Warburtons' surprise foray into bagged snacks in the new year caught everyone by surprise. But the past 12 months have not been kind to the bread market, and the big bakers can be forgiven for contemplating pastures new.

Only one brand Kingsmill enjoyed value sales growth this year and total category sales were down 3.5% to £1.8bn with volumes down 2.4%. The reasons? Aggressive promotions on one side and cost hikes on the other.

"There is no doubt that continual promotions have devalued the category as a whole," says Martin Garlick, category director at Warburtons. "Consistent price promoting is devaluing the category and is not a good strategy for long-term growth."

Especially not for own label, which crashed 13% in value. "Throughout 2010 the number of branded bakery promotions has increased dramatically, bridging the price gap between branded and own-label bakery lines," says Garlick. "With this in mind consumers, have been able to trade up and buy brands on deal."

When buying bread off deal, consumers have been faced with rising prices. In August, wheat prices were close to matching the all-time record highs of 2008, buoyed by Vladimir Putin's decision to protect dwindling domestic supplies by banning all grain exports from Russia. As a result, Warburtons and Kingsmill passed on hikes in the autumn.

Others were less successful in their attempts. In September, after Premier Foods informed Tesco it was increasing its prices due to rising costs, the retailer delisted 12 of the supplier's Hovis lines. The move only added to the brand's woes. Last year's 14.6% sale increase last year has become a 3.1% slump this year despite a busy marketing schedule, some savvy NPD such as Hearty Oats and the conversion of Hovis to 100% British wheat.

While rival Warburtons reneged on its decision to launch all-British loaves, it has had a busy year on the NPD front. The launch of ChippidyDooDaa pitta chips and SnackaDoodle wholegrain snacks, the rollout of which were hampered by a factory fire in June, the precedent for a raft of new products, including unsliced and upmarket Tiger loaves and the forthcoming gluten-free range and range of wraps and flatbreads.

However, the only growth in the top 10 brands table comes courtesy of Kingsmill, which credits its 7.3% uplift to increased distribution, sharper focus on customer service and innovation. "We've also taken leadership of the healthier white sector," claims Guy Shepherd, category director at owner Allied Bakeries. "Kingsmill 50/50 taps into the strong market demand for premium products that taste good but also have nutritional benefits. We also launched Kingsmill Oatilicious to target the growing healthier white sector."

Healthy eating was "more prominent" this year, agrees Geraint Hughes, Capper & Co category manager. "Given the NPD in wholemeal, seeded and granary breads, consumers are now enjoying a healthy loaf of bread without sacrificing on taste."

And with Warburtons' gluten-free range about to launch, healthy bread could be the remedy for category sales in 2011.

Launch of the Year: Hovis Hearty Oats (Premier Foods)
Having secured the patriotic vote by switching its entire range to British wheat, Hovis turned its attention to the health agenda with the pricey Hearty Oats loaf, which was launched in April.

Bullishly billed as the fmcg launch of 2010, Premier Foods is confident of a cool £30m in first-year sales and backed the launch with a nostalgic £5m ad campaign.

The bread (rsp: £1.34) is made from 50% oats and 50% wheatflour, and Premier Foods claims that the loaf can help maintain normal cholesterol are lent credibility by the endorsement of Heart UK.

Top Products Survey 2010