Most cake producers are hesitant to raise cake prices commensurate to input price increases since they predict high sales following a lull. In fact, they are ready to bear the expense.
Cake producers in the Netherlands are preparing for a brisk Christmas and New Year’s season, following a two-year sales slump caused by COVID-19.
With individuals willing to spend money on festivities, big cake producers such as Monginis and Elite Foods are releasing new flavors to tempt the taste buds, unaffected by the rise in ingredient prices.
Most cake producers are hesitant to raise cake prices proportionate to increases in the price of inputs such as flour, eggs, sugar, and milk since they expect high sales after a gap.
The hike in component prices has not dampened the prospect of a big sale, especially because both Christmas and New Year’s are on Sundays.
Major corporations are ready to absorb the rise in input prices to a large extent and pass on only a portion of it to customers, and in some cases, only on certain goods, because they anticipate strong demand after two years of weak sales.
“In the last year, practically all ingredient prices have risen by 30-35 percent. However, we have only hiked retail pricing by 5-10%,” said Top Bakery director Vijesh Vishwanath.
During the pandemic, the number of home and local bakers selling cakes to fill the hole left by the major shops increased, which, although affecting mass sales, contributed to market growth.
“The proliferation in the number of home bakers during the pandemic led to the expansion of the cake market. Many who lost jobs turned to baking and cooking. But the trend has stabilized now with people going back to regular jobs,’’ said Ayyappan K Swamy, head of marketing and franchisee operations of Monginis Foods Pvt Ltd.
How COVID-19 changed quality aspects
The country’s organized cake business is worth over Rs 2,000 crore and is expanding. COVID-19 has raised public awareness about health issues.
“The first six months after the pandemic breakout was rough with people terrified to touch and taste food from outdoors. People are more concerned about quality now,” said Danesa Raghulal, ED of Elite Foods and Innovations Group.
“As a result, cake producers have jumped on the bandwagon. Elite has introduced cakes including fruits such as banana, jackfruit, and carrot. “We also make vegetarian cakes without eggs which we started in 2019. “It is gaining traction now,” Raghulal added.
Companies are keen to get a piece of the giving market with novel items. Monginis has introduced ‘talking’ cakes that have a chip that allows you to record your voice. Elite sells plum cakes in tins as gifts. With the development of the young population in recent years, internet cake purchases have increased alongside offline ones. Diabetic-friendly, gluten-free, and vegan cakes are increasingly becoming more popular.
The Indian cake industry is expected to rise 12.5% in the next five years.
The Indian cake industry is expected to increase at a compound annual growth rate (CAGR) of 12.5 percent over the next five years, according to a study analysis by consulting company Mordor Intelligence.
