FDBusiness.com

While the German economy is growing, value-conscious German consumers are still on the lookout for the best deals in bakery & cereals. To avoid price wars and encourage consumers to trade-up, manufacturers need to more effectively meet consumers’ desire to treat themselves.

According to a new report from Canadean, Germany’s bakery & cereals market – with a volume of 6.4 billion kilos and a value of US$25.9 billion in 2014 – is forecast to register a CAGR of 1.1% between 2014 and 2019 by volume, and a lower CAGR of -0.5% by value. Despite Germany’s economy being considered stable, value-conscious German consumers are still vastly driven by the desire for best value, which is motivating a fifth (19.8%) of bakery & cereals consumption. “More consumers have turned to retailers such as ALDI and LIDL in the search for value, leaving more premium brands with a challenge to justify higher prices to consumers,” says Veronika Zhupanova, analyst at Canadean.

To avoid a race to the bottom, manufacturers need to justify the price – and they can do this by appealing to the motivator that is more important than price to Germans – the desire to treat themselves. Almost a third of bakery & cereals consumption are motivated by superior taste sensations (31.9%), reflecting how German consumers consider indulgence to be worth trading-up for. This is especially true for cookies, where this desire motivates 40.6% of consumption, as well as for cakes, pastries & sweet pies (36.8%) and savoury biscuits (34.9%). Veronika Zhupanova adds: “As consumers prioritise taste above all, manufacturers can target them with decadent flavour combinations, such as breakfast cereals with dark chocolate, sweet pomegranate seeds and savoury nuts.”

According to the Canadean report, manufacturers should explore cross-promotion meal deals to maximise taste sensations for consumers, such as offering breakfast cereals with flavoured milk, or spicy and hot pastries paired with a sweet carbonated chilled drink, or matching savoury biscuits with certain types of cheese and wine. Veronika Zhupanova adds:“Such deals not only make the product more indulgent, but will also help consumers to save costs.”