Published on 23/11/2016 by Punchmedia

Investors Tempted by Booming Bakery Trade

A private investor group has picked up Melbourne-based sweet and savoury baked products maker Temptation Bakeries.

Temptation Bakeries, which was owned by the Ratcliff family for more than two decades, makes baked products including finger foods, pies, quiches and pastries and is is well known in the food services sector - its products sold through supermarkets, cafes and also on-board Qantas Airways domestic flights.

Boutique adviser Comet Line Consulting ran the sale, and is tipping more consolidation in the baked good sector of course following on since private equity firm Pacific Equity Partners took control of Four'N Twenty pies maker Patties Foods just a few months ago.

The cake and pastry manufacturing industry has undergone some significant changes in the past decade, with greater product development and the expansion of distribution channels making for a competitive market.

Product Line Extensions

Over the past five years, the launch of new product lines and the extension of existing ones have been distinctive characteristics of the industry. Traditionally, most Australian consumers have based their purchasing decisions on taste, quality, packaging, price and use-by dates. However, the increasing sophistication of consumer demands has prompted greater product development. Some meat pies now use Angus, Wagyu, King Island or 8-hour slow-cooked beef and pulled pork, and vegetarian offerings now incorporate more exotic ingredients.

Distribution Channels

Several industry players have been expanding their distribution channels, as the importance of the traditional supermarket channel has been waning. For example, Patties Foods has increased its range of hot pastries sold in petrol stations and convenience stores. Due to the growing importance of alternative distribution channels, such as convenience stores and the food-service industries, pack sizes have been changed to include on-the-go, snack and single-serve options, to cater for time-poor consumers.

International Trade

The perishable and fragile nature of many of the industry’s products limits the extent of international trade, as they are largely unsuitable for long-distance transport. However, recent technological innovations in freezing and packaging have improved long-distance transportation of many industry products.

Profit and Prices

In 2016-17, industry profit is estimated at 8.6% of revenue. * With AFR
 

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punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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