Fragmented baking industry in weak bargaining position

The gross production of the baking industry is expected to exceed HUF 100 billion this year, which represents 5 per cent of the food market. Production remains very decentralised with 1,200 enterprises in the business. According to József Werli, secretary of the Hungarian Association of Bakers, consumption of bakery products has been rising in recent years. Per capita consumption was 94 kilos last year, with bread accounting for 80 kilos. Over two-thirds of the bread sold is of the conventional white type. Modern stores account for half of total sales, while small, neighbourhood stores have a 25 per cent share of the market, with only a 13-14 per cent market share for the own stores of bakeries. Profitability of the bakery industry is under 1 per cent. The bargaining position of bakeries is weak against highly concentrated retail chains. There is no co-operation between suppliers. Marketing is inferior. One way to improve the position of the industry would be to establish a chain of specialised stores. The ability to reach consumers directly would put bakeries in a better bargaining position regarding retail chains. Bakery stores would also contribute to marketing and help in introducing new products.