Bread for Success?
March 01, 1999
by Teresa Acklin
Although at-home consumption is down, bread is still an important component of the U.K. flour market.
Although bread consumption in the United Kingdom has dropped in the past 30 years, bread still accounts for the majority of demand in what has become an increasingly diversified flour market in that country, according to Ralph Richard, immediate past-president of the National Association of British and Irish Millers.
In a presentation at the International Milling Association's 1998 Congress in London, Mr. Richard gave a brief overview of the U.K. milling and baking industries while John Murray, representing the U.K.'s Flour Advisory Bureau, reported on a survey of the U.K. bread market (see story on Page 37).
The U.K. flour milling industry converts more than 5 million tonnes of wheat mostly home-grown into 4 million tonnes of flour, generating revenues of well over £1 billion (U.S.$1.6 billion), including sales of wheatfeed and other co-products, Mr. Richard said.
“The flour we supply is not homogenous but highly varied depending on the nature of end products, with a typical mill producing 50 different flours using a wide range of wheats,” he said.
About 65% of flour produced in the U.K. goes into the production of bread, primarily standard white bread, wholemeal bread and brown bread. The remainder of U.K. flour is used in biscuit making (13%), starch manufacture (10%), pre-packed household flour (3%), self-rising flour (2%), cake (1%) and other products (7%).
Yet overall household bread consumption in the U.K. has dropped in the past three decades, from about 1,300 grams per person per week in 1965 to only 747 grams in 1997, although the decline has been entirely in standard white bread. Consumption of brown bread at home remained relatively constant over the 30-year period, peaking in the mid-1980s, while wholemeal and “other” bread consumption actually rose.
In fact, in the decade from 1975 to 1985, household consumption of wholemeal bread in the U.K. jumped dramatically as breadmaking techniques improved to produce a lighter-eating loaf. Specialty or premium bread products, such as French-style baguettes, pita, ciabatta and foccacia, also have gained in popularity in the U.K.
The overall decline in bread eaten at home has been offset by rising consumption outside the home, Mr. Richard said. “The sandwich market has been especially buoyant,” he said.
The popularity of sandwiches eaten outside the home grew 61% in value between 1991 and 1996, Mr. Richard noted. Sales of bread and morning goods generated turnover of £3 billion (U.S.$4.8 billion) annually, he added.
Other recent growth markets for flour in the United Kingdom have included pizza, hamburger buns, coatings and using wheat flour as a feedstock for starch production in place of imported maize, he said.
WHEAT IMPORTS DOWN.
Since joining the European Community, the U.K.'s usage of wheat imports from third countries, mainly Canada, has fallen from 2.4 million tonnes in 1973 to only about 300,000 tonnes in 1997.
“The major reason for this has been the impetus that high import duties gave to the development of better domestic varieties of breadmaking wheat, along with technical developments such as the Chorleywood breadmaking process (a process introduced in the early 1960s by the British Baking Industries Research Association that achieves adequate bread volume using lower-protein wheats) and the use of gluten to fortify the lower protein levels of home-grown wheats,” Mr. Richard said.
The U.K. component of breadmaking grists has increased from only 30% in 1978 to nearly 80% today, he said.
“Many breadmaking grists and virtually all grists for other flours will use 100% home-grown wheat,” Mr. Richard said. “It is therefore unlikely that the milling industry will be able to use significantly more. Even though the recent GATT (General Agreement on Tariffs and Trade) and future World Trade Organization negotiations have started and seem likely to continue a process of easier access for third-country wheats, we would not expect U.K. farmers to lose market share, providing they continue to grow the right varieties.”
MILLING, BAKING STRUCTURE.
A recession in 1990-91 saw a further decline in the number of milling companies and mills operating in the United Kingdom, Mr. Richard pointed out.
“This process seems set to continue for a while yet, given the intense pressure on margins exerted by the major retailers and the consequent need to achieve the maximum economies of scale consistent with efficient raw materials supply and product distribution,” Mr. Richard noted.
In 1950, there were 252 flour mills operating in the U.K.; by 1998, that number had dropped to 73. Nevertheless, the shape of the U.K. milling industry has become more competitive, Mr. Richard said. Since the beginning of the 1990s, the market share of the three largest milling companies (those with more than 500,000 tonnes of wheat usage) declined while the number and market share of the next largest group of milling companies those in the 100,000 tonne to 500,000 tonne range has doubled.
“U.K. flour millers therefore operate in a highly competitive market and, by dint of rationalization, are well-placed in Europe,” Mr. Richard said.
According to the International Milling Association, there were 73 flour mills in the United Kingdom in 1997 producing an average of nearly 59,000 tonnes of flour annually. That was nearly twice as high as The Netherlands, (40 mills producing 34,000 tonnes), and well ahead of “the more loosely structured” milling industries in France, Germany, Italy and Spain.
“The U.K. is largely self-sufficient in supplying the domestic market and, indeed, operates a small trade surplus with exports of 100,000 tonnes per annum and imports of 50,000 tonnes,” Mr. Richard said. “The latter figure has, however, grown significantly in recent years and the industry is therefore reviewing whether it should utilize highly competitive supplies of local wheat to become more aggressively involved in exports, particularly to third countries.”
The baking industry in the United Kingdom also has undergone some recent shifts, Mr. Richard noted. Plant or industrial bakers still account for more than 75% of baking production in the U.K. These industrial bakers were split fairly evenly between Allied Bakeries, a sister company to Allied Mills Ltd.; British Bakeries, a sister company to Rank Hovis; and other large bakeries.
The major shift in market share, however, has occurred between the traditional master bakers, or “high street” bakers, and supermarket in-store bakeries, Mr. Richard said. In-store bakeries currently account for about 16% of the market, while master bakers account for only about 7% of sales.
“Indeed, had it not been for the growth of sandwich and takeaway trade, it is likely that the number of high street bakers would have fallen even lower than its current estimated level of some 5,000 outlets,” Mr. Richard said. “Nor does the continuing dominance of the major multiple retailers, such as Tesco and Sainsbury, suggest any early reversal of this trend.”Household bread consumption in the United Kingdom
U.K. flour mills
| (grams per person, per week)|
|Standard white|| 973|| 785|| 549|| 389|| 430|| 444|| 431|
|Brown|| 81|| 74|| 106|| 103|| 94|| 79|| 80|
|Wholemeal|| 20|| 20|| 102|| 104|| 105|| 94|| 91|
|Other|| 78|| 76|| 122|| 156|| 128|| 140|| 145|
|Total||1,289||1,014|| 882|| 795|| 753|| 757|| 747|
|Source: U.K. National Food Survey|
Competitive structure of U.K. flour mills
|Number of mills in operation|| 252|| 202|| 118|| 100|| 84|| 73*|
|NABIM membership|| 203|| 143|| 60|| 46|| 41|| 31|
|*Includes Finedon and Shipton mills, which are not NABIM members.|
E.U. milling industry comparisons, by country
|Wheat usage (tonnes)|| No. of companies|| % of total usage|
|More than 500,000|| 3|| 3|| 70.6|| 64.4|
|100,000-500,000|| 3|| 8*|| 10.7|| 26.0*|
|50,000-100,000|| 9|| 5|| 13.2|| 6.5|
|25,000-50,000|| 5|| 3|| 3.8|| 1.7|
|Less than 25,000|| 17|| 12|| 1.7|| 1.4|
|*Includes two mills devoted to in-house production of flour for starch manufacture|
U.K. flour use, 1996-97
| ||No. of mills||Flour production||Avg. production|
| (in 1,000 tonnes)|| (in 1,000 tonnes)|
|France|| 699|| 5,237|| 7.49|
|Italy|| 554|| 4,880|| 8.81|
|Spain|| 275|| 2,442|| 8.88|
|Germany|| 534|| 5,715|| 10.70|
|The Netherlands|| 40|| 1,355|| 33.88|
|United Kingdom|| 73|| 4,282|| 58.66|
|Source: International Milling Association, 1997|
|Brown bread|| 4%|
|Wholemeal bread|| 5%|
|Pre-packed household flour|| 3%|
|Self-rising flour|| 2%|
|Source: National Association of British and Irish Millers|