branded cakes have seen double-digit growth over the past year, driven by small options such as McVitie’s Moments and slices, particularly Mr Kipling.
  • Aldi and Lidl once again drove growth in the private-label cake market. However, the Co-op also played a part, Dixon says.
 

On-the-move appeal

That on-the-move appeal means portable formats are doing well all round. Cake slices have risen £8.1m to £114.4m, led by the roaring success of Premier Foods’ Mr Kipling brand. Small cakes are up an eye-watering £49.5m to just shy of £580m. Bonne Maman is a standout player in the latter, racking up near 30% value growth with its range of small madeleines and fruit cakes.

This growth is inspiring a slew of innovation. NPD over the past year ranges from M&M’s cake bars to Mr Kipling’s Dragon Slices, as well as additions to its “incredibly successful” Roald Dahl range. “For its return this year we’ve added more snack-sized options like Mr Fox’s Apple Mini Batts and James’s Chocolate & Raspberry Ladybird Slices,” says Premier Foods’ Bird.

Everyone seems to agree that smaller is where the big cash lies. “Brands know this a huge area of opportunity for the category,” says Daryl Newlands, marketing manager at Finsbury Foods, which launched Thorntons cake bars in February. “It opens up new occasions and modernises cake, allowing it to fit into the lives of modern day shoppers.”

If all this sounds worryingly unhealthy, it needn’t be. For there is also plenty of demand for healthier fare alongside indulgent lines. Mr Kipling, for example, built on its better-for-you range with the launch of 30% less sugar Angel and Chocolate slices in February. According to the brand, they have racked up £837k - and half those sales have been incremental to the category. “Many consumers are looking for a treat, but health remains high on the agenda,” says Bird.

“Formats that don’t fit into snackable are struggling to get the same level of growth”

His assertion is backed up by consumer research. Nearly three in 10 cake snack shoppers buy them as a means of exercising portion control, according to Streetbees data. And 17% believe cake snacks are a healthier option than other cakes.

So brands that put a strong emphasis on healthy credentials are seeing some even healthier sales. Take Fibre One, whose promise of 90 calories per cake bar seems to be paying off. It reports growth of 33.4% to £23.7m in the past year [Nielsen 52 w/e 24 August 2019]. “Our penetration has grown from 10% to 12.3%,” says Kat Jones, snacking marketing manager at General Mills, Fibre One’s parent company.

“The trend for indulgent but permissible treats shows no sign of slowing,” she explains. “Shoppers are filling into the cake snack sector because products like Fibre One bars offer them superior indulgence as well as the perfect portion control.”

Another brand reaping the rewards of a healthier proposition is Soreen, whose loaves contain fewer than 100 calories. “These new and healthier cake snacks are driving in shoppers who might normally skip that section of the supermarket,” says Soreen managing director Mark Simester.

At a total level, Soreen is up 2.9% to £36.8m. Certain areas of the brand are proving particularly fast-growing. Soreen reports 17.7% value growth in multipacks of its Lunchbox Loaves [Nielsen 52 w/e 19 August 2019]. In August, it extended the Lunchbox Loaves range with the addition of apple and strawberry flavours.

Soreen attributes the popularity of the range partly to its wide appeal. Despite the name, many of those products never see the inside of a lunchbox. “Half of our Lunchbox Loaf sales actually come from childless households,” says Simester.

This adult market is helping Soreen rack up some staggering growth in impulse. Soreen’s loaf bars - a range of larger bars designed for the adult market, which expanded to include a banana variant in September - have increasingly migrated to the impulse fixture. Meanwhile, its buttered snack packs recently became part of the Tesco meal deal. Combined, the loaf bars and buttered snack packs are up 46% this year [Nielsen].

Which brings us to an important part of this cake snacking boom: store positioning. The impulse aisle is proving profitable for many brands. Thorntons cake bars, for example, have made their way into impulse areas and the Tesco meal deal. “It’s been a massive growth area for us,” says Newlands.

Soreen’s Simester believes there is plenty more growth to be had in this area. “The lunch trade is an increasingly important driver of cake snack sales, and there is a gap in the market between chocolate or crisps and fruit in the meal deal aisle,” he says. “Healthier cake snacks can fill that gap.”

Brands may soon have competition in that space, though. For they are no longer the only ones making a play for snacking shoppers: retailers are now looking for their share of the action. That’s particularly true in the case of cake bars. Own-label versions have more than doubled to £10.1m in the past year. “The runaway success of Fibre One has prompted retailers like Morrisons and Asda to replicate the format,” says Kantar’s Dixon. “Asda has had the most success here with its own-label Fibre Bars.”

The selling point of the Asda range is clear. Its range of Fibre Cake Bars, including Blueberry Muffin, Salted Caramel and Chocolate Brownie flavours, comes at just £1.30 per five-pack. Fibre One is more than double the price per 100g - and sits on the same shelf for easy comparison.

 

Innovation in crispbreads: biscuits value sales

Biscuits value sales   
  Value (m) % change Market share
 Everyday treats   £427.1 -0.5% 15%
 Crackers and crispbreads £383.9 5.2% 13%
 Chocolate biscuit bars   £372.7 -1.1% 13%
 Cereal and fruit bars   £340.7 3.7% 12%
 Everyday biscuits   £317.6 -0.8% 11%
 Healthier biscuits   £234.1 -0.9% 8%
 Special treats   £205.1 7.0% 7%
 Confectionery biscuits £204.2 6.3% 7%
       
Branded £2,036.5 -0.1%  
Own label 881.7 6.2%  
       
Source: Kantar, 52 w/e 16 June 2019      
  • Biscuits are seeing a slight uplift in performance, growing at 1.7%. The largest growth has come from crackers and crispbreads (up 5.2%), which have been a focus for innovation.
  • Prices have grown in line with inflation over the past 52 weeks, with growth down to shoppers buying more frequently, says Ben Dixon, Kantar analyst.
  • Indulgence has been a big trend this past year. This is evident in the rise of special treats (up 7%), and cereal bars (up 3.7%), which are growing strongly “as shoppers begin to blur the line between health and indulgence” Dixon says.
  • Own label continues to drive market performance, as branded biscuits slip into the red.
  • Chocolate biscuit bars and everyday treats have seen some of the largest losses for brands, while the same sub-sectors are rising in private label.
  • Growth in biscuit sales this year has been driven by an increase in the average price shoppers are paying for branded biscuits, as well as shoppers buying more often. Just over 60% of biscuits were sold at full price, with promotions decreasing.
 

The ‘9pm sofa moment’

In the wake of this fresh competition, brands are looking at new ways to grow. Fibre One’s Red Velvet cake bars, which arrived on shelves in September, is a good example. Not only does it satisfy “growing demand for new flavours”, but it’s also targeting a new occasion: the ‘9pm sofa moment’. According to General Mills’ Jones, that’s when consumers “crave something sweet but need it to be guilt-free”.

Mr Kipling is similarly setting its sights on evening snacks. Instead of opting for permissible treats, however, it’s going the other way. Hitting shelves in September, the Mr Kipling Signature Collection is designed to be pure and simple indulgence. The range comes in three distinctly luxury-sounding flavours: After Dinner Mint Fancies, Chocolate, Caramel & Pecan Slices and Apple, Pear & Custard Crumble Tarts.

“Research has shown there is a key need for indulgent evening treats and rewards that the small cake aisle is currently underserving,” says Bird. He believes consumers will pay more for an indulgent product “that offers a trade-up and serves these occasions”.

He may be on to something. For the similarly positioned McVitie’s Moments is proving a hit with consumers. Available in flavours including a Salted Caramel Billionaire and Honeycomb Crunch, it firmly falls into the realms of an indulgent evening snack. The line has made a cool £5.2m since launching last May [Nielsen 52 w/e 10 August 2019].

“We recognised that cake under-indexed in the evening consumption occasion, where reward and indulgence win,” says Claire Hooper, head of marketing at McVitie’s cake division. “With McVitie’s Moments we’ve been able to successfully target that occasion, and we plan to continue developing in this area with new innovation arriving in 2020.”

“Biscuits are battling with the long-term decline of hot drinks and dessert occasions”

So cakes have plenty of occasions working in their favour. Sadly, the same can’t be said for biscuits. Granted, they aren’t in a bad position - shoppers tucked into an extra 10.2 million kg last year [Kantar]. But they are facing issues in some of their core battlegrounds. “Biscuits continue to battle with the long-term decline of hot drinks and dessert occasions,” says Kantar’s Dixon.

The fall of these two core occasions has made snacking, which accounts for half of all biscuit occasions [Kantar], an even more competitive space. “There is a recognised need for the category to compete with other impulsive snacks that aren’t as reliant upon hot beverage occasions,” says Browne of Burton’s Biscuits. “We know that shoppers are already engaged with sweet biscuits, our task is to convince shoppers that biscuits can be relevant to a wider variety of occasions.”

The decline of the cuppa and biccie ritual has proven particularly painful for what Kantar terms ‘everyday biscuits’. Sales of these biscuits, which include the likes of plain digestives and Hobnobs, have fallen £2.7m to £317.6m on volumes down 1.2%. “The performance of everyday biscuits reflects the consumer’s desire to really enjoy their biscuits once they have decided to have a treat in their everyday routine,” explains Susan Nash, trade communications manager at Mondelez International.

 

Top 10 cake brands: Mr Kipling shows strength

Top 10 cake brands  
     
  Value (m) % change
Mr Kipling 159.0 5.3
Cadbury 76.6 -0.8
Soreen 36.8 2.9
Thorntons 23.0 4.7
Bonne Maman 11.0 29.0
Mcvitie’s Jaffa Cake bars 7.5 -4.5
Mcvities Hobnob bars 7.5 -5.7
Graze 7.0 -9.2
Mcvitie’s Digestive bars 6.9 -2.1
Balconi 6.6 51.3
     
Nielsen, 52 w/e 10 August 2019    
  • Mr Kipling has seen the strongest growth in absolute terms, adding an extra £8m to its value. Extra sales came from both the brand’s core range and innovations like Unicorn Fancies and Ladybird Slices, as well as its Roald Dahl lineup.
  • Mr Kipling’s tie-up with the Dahl estate “has been a real success and has generated a buzz within the category” says Nielsen analyst Steven Hansell. “They have created a bit of theatre in store through imaginative flavours based on Dahl books.”
  • Of the top 10 brands, Graze suffered the heaviest decline in percentage terms this year as the result of its flapjacks struggling. The brand is hoping to revive the lineup by tapping demand for permissible indulgence. It recently relaunched its Lively Lemon Flapjack with 50% less sugar.
  • Cadbury has also seen declines, driven by a drop in distribution. A key example is Cadbury’s Amaze Bites range, which was delisted after about four years.
  • By far the fastest-growing player in the top ten this year is Balconi. Volume sales for the Italian cake snack brand are up 72%, thanks to increased distribution across retailers like Asda and Iceland, which are looking to tap the cake snacking trend.
  • Overall, branded cakes have seen an increase in off-shelf promotional support in the past year. This has had limited impact on sales on promotion, however, which has remained stable at 59%.
 

Everyday decline

Everyday treats - spanning chocolate-covered fare such as chocolate digestives and Jaffa Cakes - also suffered a marginal decline. Sales fell £2.2m on volumes down 0.5%. Particularly badly hit were McVitie’s Chocolate Digestives, which shed a hefty £16.2m [Nielsen].

Shoppers switching to more indulgent fare is one likely reason. Sales of what Kantar terms ‘special treats’ are up 7%. Premium brand Bahlsen saw report 15.3% growth in its Choco Leibniz line. But McVitie’s believes there is more to it. “Our sales were impacted by last year’s unseasonably hot summer,” says Stuart Graham, customer marketing director at Pladis UK & Ireland. Presumably, consumers don’t want a cuppa and biccie in the midst of a heatwave.

What he doesn’t mention is that McVitie’s is suffering from a wider problem. Sales of its Chocolate Digestives suffered particularly when not on promotion, says Nielsen. And that’s likely because cheaper own label biscuits are growing in popularity.

Across the biscuit category, brands lost a combined £1.1m. Considering the size of the category, that’s just a 0.1% drop. Certain areas saw a sharper fall, though. In everyday biscuits, brands fell 5.3%, or £8.4m.

By contrast, retailer lines are flying. Own label was the sole driver of the £50m growth in biscuit sales [Kantar], with gains across every single subcategory. Where it thrives, brands tend to feel the impact. While branded everyday biscuits are down 5.3%, own label versions are up 3.6%. Branded everyday treats are down 1.7%; own label lines are up 2.1%.

Fuelling the rise of own label are Lidl and Aldi, the only retailers to see double-digit growth in biscuit sales this year [Kantar]. As always, they are prioritising their own biscuit lines over big brands. “The biggest driver of own label this year has been the discounters,” says Julien Lacrampe, trade marketing manager at Bahlsen.

Discounters shaping sales

That’s not just what’s happening in their stores. Aldi and Lidl are also shaping biscuit sales in the mults. “The grocers have been rationalising their ranges across fmcg to compete with the discounters for some time now, and that has impacted into the biscuit aisle this year,” says Burton’s Browne. “On top of that, retailers are focusing on differentiating their own label ranges with some truly exciting innovation. You just have to look at the Tesco Finest range to see how the standard of own label has increased in recent years. Brands need to be extremely focused on their innovation pipelines if they are going to retain space on shelf in the year ahead.”

That means looking carefully at gaps in the market, says Mondelez’s Nash. “The average biscuit shopper is over 65,” she says. “If brands can offer innovation that provides a differentiated experience that meets their needs, the next generation of biscuit lovers can be attracted to the category.”

“Brands need to be focused on their innovation pipelines to retain space on shelf”

To unlock this younger customer base, biscuits may have to follow the lead of cakes and look to more convenient formats. After all, formats that naturally lend themselves to convenience are reaping the rewards - cereal and fruit bars enjoyed a £12.2m boost this year [Kantar]. Browne says this serves as a lesson for the wider category. “We should be delivering packaging solutions that allow biscuits to be eaten in different environments, such as those designed for convenience while on-the-go,” he says.

The convenience strategy has paid dividends for the likes of Burton’s, whose Jammie Dodgers and Maryland Cookies snack packs are up 6.4% to £16.4m [Nielsen]. Pladis is also seeing success with portable packs of chocolate-covered Flipz, which it says racked up £12.3m in its first year.

There is also potential in the so-called ‘9pm sofa moment’ favoured by cake brands. Again, that’s capturing the imagination of Pladis, which extended its shareable Nibbles lineup with a Jaffa Cakes variant in January. The new line has already made £4.6m, making it the most successful biscuit launch of the past year [Kantar].

Considering sharing bags are doing big business in confectionery - up 7.1% to £480.1m [Kantar 52 w/e 16 June 2019] - it could prove a lucrative area to explore.

 

McVitie’s Choc Digestives in decline: top 10 biscuit brands

Top 10 biscuit brands  
  value (m) % change
McVitie’s Chocolate Digestives 108.2 -13.0
Belvita 78.0 6.6
Kit Kat 73.5 0.9
Mcvitie’s Jaffa Cakes 64.0 26.8
Nature Valley 55.6 4.2
Oreo 49.0 12.0
Mcvitie’s Digestives 41.9 5.6
Mcvitie’s Hobnobs 41.4 0.9
Nakd 39.2 2.1
Maryland 38.4 -5.0
     
Source: Nielsen, 52 w/e 10 August 2019    
  • The fastest-growing player in biscuits this year is McVitie’s Jaffa Cakes. The brand’s £13.5m sales boost is partly due to a strong off-shelf promotional presence and the launch of Jaffa Cake Nibbles.
  • Belvita Softbakes also had a strong year. The sub-brand was a key driver of Belvita’s growth this year, says Nielsen analyst Steven Hansell. It is now the largest part of the portfolio, overtaking the core Breakfast Biscuits (which lost 6.2% of value) with £7.6m in additional sales.
  • Belvita is also cashing in on demand for permissible treats. It rolled out its first-ever reduced-sugar variant in June: Chocolate Chips (rsp: £2/5x45g) has 16g of sugar per 100g, and promises 30% less sugar ‘than breakfast biscuits on average’.
  • Mondelez’s Cadbury Fingers and Belvita Breakfast Biscuits have both suffered heavy declines, losing a combined £12.5m through distribution losses.
  • The most severe decline this year came from the biggest brand in biscuits. McVitie’s Chocolate Digestives lost a whopping £16.2m in sales, driven by 12.3% volume declines.
  • Things have been looking up for Chocolate Digestives in recent months, however. A mixture of strong promotional support over the summer and a push in partnership with mental health charity Mind, to encourage conversation, has driven the brand back into growth in 2019.
 

Larger formats lacklustre

All this is well and good for cakes and biscuits that lend themselves to current trends. But formats that don’t fit into that mould are struggling to get quite the same level of growth. Large tarts and pies are down 8.5% to £20.3m. Meanwhile, whole cakes have edged up 1.6% to £348.3m. That’s hardly a bad performance, but compared with small cakes and slices - up 9.4% and 7.7% respectively - it feels a little lacklustre. It’s not down to a lack of innovation in larger cakes, either. The past month alone has seen the arrival of Mars Skittles Cake, Guinness Cake and Baileys Hot Chocolate Freakshake into the fixture.

Finsbury Foods’ Newlands says the slower performance is largely down to retail strategy. “Promotions and pricing in the sector just haven’t been as aggressive as the smaller formats, and that is impacting on growth.”

Newlands points to its Mary Berry brand, which has seen a 2.6% decline in sales of its whole and loaf cakes [Nielsen]. “The brand hasn’t had the same level of promotion or opportunity from retailers that other formats have,” he insists.

Still, in a classic case of ‘if you can’t beat them, join them’, Mary Berry rolled out its first portable format in spring. “We’re seeing a good rate of sale for Mary Berry mini loaves, and will be expanding the range with new flavours next year,” says Newlands.

So in the fast-moving world of cakes and biscuits, it seems the best things really do come in small packages.

Innovations in cakes & biscuits 2019

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