Dheeraj Talreja

A deep dive into the cake industry in India indicates that the segment has been growing rapidly for the last two decades. It is expected to reach $13-14bn by 2025 with CAGR growth of 9%+ during 2020-2025. More urbanisation and an increase in the working population have led to a rise in out-of-home food consumption. And cakes have been at the top of the preference list for a lot of consumers because of its convenience and taste factor. Sponge cakes, cupcakes, cheese cakes, cake pops and much more have now become ubiquitous in the Indian market.

2020 and 2021 led to more people being confined to their homes than ever before. In response to this sudden change, we witnessed a rise in home cooks as more people discovered their passion for making desserts and home baking. This has also led to significant growth in the cake market and cake has now emerged as the clear new favourite food for dessert enthusiasts.

Following are some of the most significant industry trends that are shaping the way we consume cakes.

  • Packaged Cakes: Apart from artisanal cakes and Instagram-worthy fondant creations, the packaged cakes segment has seen a significant uptick in India. This is because it provides for a quick and delicious snack time indulgence, and the variety in flavours and textures that are being introduced into the market make it even more appealing. A casual stroll down a supermarket aisle today can reveal the endless variety of available packaged cakes ranging from centre filled cakes, plain sponge cakes, frosted icing, Swiss rolls, fruit-filled muffins, the list goes on. Consumers are constantly on the lookout for packaged cakes that combine spongy, rich and creamy textures, and manufacturers are constantly innovating alongside oils and fat suppliers to achieve these properties.
  • Urban to semi-urban: With a rise in disposable incomes among the middle class and the penetration of local Indian confectionery brands into small towns, cakes have become a staple at bakeries in Tier 2 and Tier 3 cities. The product’s appeal factor coupled with its convenience as a snack or food item to celebrate special occasions, has led to wide-scale proliferation of the cake industry in semi-urban areas in India. Buying cake is also an aspirational activity among the country’s middle-class families and key to overall growth.
  • Health, Nutrition and Taste: The trio of Health, Nutrition and Taste is on top of every consumer’s agenda. And in a country like India where even eggs are considered to be on the non-vegetarian food spectrum, manufacturers are challenged to create good substitutes for eggs. In addition to this is also the clean label trend wherein more consumers want to know what goes into their food. A significant outcome of this has led to consumers actively avoiding products that contain ingredients such as hydrogenated vegetable oils and saturated fats. This is also in keeping with the recent FSSAI rule that states; Trans-fat levels in foods need to be reduced from 5% to less than 3% in 2021 and less than 2% by 2022. And although this is a big step towards a healthier future, the onus is on manufacturers to create nutritious and tasty products. To help the cake industry follow through with these rules, there are a handful of companies that are developing specialized oils and fats for cakes to meet the latest health, nutrition and taste profiles.
  • Glocalization: India’s food sector is no stranger to constant innovation. Indian consumers are receptive to global trends and accept them wholeheartedly when merged with local trends. This has led to local and multinational companies working hard to innovate newer textures and flavors that are suitable for the Indian palate. Today, it is not uncommon to see gulab jamun and rasmalai cakes or phirni tiramisu. Bakers are increasingly infusing western desserts with Indian flavours, and this trend is picking up fast, thanks to a craving for newer textures and the innovation in the specialty oils and fats sector.

The cake industry is undergoing rapid transformation on multiple fronts, and it is expected to continue delivering strong growth that will be driven by evolving consumer preference and the acceptance of global food trends.

* President – India, AAK Group