Bakery Products - China - December 2012
“With fast growth in the Chinese economy and rising incomes, more and more urban consumers are including more flavourful, healthy and convenient foods in their diets. Bakery products, especially Western bakery products, have become popular as breakfast foods and snacks. This has driven rapid growth in the bakery products industry and market in China. In the last five years, many bakery stores and plant bakeries have continually expanded their area of operation and production capacity.”
– Gao Haiping – Research Analysis Manager
In this report, we answer the key questions:
- What is the current state of the baked goods industry in China and what are the growth trends, drivers and barriers?
- How do consumers behave and what are their attitudes towards baked goods?
- What main factors can operators leverage to stand out in the bakery products market and what are the main growth opportunities?
With fast growth in the Chinese economy and rising incomes, more and more urban consumers are including more flavourful, healthy and convenient foods in their diets. Bakery products, especially Western bakery products, have become popular as breakfast foods and snacks. This has driven rapid growth in the bakery products industry and market in China. In the last five years, many bakery stores and plant bakeries have continually expanded their area of operation and production capacity. In addition, a number of non-bakery companies have been venturing into the baked goods arena. From 2007-2012, the baked goods market in China grew at a CAGR of 33.5%. Market value sales soared from RMB 30 billion in 2007 to RMB 127.7 billion in 2012.
The price of sugar, peanut oil, flour, labour and property rents have risen across the board. Under pressure from high costs, coastal-based bakery stores have been moving into tier two and three cities in western and central regions in order to increase their economies of scale and continue to grow sales and profits. At the same time, bakery stores already in central and western China have been racing to establish a presence across more territories in order to protect their business.
Baked goods are consumed mainly for breakfast, as snacks or as celebratory foods. When it comes to bakery products, safety, flavour and freshness are top of mind for consumers. Many are also happy to try new bakery products. Therefore, for baked goods brands and manufacturers, quality and safety are prerequisites, and product innovation is of vital importance for growth.
In order to counter competition in the market and seasonal fluctuations, there has been an emerging trend amongst brands and manufacturers of increasing beverage sales and providing in-store consumption areas.
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