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Globalization expands business opportunities for baking companies

Source:Baking Business

Technology has grown by leaps and bounds; just a look at the past 10 years proves how much has changed. As technology has leapt forward, it has shrunk the world for consumers but expanded it for business, and the baking and snack industry is no different.

“Globalization has had a huge impact on consumption trends in bakery and snack,” said Carolina Moré, marketing director, Europastry USA, Long Island, NY. “There are products that doubtless become global such as baguettes, donuts and croissants, products one can find in almost every part of the world.” 

While certain bakery and snack products are ubiquitous, each is tweaked to target specific regions’ preferences in flavors, textures and health concerns.

“Innovation and scientific research, especially when focused on improving production and nutrition, have also intensified, becoming requirements for companies with international scope to respond to global demands while remaining competitive,” said Rafael Juan, chief executive officer of Vicky Foods, a global company based in Valencia, Spain, that owns the Dulcesol brand.

And as globalization impacts consumer trends, it also has become a major part of doing business. From supply chain optimization to expanding in emerging markets, baking and snack companies are looking worldwide for growth opportunities.

As the baking industry has grown, companies have looked beyond their home country’s borders for expansion opportunities.

Today’s multinational companies like Europastry, headquartered in Barcelona, Spain, and Vicky Foods span the globe with their bakery and snack brands.
“In our case, internationalization has been a key aspect of our business strategy,” Ms. Moré said. “It has allowed us to grow in countries such as the United States and the Netherlands through our different acquisitions.”

This has become a business strategy for many larger food manufacturing companies. Grupo Bimbo, Mexico City, the largest baking company in the world, has a presence in 33 countries, a far cry from its humble beginnings as a family-owned bakery 75 years ago. And it continues to grow through acquisitions around the world, most recently acquiring a production plant in Medina del Campo, Spain, from Cerealto Siro Foods and Modern Foods in India. In a call with investment analysts, Daniel Servitje, chief executive officer and chairman of Grupo Bimbo, said the acquisition in Spain would enable the company to enter that region’s sweet baked goods private label market. The company also expects growth to come from Brazil, Russia, India and China, as it reported to investors in the fourth quarter of 2020.

Other major players are also finding opportunities around the world. At the Consumer Analyst Group of New York conference earlier this year, Mondelez International, Deerfield, Ill., reported record share gains in chocolate in the United Kingdom and cookies in the US and China. The company’s Oreo brand most notably has room to grow in other markets, said Dirk Van de Put, chairman and chief executive officer.

“We are leaders in the US and China, but in other markets, we are under-indexed with significant opportunities,” he explained in a call with investors.
For Gruma, the Monterrey, Mexico-based company, which owns Irving, Texas-based Mission Foods, reported seeing future demand in Europe and growth for its pizza business in Asia and Australia.

“We are producing not only for the retail, which is growing, but also in a very important way, we are providing pizza bases for most of the pizza, let’s say, restaurant chains in that area,” Raul Cavazos Morales, chief financial officer, told analysts during a Feb. 25 conference call about the company’s pizza bases business. “Now we are introducing these products in the US. We will start to also offer to the market the pizza bases as well in Europe.”

Much of the room for growth in baking and snack categories is found in emerging countries, Mr. Juan explained.

“Generally speaking, emerging countries currently represent the greatest business opportunity for the snack industry for two reasons: their demographic growth and their increasing income and purchasing power,” he observed.

Many expect the Asia region to dominate sales in the coming years, specifically China.

“We all understand that certainly the Chinese market is still a growing market and expect there to be a real growth opportunity,” said Chuck Metzger, chief executive officer, Hearthside Food Solutions, Downers Grove, Ill. “We are seeing multinational companies building plants there, especially in the baking sector.”

In its 2020 bakery report of the Asia Pacific region, Euromonitor showed that baked good sales experienced healthy growth from 2015-2020, largely thanks to China. The research firm expects the category to expand in China in 2021 as well as the entire region.

During a virtual presentation at the Consumer Analyst Group of New York conference, General Mills, Minneapolis, reported it saw opportunity in core markets such as France, the UK, Australia, China, Brazil, India and North America.

 

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