Who isn’t happier than when they have a freshly baked Iced Bun in one hand, and a piping hot coffee in the other? Well, apparently Australians according to the IbisWorld report on Bread and Cake Retailing. At this time of economic strife many of us are cutting back on luxuries, and as a result the sales of cakes have been slashed. It’s not all doom and gloom though, the economy is complex, and in some aspects it’s thriving – so don’t get rushing to you local bakery just yet, it will probably still be there tomorrow!
From 2012-13 the total industry revenue for cake and pastry sales is expected to fall by 0.6%, which in an industry valued at $1.6 billion, is a considerable decrease. This decrease reflects national and global economies that have both struggled in recent years. The link isn’t just coincidence though, as the two are intrinsically linked by a number of factors.
If we start at the beginning of the process, farmers growing wheat have been receiving a price 9.2% lower than in 2010. At the same time as wheat prices are falling, the price of sugar is also decreasing, to a level 18.7% lower than in 2011. These falls in theory mean cheaper cakes, but in reality just reflect a volatile marketplace, where manufactures are unwilling to assume their goods will sell.
Manufacturers know that in a time of worldwide recession, people in the street have less disposable income, as they focus on mounting bills, in place of buying cakes. The decrease is as a result of quite boring economic issues such as high inflation, reduced access to borrowing and low house prices.
At the same time as manufacturers struggle, customers have started to realise that a diet high in sugars and fats are probably not the healthiest. This change in social opinion means that people are less willing to go and buy cakes, instead favouring low-carb, low-fat diets. For an industry already feeling the effects of recession this shift away from traditional products couldn’t have come at a worse time.
In contrast to all the negatives, there are some big positives. The number of establishments selling cakes and pastries has continued to rise in trend with previous years as property and rent costs fall. With this rise in number of shops, comes an increase in employment with 8,862 jobs in 2012 compared to 7,612 in 2005. The shift of diets also means that bakeries are innovating to find new healthy recipes, so we can enjoy all of our favourites, but without having to feel guilty.
Sales of cakes are an unusual way to monitor the economy, but because they are so reliant on a variety of factors, they are a surprisingly good way. What is clear is that the economy is unstable, and at this time, so are sales of cakes, but the future is bright with the European economy resolving itself and in turn the global economy gaining confidence once again. Don’t get too attached to your favourite jeans, with cake sales making a comeback, they might not fit in a few months!
become one of the wealthiest, and most influential, men on the planet. Through innovation and his own personal design philosophies he helped to create a company worth over $650 billion, the highest of any company in history – even surpassing Bill Gates and Microsoft in 1999, a feat many believed to be impossible.
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