IN-STORE BAKERY EXPERIENCE - CANADA, NOVEMBER 2018 - Mintel

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IN-STORE BAKERY EXPERIENCE - CANADA, NOVEMBER 2018 - Mintel
IN-STORE BAKERY EXPERIENCE
CANADA, NOVEMBER 2018

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IN-STORE BAKERY EXPERIENCE - CANADA, NOVEMBER 2018 - Mintel
IN-STORE BAKERY EXPERIENCE - CANADA - NOVEMBER 2018                                                                                                2

OVERVIEW
What you need to know                                                      Other areas where baked goods are purchased at retail

Canada’s grocery retail landscape is changing. While much of the           • Bread from a supermarket aisle (eg Wonder Bread)
chatter revolves around online shopping, the fact remains that
most grocery “trips” happen on site. That said, the evolving divide        • Dessert mix from a supermarket aisle (eg brownie mix, cake mix)
between online and bricks and mortar means that to maintain an
advantage, retailers are increasingly pressured to offer experiences       • Boxed pastry from supermarket aisle (eg toaster pastries, Pop-
that are relevant. In-store bakeries are a part of this equation. While      Tarts)
freshness is of core value for in-store bakeries, it’s not the only
point of differentiation. Aside from assortment, retailers can look to     • Boxed sweet baked goods from supermarket aisle (eg cookies,
model their bakeries to meet the variety of demands that today’s             brownies)
consumers have. This extends beyond indulgent desserts, but also
to snacks that can prove healthier for earlier parts of the day when       • Frozen pie or cake from supermarket freezer case (eg McCain
consumers are more likely to consider factors related to health,             Deep n’ Delicious, Sara Lee)
energy and portability. In-store bakeries that work in concert with
other in-store departments executing as part of a broader strategy         Retail Sales:
to provide contemporary day-to-day meal and snack solutions stand
to be more relevant.                                                       • Bread and bread products: this market covers packaged white
                                                                             and non-white bread, savoury specialty breads and savoury
Definition                                                                   pastries & pies. Market size comprises sales through all retail
                                                                             channels including direct to consumer. This market covers
For the purposes of this Report, Mintel has used the following               packaged white and non-white bread, specialty breads and
definitions for in-store bakeries and for where baked goods are              savoury pastries & pies. Market size comprises sales through
purchased more broadly. Bakery items purchased from foodservice              all retail channels including direct to consumer. It includes sales
(eg restaurants) are not included when looking at in-store bakeries          through in-store bakeries unless stated otherwise.
on the whole.
                                                                           • Sweet bakery: this market covers wrapped ambient and chilled
Consumer data:                                                               cakes, pies, tarts and other sweet bakery products. It excludes
                                                                             frozen products. Market size comprises sales through all retail
In-store bakery                                                              channels including direct to consumer.

• Bread from an in-store bakery (eg bakery in a grocery store)

• Sweet baked goods from an in-store bakery (eg bakery in a
  grocery store)

Stand-alone bakery shop

• Bread from a stand-alone bakery shop

• Sweet baked goods from a stand-alone bakery shop

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IN-STORE BAKERY EXPERIENCE - CANADA - NOVEMBER 2018                                                                                          3

REPORT CONTENT
OVERVIEW
     What you need to know
     Definition

EXECUTIVE SUMMARY
     The issues
          Stand-alone bakeries represent an area of competition
          Figure 1: Opinions on in-store vs stand-alone bakery, August 2018
          Longer-term stagnation in baked good sales
          Figure 2: Retail market volume consumption per capita of bread and bread products and sweet bakery, 2013-2017
          Younger consumers are less likely to make purchases from in-store bakeries
          Figure 3: Purchase at in-store bakeries, by age, August 2018
     The opportunities
          Fresh-focus is at heart of in-store bakery’s appeal
          Figure 4: Important factors when choosing a product from an in-store bakery, August 2018
          Cross-daypart opportunities helps drive more frequent product usage
          Figure 5: Correspondence Analysis – Snacking occasions, July 2016
          New flavours and less-familiar formats represent an opportunity to differentiate
          Figure 6: Interest in flavour and format innovation from in-store bakeries, August 2018
     What it means

THE MARKET
 WHAT YOU NEED TO KNOW
     Bread and sweet bakery sales are soft
     Canadians strive to eat healthy most of the time
     Immigration fuelling Canada’s population growth

 MARKET SIZE AND FORECAST
     Bread sales to remain relatively flat
          Figure 7: Canada retail value sales and fan chart forecast of bread & bread products, at current prices, 2012-23
          Figure 8: Canada retail value sales forecast of bread & bread products, at current prices, 2012-23
     Modest growth forecast for sweet bakery
          Figure 9: Canada retail value sales and fan chart forecast of sweet bakery, at current prices, 2012-23
          Figure 10: Canada retail value sales and fan chart forecast of sweet bakery, at current prices, 2012-23

 MARKET FACTORS
     Canadians are more time-pressed
     Most Canadians live in urban areas
          Figure 11: Share of Canadians that live in urban and rural areas, 1851-2016
     Mobile technology enabling unprecedented opportunity to interact
          Figure 12: Mobile and smartphone penetration, by age group, May 2017
     Immigration fuelling Canada’s population growth
          Figure 13: Top 10 countries of birth of recent immigrants, 2011-16
     Canada’s population is aging
          Figure 14: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
     Canadians strive to eat healthy most of the time…
          Figure 15: Healthy eating, November 2016
     ...but flexibility may be contributing to the high obesity rates
          Figure 16: Body mass index, self-reported rate of being overweight or obese among Canadian adults, by gender, 2010-14

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IN-STORE BAKERY EXPERIENCE - CANADA - NOVEMBER 2018                                                                                                   4

KEY PLAYERS
 WHAT YOU NEED TO KNOW
     Carb-consciousness diets represent a potential challenge to growth
     Snackable baked goods are an opportunity
     Baked goods for specific diet to become more prominent

 WHAT’S WORKING?
     Demand for better experiences a potential growth-booster

 CHALLENGES
     Carb-consciousness diets represent a potential challenge to growth
          Figure 17: Mojo Me Chocolate Brownies (South Africa), July 2018
          Figure 18: Julian Bakery Pegan Ginger Snack Cookie Protein Bar (US), March 2017
          Figure 19: Julian Bakery Paleo Wraps (US), August 2018
          Figure 20: Growfit Ultra Low Carb Flower (India), June 2018

 WHAT’S NEXT?
     Snackable baked goods are an opportunity
          Figure 21: Correspondence analysis – snacking occasions - July 2016
     Baked goods for specific diet to become more prominent
          Figure 22: Strawberries & Cream Artisan Raw Cake (UK), July 2018
          Figure 23: Lazy Day Foods Free From Tiffin Bites (UK), March 2018
          Figure 24: Vega Divas Baked Goods & Desserts Banana Chocolate Cupcakes-to-Go (USA), January 2018
          Figure 25: Vegan Cocoa & Goji Berry Muffins (South Africa), July 2018
          Figure 26: Probios Go Vegan! Organic Vegan Wheat Croissant with Chocolate Cream (UK), March 2018
          Figure 27: The Free From Bakehouse Bakery Banana &Date Flapjack (UK), July 2018
          Figure 28: Ozery Bakery Organic Morning Rounds Cranberry Orange Flavoured Toastable Fruit and Grain Buns (UK), November 2017

THE CONSUMER
 WHAT YOU NEED TO KNOW
     In-store bakery’s importance reflect Canada’s retail evolution
     Demand for freshness reflects core appeal of in-store bakery
     Opportunity to bring theatre to the bakery
     Looking abroad can be an inspiration for innovation at home
     Foodservice focus can help focus innovation for growth

 IN-STORE BAKERY USAGE
     In-store bakery’s importance reflect Canada’s retail evolution
          Figure 29: Locations where baked are purchased, August 2018
     Over half of consumers made a recent in-store bakery purchase
          Figure 30: When and where baked goods are purchased, August 2018
     Young women key to growing bread at in-store bakery
          Figure 31: When bread from an in-store bakery was purchased, women 18-34 vs overall, August 2018
     Foodservice focus can help focus innovation for growth
          Figure 32: Correspondence Analysis – Principal map – Purchase location, August 2018
          Figure 33: Where bread and desserts are purchased, by age group, August 2018

 CHOICE FACTORS
     Demand for freshness reflects core appeal of in-store bakery
          Figure 34: Important factors when choosing a product from an in-store bakery, August 2018
     Canadians are looking for natural baked goods
          Figure 35: Importance of all-natural ingredients when choosing a product from an in-store bakery, by age, August 2018
     Added nutrition is a purchase driver
          Figure 36: Importance of nutrition-related considerations when choosing a product from an in-store bakery, by age, August 2018
     New flavours reflects opportunity to differentiate
          Figure 37: Importance of flavour combinations when choosing a product from an in-store bakery, by age, August 2018

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IN-STORE BAKERY EXPERIENCE - CANADA - NOVEMBER 2018                                                                                                          5

     It’s important to remember value’s importance to younger consumers
          Figure 38: Importance of price vs “baked on same day”, by age group, August 2018

 OPPORTUNITIES FOR INNOVATION
     Opportunity to bring theatre to the bakery
     Provenance can be the basis for story
          Figure 39: Areas of interest from in-store bakeries, August 2018
     Looking abroad can be an inspiration for innovation at home
          Figure 40: Interest in internationally-inspired options from in-store bakeries, Chinese Canadians vs overall, August 2018
     Canadians fall for seasonal flavours
          Figure 41: Interest in seasonally-inspired options from in-store bakeries, 18-34s with household incomes of $70K or more vs overall, August 2018
     Demand for health innovation at in-store bakeries requires context
          Figure 42: Interest in health-related considerations from in-store bakeries, 18-44s vs over-45s, August 2018

 CONSUMER SEGMENTS
     Success with women key to in-store bakery’s success
          Figure 43: Purchase of sweet baked goods from in-store bakeries, by gender, age and parental status, August 2018
          Figure 44: Purchase of sweet baked goods from in-store bakeries, by gender, August 2018
     Flavour and format exploration key to winning over Chinese Canadians
          Figure 45: Purchase of sweet baked goods from in-store bakeries, Chinese Canadians vs overall, August 2018
          Figure 46: Interest in select options from in-store bakeries, Chinese Canadians vs overall population, August 2018

APPENDIX
 DATA SOURCES AND ABBREVIATIONS
     Data sources
          Sales Data
          Consumer survey data
          Correspondence analysis
     Abbreviations and terms
          Abbreviations

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IN-STORE BAKERY EXPERIENCE - CANADA - NOVEMBER 2018                                                                                           6

DATABOOK CONTENT
Standard demographics vyou can expect to see tracked in our Databooks:

•   Gender
•   Age
•   Gender/age combined
•   Generation
•   Race/Hispanic origin
•   Geographic region
•   Geographic area (urban, suburban, rural)
•   Household income
•   Age/income combined
•   Employment status
•   Education level
•   Presence and number of children in the household
•   Household size
•   Marital status
•   Home ownership status
•   Social media usage
•   Mobile device ownership

Consumer Research
        Q1 Which of the following items have you purchased in the past 3 months? Please select all that apply.
        Q1 Which of the following items have you purchased in the past 3 months? Please select all that apply., by demographics
        Q2 When did you last purchase each of the following items?
        Q2 When did you last purchase each of the following items?, by demographics
        Q3 When did you last purchase each of the following items?
        Q3 When did you last purchase each of the following items?, by demographics
        Q4 Which of the following are important to you when choosing a product from an in-store bakery? Please select all that apply.
        Q4 Which of the following are important to you when choosing a product from an in-store bakery? Please select all that apply., by
        demographics
        Q5 Which of the following baked good options would interest you from in-store bakeries? Please select all that apply.
        Q5 Which of the following baked good options would interest you from in-store bakeries? Please select all that apply., by demographics
        Q6 Where would you typically go to purchase the following items? Please select all that apply.
        Q6 Where would you typically go to purchase the following items? Please select all that apply., by demographics
        Q7 Where would you typically go to purchase the following items? Please select all that apply.
        Q7 Where would you typically go to purchase the following items? Please select all that apply., by demographics
        Q8 Where would you typically go to purchase the following items? - NET
        Q8 Where would you typically go to purchase the following items? - NET, by demographics
        Q9 Where would you typically go to purchase the following items? Please select all that apply.
        Q9 Where would you typically go to purchase the following items? Please select all that apply., by demographics
        Q10 Which of the following statements about bakery items do you agree with? Please select all that apply.
        Q10 Which of the following statements about bakery items do you agree with? Please select all that apply., by demographics

Demographics By Demographics
        Demographics by demographics

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REPORT, US - YEAR MONTH              7

RESEARCH
METHODOLOGY

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CANADA RESEARCH METHODOLOGY                                                                                                                                   8

Canada Research Methodology
Mintel is an independent market analysis
                                                 research has been conducted using a            Female, 18-24                    6.9             139
company that prides itself on supplying
                                                 device agnostic platform for online surveys
objective information on a whole range of                                                       Female, 25-34                    8.8             177
                                                 (ie respondents can now take surveys from
markets and marketing issues.                                                                   Female, 35-44                    9.4             188
                                                 a smartphone in addition to a computer or
There are six main sources of research that      tablet). This methodology change may result    Female, 45-54                    8.7             174
are used in the compilation of Mintel reports:   in data differences from previous years; any
                                                                                                Female, 55-64                    8.6             172
                                                 trending should be done with caution.
• Consumer research                                                                             Female, 65+                      8.5             170
                                                 Sampling
• Social media research                                                                         Total                            100           2,000
                                                 Online Surveys
• Desk research
                                                 Lightspeed
• Trade research                                                                                Region                            %               N
                                                 Founded in 1996, Lightspeed's double           Ontario                          40.2            804
• Statistical forecasting                        opt-in U.S. online consumer panel contains     Quebec                           22.1            443
                                                 approximately 1.27 million U.S. consumers.     British Columbia                 13.3            265
Mintel reports are written and managed by        Lightspeed recruits its panelists through
                                                                                                Alberta                          10.7            214
analysts with experience in the relevant         many different sources including web
                                                                                                Saskatchewan                      3.0            61
markets.                                         advertising, permission-based databases
                                                 and partner-recruited panels. Note:            Manitoba                          4.8            95
Consumer research                                Lightspeed GMI was re-branded as               Atlantic Provinces
                                                 Lightspeed in September 2016.                  (New Brunswick,
                                                                                                Newfoundland/
Exclusive and original quantitative                                                                                               5.9            118
                                                                                                Labrador, Nova
consumer research is commissioned                Mintel sets quotas on age and gender,
                                                                                                Scotia, Prince
for almost all Mintel reports. In addition,      region, and household income. Specific         Edward Island)
qualitative research is also undertaken for      quotas for a sample of 2,000 adults aged
a large proportion of reports in the form of     18+ are shown below.                           Total*                           100            2,000
online discussion groups. Mintel invests a
considerable sum each year in consumer           Please note: these quotas are only             *Mintel does not include rural regions such as the Yukon
research, and the purchaser of a Mintel          representative of a standard General           or the Northwest Territories (including Nunavut) in its
report benefits, as the price of an individual   Population survey sample of 2,000 internet     research. Thus the consumer research data does not
report is less than the cost of the original     users aged 18+. Sample size, targets, and      reflect opinions and behaviours of the population living in
research alone. The research brings an           quotas may vary per report. Please see the     those areas.
up-to-date and unique insight into topical       Report Appendix for further details.
issues of importance.                                                                            Household income                    %             N
                                                 Age groups by                                  Less than $25,000                   14.0          281
Consumer research is conducted among a                                      %             N
                                                 gender                                         $25,000 - $49,999                   20.8          416
nationally representative sample of internet
                                                                                                $50,000 - $69,999                   15.0          300
users in Canada and is carried out by            Male, 18-24               7.9           158
                                                                                                $70,000 - $99,999                   17.8          356
Lightspeed. The results are only available in    Male, 25-34               9.1           181    $100,000 and over                   32.4          647
Mintel reports. Note that Mintel’s exclusive
research is conducted online in both English     Male, 35-44               10.4          207
and French.                                      Male, 45-54               8.1           163    Total                               100          2,000

                                                 Male, 55-64               6.1           123
Starting in July 2017, Mintel’s consumer                                                        Secondary Data Analysis
                                                 Male, 65+                 7.4           148

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In addition to exclusively commissioned        This is a statistical visualisation method for   TURF (Total Unduplicated Reach &
surveys, Mintel gathers syndicated data        picturing the associations between rows          Frequency) analysis identifies the mix
from the most respected consumer               (image, attitudes) and columns (brands,          of features, attributes, or messages that
research firms. This allows Mintel analysts    products, segments, etc.) of a two-way           will attract the largest number of unique
to form objective and cohesive analyses        contingency table. It allows us to display       respondents. It is typically used when the
of consumer attitudes and behaviour.           brand images (and/or consumer attitudes          number of features or attributes must be
Qualitative Research                           towards brands) related to each brand            or should be limited, but the goal is still to
                                               covered in this survey in a joint space that     reach the widest possible audience. By
Revelation by FocusVision                      is easy to understand. The significance of       identifying the Total Unduplicated Reach,
                                               the relationship between a brand and its         it is possible to maximize the number
FocusVision provides Mintel with qualitative   associated image is measured using the           of people who find one or more of their
bulletin board software. This allows the       Chi-square test. If two brands have similar      preferred features or attributes in the
creation of Internet-based, ‘virtual’ venues   response patterns regarding their perceived      product line. The resulting output from
where participants recruited from Mintel’s     images, they are assigned similar scores         TURF is additive, with each additional
online surveys gather and engage in            on underlying dimensions and will then           feature increasing total reach. The chart
interactive, text-based discussions led by     be displayed close to each other in the          is read from left to right, with each arrow
Mintel moderators.                             perceptual map.                                  indicating the incremental change in total
                                                                                                reach when adding a new feature. The final
Further Analysis                               CHAID analysis                                   bar represents the maximum reach of the
                                                                                                total population when all shown features are
Mintel employs numerous quantitative data      CHAID (Chi-squared Automatic Interaction         offered.
analysis techniques to enhance the value       Detection), a type of decision tree analysis,
of our consumer research. The techniques       is used to highlight key target groups in a      Social Media Research
used vary form one report to another. Below    sample by identifying which sub-groups
describes some of the more commonly used       are more likely to show a particular             To complement its exclusive consumer
techniques.                                    characteristic. This analysis subdivides the     research, Mintel tracks and analyses social
                                               sample into a series of subgroups that share     media data for inclusion in selected reports.
Repertoire Analysis                            similar characteristics towards a specific       Using Infegy’s Atlas software, Mintel ‘listens
                                               response variable and allows us to identify      in’ on online conversations across a range
This is used to create consumer groups         which combinations have the highest              of social platforms including Facebook,
based on reported behaviour or attitudes.      response rates for the target variable. It is    Twitter, consumer forums and the wider
Consumer responses of the same value           commonly used to understand and visualise        web.
(or list of values) across a list of survey    the relationship between a variable of
items are tallied into a single variable.      interest such as “interest in trying a new       Atlas provides rich consumer insight via
The repertoire variable summarises the         product” and other characteristics of the        the analysis of commentary posted publicly
number of occurrences in which the value       sample, such as demographic composition.         on the internet. The system performs
or values appear among a list of survey                                                         comprehensive and broad collection of
items. For example, a repertoire of brand      Key Driver Analysis                              data from millions of internet sources,
purchasing might produce groups of those                                                        working to ensure a faithful and extensive
that purchase 1-2 brands, 3-4 brands and 5     Key driver analysis can be a useful tool in      sampling of feedback from the widest
or more brands. Each subgroup should be        helping to prioritise focus between different    range of individuals. The dataset contains
large enough (ie N=75+) to analyse.            factors which may impact key performance         commentary posted in real time, as well as
                                               indicators (eg satisfaction, likelihood to       a substantial archive dating back through
Cluster Analysis                               switch providers, likelihood to recommend        2007.
                                               a brand, etc). Using correlations analysis
This technique assigns a set of individual     or regression analysis we can get an             Trade research
people in to groups called clusters on the     understanding of which factors or attributes
basis of one or more question responses,       of a market have the strongest association       Informal
so that respondents within the same cluster    or “link” with a positive performance on
are in some sense closer or more similar to    key performance indicators (KPIs). Hence,        Trade research is undertaken for all reports.
one another than to respondents that were      we are able to identify which factors or         This involves contacting relevant players
grouped into a different cluster.              attributes are relatively more critical in a     in the trade, not only to gain information
                                               market category compared to others and           concerning their own operations, but also
Correspondence Analysis                        ensures that often limited resources can be      to obtain explanations and views of the
                                               allocated to focusing on the main market         strategic issues pertinent to the market
                                               drivers.                                         being researched. Such is Mintel’s concern
                                                                                                with accuracy that draft copies of reports are
                                               TURF Analysis                                    sent to industry representatives, to get their

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CANADA RESEARCH METHODOLOGY                                                                                                                   10

feedback and avoid any misrepresentation         as Statistics Canada and the Canadian           forecast are collated in Mintel’s own market
of the market. These comments are                Grocer. Other information is also gathered      size database and supplemented by macro-
incorporated into reports prior to final         from store and exhibition visits across         and socio-economic data sourced from
publication.                                     Canada, as well as using other databases        organisations such as Statistics Canada,
                                                 within the Mintel Group, such as the Global     The Bank of Canada, The Conference
Formal                                           New Product Database (GNPD), which              Board of Canada and the Economist
Internally, Mintel’s analysts undertake          monitors FMCG sales promotions.                 Intelligence Unit.
extensive trade interviews with selected
key experts in the field for the majority of     All analysts have access to Mintel’s Market     Within the forecasting process, the model
reports. The purpose of these interviews         Size and Macroeconomic Databases –              searches for, and analyses relationships
is to assess key issues in the market            a database containing many areas of             between, actual market sizes and a
place in order to ensure that any research       consumer spending and retail sales as well      selection of key economic and demographic
undertaken takes these into account.             as macroeconomic and demographic factors        factors (independent variables) in order to
                                                 which impinge on consumer spending              identify those predictors having the most
In addition, using experienced external          patterns..                                      influence on the market.
researchers, trade research is undertaken
for some reports. This takes the form of         The database is used in conjunction with        Factors used in a forecast are stated in
full trade interview questionnaires and          an SPSS forecasting program which uses          the relevant report section alongside an
direct quotes are included in the report and     weighted historical correlations of market      interpretation of their role in explaining the
analysed by experts in the field. This gives a   dynamics, with independent variables, to        development in demand for the product or
valuable insight into a range of trade views     produce future spending scenarios.              market in question.
of topical issues.
                                                 Statistical Forecasting                         Qualitative insight
Desk research
                                                 Statistical modelling                           At Mintel we understand that historic data is
Mintel has an internal team of market                                                            limited in its capacity to act as the only force
analysts who monitor: government statistics,     For the majority of reports, Mintel produces    behind the future state of markets. Thus,
consumer and trade association statistics,       five-year forecasts based on an advanced        rich qualitative insights from industry experts
manufacturer sponsored reports, annual           statistical technique known as ‘multivariate    regarding past and future events that may
company reports and accounts, directories,       time series auto-regression’ using the          impact the market play a crucial role in our
press articles from around the world and         statistical software package SPSS.              post statistical modeling evaluation process.
online databases. The latter are extracted
from hundreds of publications and websites,      Historical market size data feeding into each
both Canada and overseas. All information
is cross-referenced for immediate access.

Data from other published sources are the
latest available at the time of writing the
report.

This information is supplemented by
an extensive library of Mintel’s reports
produced since 1972 globally and added
to each year by the 500+ reports which are
produced annually.

In addition to in-house sources, researchers
also occasionally use outside libraries such

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CANADA RESEARCH METHODOLOGY                                                                                                                    11

As a result, the Mintel forecast allows for      fall within these outer limits, which we call     Weather analogy
additional factors or market conditions          the best and worst case forecasts. These,
outside of the capacity of the data analysis     based on the statistically driven forecast,       To illustrate uncertainty in forecasting in
to impact the market forecast model, using       are the highest (best case) and lowest            an everyday example, let us assume the
a rigorous statistical process complemented      (worst case) market sizes the market is           following weather forecast was produced
by in-depth market knowledge and                 expected to achieve.                              based on the meteorologists’ current
expertise.                                                                                         knowledge of the previous weather condition
                                                 Over the next five years, the widening            during the last few days, atmospheric
The Mintel fan chart                             bands successively show the developments          observations, incoming weather fronts etc.
                                                 that occur within 95%, 90%, 70% and 50%
Forecasts of future economic outcomes            probability intervals. Statistical processes      Now, how accurate is this forecast and how
are always subject to uncertainty. In order      predict the central forecast to fall within the   certain can we be that the temperature on
to raise awareness amongst our clients           darker shaded area which illustrates 50%          Saturday will indeed be 15°C?
and to illustrate this uncertainty, Mintel has   probability, i.e. a 5 in 10 chance.
introduced a new way of displaying market                                                          To state that the temperature in central
size forecasts in the form of a fan-chart.       A general conclusion: Based on our current        London on Saturday will rise to exactly 15°C
                                                 knowledge of given historic market size data      is possible but one can’t be 100% certain
Next to historical market sizes and a current    as well as projections for key macro- and         about that fact.
year estimate, the fan chart illustrates the     socio-economic measures that were used to
probability of various outcomes for the          create the forecast, we can assume that in        To say the temperature on Saturday will
market value/volume over the next five           95% of the time the actual market size will       be between 13°C and 17°C is a broader
years.                                           fall within the purple shaded fan. In 5% of all   statement and much more probable.
                                                 cases this model might not be correct due
At a 95% confidence interval, we are saying      to random errors and the actual market size       In general, we can say that based on the
that 95 out of 100 times the forecast will       will fall out of these boundaries.                existing statistical model, one can be 95%
                                                                                                   certain that the temperature on Saturday
                                                                                                   will be between 13°C and 17°C, and
                                                                                                   respectively 50% certain it will be between
                                                                                                   about 14.5°C and 15.5°C. Again, only in
                                                                                                   5% of all cases this model might not be
                                                                                                   correct due to random errors and the actual
                                                                                                   temperature on Saturday will fall out of
                                                                                                   these boundaries and thus will be below
                                                                                                   13°C or above 17°C.

                                                                                                   (To learn more about uncertainty in weather
                                                                                                   forecasts visit: http://research.metoffice.gov.
                                                                                                   uk/research/nwp/ensemble/uncertainty.html)

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