Baked goods are a significant part of many people’s diets around the world, from true staples like bread to indulgences like cakes and pastries. Because of this, the baking ingredients industry is robust and highly competitive as businesses provide basic essentials at a range of price points and qualities, as well as ingredients that cater to demand for healthy products, dietary restrictions, functional qualities, and more. With so many competitors in the market, keeping up with industry trends and finding a particular niche to operate within can be a valuable way to stand out.
Global Baking Ingredients Industry Overview
The global baking ingredients industry is valued at over $15 billion and is expected to see a healthy CAGR of more than 6% between 2023 and 2030. While the market was hit by pandemic setbacks such as lockdowns and trade restrictions, it was less impacted than some. While consumers were dining out less, they were still purchasing bakery products and there was also a substantial increase in home baking, particularly of bread. This boosted consumer demand for products such as flour and even resulted in product shortages for a time.
Leading Market Segments
The largest product segment of the global baking ingredients industry is baking powders and mixes, which account for more than 27% of the market. These ingredients are key components of baked goods, and are a valuable source of proteins, vitamins, and carbohydrates. Emulsifiers is the product segment expected to see the greatest increase in demand over the next several years, as they can help increase shelf life and thereby reduce waste from expired products.
Bread baking is currently the largest end-user of bakery ingredients, valued at close to $7 billion in revenue. Its status as a staple in many countries around the world makes it very prevalent in bakeries and in home cooking, and producers are offering an increasing variety of breads to cater to evolving consumer demands, balancing nutritional content with flavor to create attractive products.
Regional Insights
Europe is responsible for roughly a third of global baking ingredients industry revenue, with bread being a common staple in the region and the presence of many specialized pastries and other baked goods. Baked good preferences vary by country, with consumers in Spain, Turkey, and France often preferring handmade products while consumers in countries such as the UK and Russia enjoy purchasing a wide range of bakery products. Western Europe sees high demand for gluten-free baking mixes.
North America also accounts for a significant share of the baking ingredients industry, with the popularity of convenience products helping to drive demand for baked goods such as wraps and rolls. Gluten-free products are also in high demand in the region, as well as ones that are perceived to be healthy, such as whole grain products and those with added protein.
The highest growth is expected to come from the Asia-Pacific region, with rising populations in countries such as China and India contributing to demand. Urbanization is increasing in these countries and purchasing power is on the rise, making it easier for buyers to afford treats and luxuries. In addition, consumers in urban areas are increasingly adopting Western foods, including baked goods that were not traditionally made in the region, helping to boost demand for baking ingredients.
Baking Ingredient Trends
Healthy foods and products targeted at people with dietary restrictions continue to grow in popularity, leading to rising demand for baking ingredients that add nutritional value or can be substituted for traditional ingredients such as wheat flour. Fiber, omega-3 fatty acids, multigrain flours, vitamins, probiotics, and other functional ingredients are becoming increasingly common in baked goods. Products with organic labels also continue to be popular. While these ingredients tend to be more expensive than traditional baking ingredients, making finished baked goods more expensive as well, many consumers are willing to pay more for healthy and organic products. However, healthiness does not override flavor, so it’s important not to sacrifice taste for functionality.
Plant-based products are growing in popularity, both for health reasons and for environmental concerns. In North America, many consumers believe that plant-based ingredients are better than animal-based products for both health and for the environment. Vegetarian and vegan diets also remain popular in many places around the world. Demand is therefore rising for plant-based substitutes for ingredients such as eggs and milk, and many companies are developing new products that better mimic the qualities of their animal-based counterparts.
Many manufacturers are also focusing on improving freshness and longevity in bakery products, developing new ingredients and formulas to achieve this. There are natural ingredients and enzymes with low sugar levels that can inhibit mold growth without detracting from the taste of the product. Better shelf life means less waste, which is good for both the planet and for managing costs. As baked goods manufacturers and suppliers face volatility in price and availability of raw materials, finding other ways to reduce costs helps maintain profits despite such challenges.
