According to a 28 October, 2024 report by global strategic insights practice Canvas8, Amid rising living costs, Australians are turning to their local bakeries for a taste of indulgence and comfort. The report, Why a luxury mindset shift is driving sales of baked goods, was authored by Sarah Wei and features expert comment from Felix Goodwin and Elena Nguyen, the co-founders of Kudo bakery in Melbourne, and Tom Mitchell, Executive Chef at Gelato Messina and co-founder of Shadow Baking.
Whether it’s a morning croissant, a nostalgic lamington, or a seasonal specialty, Canvas8’s report finds that bakeries are blossoming in the Australian food landscape, with consumer spending on baked goods rising by 8% in early 2024 compared to the previous year. Small, independent bakeries are thriving by offering creative, high-quality products and forming meaningful connections with their communities. This new wave of artisanal baked goods is reshaping Australia’s food culture and forging lasting loyalty among customers.
Experts across the industry are crediting several key factors for this boom in bakery sales, including the rise of “affordable luxury,” the power of social media platforms like Instagram and TikTok, and the integration of bakeries into the lifestyle habits of fitness-focused Australians.
Despite financial pressure on household budgets, Australians are refusing to give up their beloved pastries. “We believe people are willing to spend on baked treats because they appreciate the value of something that brings joy and comfort,” says Felix Goodwin, co-founder of Melbourne’s Kudo Bakery. “That feeling of forging a relationship with your local bakery, of coming each week for a friendly chat and recognition, is key.”
Bakeries are offering more than just bread and pastries—they are places of comfort, social gathering, and indulgence. “Not everyone has the time or means to go out for dinner, but you can still feel like you’re treating yourself when you visit a bakery,” says Tom Mitchell, founder of Shadow Bakery in Sydney. The trend is reinforced by the rise of new social activities, such as run clubs that incorporate bakery stops into their routines, helping turn bakeries into community hubs. “A newish trend we’ve seen is people heading to our bakery for a post-workout treat,” adds Mitchell. “With the cost-of-living crisis, people still seem willing to treat themselves to little luxuries.”
Australia’s bakery scene is no longer just about the classics—it’s about creating a memorable experience that blends quality ingredients, creativity, and social media-savvy marketing. Small bakeries have become local sensations through collaborations, limited-time promotions, and high-quality product offerings that are impossible to resist. “Most of our customers hear about Kudo through social media and word of mouth,” explains Goodwin. “The personal connection and story behind our products influence their decisions, as they know they’re getting something special, not mass-produced.”
Social media, particularly TikTok and Instagram, is playing a pivotal role in this transformation. Studies show that 87% of customers discover new restaurants through social media, with TikTok being a key driver of traffic to local businesses. “We’re seeing the younger generation coming in who have heard of us through social media,” says Mitchell. “Interestingly, they’ve already decided what they want before they even step into the store. If that particular product isn’t available or is sold out, most times they don’t buy anything else.”
The push for quality and innovation in Australia’s bakeries goes beyond aesthetics—it’s about offering something different, personal, and authentically local. “We focus on nostalgic offerings like lamingtons, fairy bread, and custard tarts, but always use in-season ingredients,” says Mitchell, noting the importance of blending old-school comfort with modern flair. “Summer brings in stone fruits, while winter is all about comfort foods like chocolate, caramel, and poached pears.”
In Melbourne, Kudo Bakery’s offerings reflect a blend of personal storytelling and global influences. “Our bánh gan-inspired (crème caramel) canelé or pandan-flavoured pastries aren’t about following trends—they reflect personal stories and experiences,” says Goodwin. This fusion of food and culture is especially pronounced in multicultural cities like Melbourne, where customers expect more diverse and global-inspired flavours. “Australians are well-travelled, and their expectations for baked goods are higher than ever,” adds Mitchell. “We’re seeing a lot of Korean and Southeast Asian flavours blending with traditional Aussie pastries.”
As bakeries reinvent themselves, they’ve become more than places to buy bread—they’re becoming integral parts of local communities. “Melburnians—and even visitors from interstate and beyond—are seeking out the best bakeries, ones that specialize in products they can’t find where they live,” say Goodwin and Nguyen. Local bakeries like LouLou Boulangerie & Traiteur in Sydney have capitalized on this by organizing run club meet-ups, offering both a fitness outlet and a chance to indulge in high-quality pastries post-workout. This fusion of fitness and food culture is helping bakeries grow their following and solidify their place in the community.
As the market for high-quality, handcrafted baked goods continues to expand, more bakeries are focusing on offering seasonal, locally-sourced products, capitalizing on the trend toward authenticity and community engagement. “Every ingredient and supplier has a story,” says Goodwin and Nguyen. “People come to us because they want a genuine connection with the food they buy and the people who make it.”
For bakeries looking to capitalize on the rising demand for quality and indulgence, there are several strategies to consider. Limited-time promotions or seasonal menu items can keep offerings fresh and exciting. “We keep away from the trends and instead focus on bringing an original take to what we do,” say Goodwin and Nguyen. “For us, surprising our customers isn’t about following a formula, it’s about offering something we’re genuinely excited about and sharing that passion with them.”
Additionally, bakeries can continue to tap into the desire for little luxuries during tough times, as consumers still seek high-quality treats that provide comfort without breaking the bank. “A great custard tart or twice-baked croissant may be someone’s only treat in a busy week filled with stress,” says Mitchell. “Often these are shared between family, friends, or partners, turning visiting us into a semi-special experience.”
In a market where social media has become a powerful tool for visibility, bakeries can also benefit from engaging with customers online, offering unique insights into their products and the stories behind them. “When customers contact us, they’re talking directly to one of the owners, which helps build real relationships,” says Mitchell. “This connection isn’t common with larger brands that outsource their social media or rely on customer service teams.”
Nick Morris, UK-based founder and Managing Director of Canvas8, said, “From high-quality artisanal breads to nostalgic Aussie treats with a modern twist, local bakeries are rising to meet the demands of an increasingly discerning public. By offering affordable luxury, integrating into local community life, and leveraging the power of social media, Australia’s bakeries are not only surviving—they are thriving. The future of the Australian bakery scene looks as bright as the crust of a perfectly baked sourdough.”
Why a luxury mindset shift is driving sales of baked goods may be downloaded here for a limited 2-week period: https://www.canvas8.com/library/reports/2024/10/28/for-aussies-baked-goods-are-reliable-inexpensive-luxuries
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