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Breakfast Foods - China - August 2013

“The breakfast market is already undergoing transformation, with the focus shifting away from merely taste-driven offerings and business opportunities lie in meeting the demand for healthy, convenient and safe breakfasts. More nutritionally balanced breakfasts which are also convenient in terms of purchasing, preparation and consumption, and the introduction of organic ingredients, provide key means to differentiate products and help businesses to win consumers’ loyalty.”

– Jade Liu – Senior Research Analyst

In this report, we answer the key questions:

  • What is the current state of the breakfast food market in China and what are the trends behind, drivers of and barriers to growth?
  • What are consumers’ behaviour and attitudes towards breakfast food and its distribution channels?
  • How can breakfast providers unlock consumers’ hidden breakfast needs?
  • How can providers drive further sales through the delivery of convenient breakfasts?
  • What are the challenges and opportunities in the organic breakfast food market?

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Table of contents

  1. Introduction

      • Definition
        • Type
          • Channel
            • Report structure
              • Methodology
                • Abbreviations
                • Executive Summary

                    • The market
                      • The breakfast market expands rapidly thanks to strong demand
                        • Figure 1: China urban breakfast market size, 2012
                      • Market outlook
                        • Developments in the breakfast market
                          • Market drivers and barriers
                            • Market segmentation
                              • Companies and brands
                                • Trends and latest developments
                                  • The consumer
                                    • Frequency of having breakfast by location
                                      • Figure 2: Frequency of having breakfast, by channel, June 2013
                                    • Spending on breakfast foods
                                      • Figure 3: Spending on breakfast foods, by channel, June 2013
                                    • Types of breakfast foods eaten
                                      • Figure 4: Types of breakfast foods eaten most often, June 2013
                                    • Attitudes towards Chinese and western breakfast foods
                                      • Figure 5: Attitudes towards Chinese and western breakfast foods, June 2013
                                    • Attitudes towards breakfast foods for children
                                      • Figure 6: Attitudes towards breakfast foods for children, June 2013
                                    • General attitudes towards breakfast foods
                                      • Figure 7: General attitudes towards breakfast foods, June 2013
                                    • Key trends
                                      • Key issue: Unlocking consumers’ hidden breakfast needs
                                        • Key issue: The market has not kept pace with consumers’ growing demand for convenience
                                          • Key issue: Challenges and opportunities for organic breakfast
                                            • What we think
                                            • The Market

                                              • Key points
                                                • Market overview
                                                  • Breakfast market rapidly expands via strong demand
                                                      • Figure 8: China urban value sales of breakfast foods, December 2012
                                                    • Market outlook
                                                      • Channel implications
                                                        • Fast food chains and convenience stores
                                                          • Food stalls
                                                            • Hypermarkets and supermarkets
                                                              • Bakery houses
                                                                • Coffee shops
                                                                  • Casual restaurants
                                                                    • Developments in the breakfast market
                                                                      • Breakfast market evolves in style and variety
                                                                        • Figure 9: Traditional breakfast dishes in Beijing, August 2013
                                                                        • Figure 10: Traditional breakfast dishes in Tianjing, 2013
                                                                        • Figure 11: Traditional breakfast dishes in Shanghai, August 2013
                                                                        • Figure 12: Traditional breakfast dishes in Guangzhou, August 2013
                                                                      • Customised solutions are needed to entrench the breakfast culture
                                                                        • Market drivers
                                                                          • Rising disposable income drives discretionary spending on out-of-home breakfast
                                                                            • Demand for convenience creates opportunities for time-saving breakfast solutions
                                                                              • Figure 13: New product launches in the China breakfast cereals and bread and baked goods market, by top 10 claims, 2010-13*
                                                                            • Central kitchen and mass production serve more people
                                                                              • Market barriers
                                                                                • Food safety concerns and law enforcement
                                                                                  • Low profitability of breakfast business
                                                                                    • Accessibility of breakfast out-of-home
                                                                                      • Market segmentation
                                                                                        • Definition
                                                                                          • Figure 14: Spending on breakfast, by channel, July 2003
                                                                                        • High-end segment
                                                                                          • Middle-market segment
                                                                                            • Low-end segment
                                                                                            • Companies and Brands

                                                                                              • Key points
                                                                                                • Trends and latest developments
                                                                                                  • Breakfast meal deals attract footfall to stores
                                                                                                    • Foreign cuisines gaining increasing acceptance
                                                                                                      • Government launches breakfast programme
                                                                                                        • Companies
                                                                                                          • Modern trade – hypermarkets, supermarkets and convenience stores
                                                                                                            • Family Mart
                                                                                                                • Figure 15: Family Mart’s breakfast foods packages, August 2013
                                                                                                              • Western fast food chain
                                                                                                                • McDonald’s
                                                                                                                    • Figure 16: McDonald’s “International Breakfast Day” campaign, March 2013
                                                                                                                  • KFC
                                                                                                                      • Figure 17: KFC’s Breakfast set meals, August 2013
                                                                                                                    • Chinese fast food chain
                                                                                                                      • Yonghe King
                                                                                                                        • Coffee shop
                                                                                                                          • Starbucks
                                                                                                                              • Figure 18: Starbucks breakfast, October 2012
                                                                                                                            • Casual restaurant
                                                                                                                              • Pizza Hut
                                                                                                                                  • Figure 19: Pizza Hut breakfast set meals and free beverage refill, June 2012
                                                                                                                                • Bakery house
                                                                                                                                  • 85°C
                                                                                                                                    • Food stall
                                                                                                                                      • Babi Food
                                                                                                                                      • The Consumer – Frequency of Having Breakfast from Different Locations

                                                                                                                                        • Key points
                                                                                                                                          • Breakfast consumption frequency varies by channel
                                                                                                                                              • Figure 20: Frequency of having breakfast, by channel, June 2013
                                                                                                                                            • Economic freedom influences channel selection
                                                                                                                                                • Figure 21: Frequency of having breakfast prepared at home, by selected demographics, June 2013
                                                                                                                                                • Figure 22: Frequency of having breakfast from a fast food chain, by demographics, June 2013
                                                                                                                                              • Education, income level and city tier distinguish consumers using food stalls and convenience stores
                                                                                                                                                • Figure 23: Frequency of having breakfast from a convenience store, by demographics, June 2013
                                                                                                                                                • Figure 24: Frequency of having breakfast from a food stall, by demographics, June 2013
                                                                                                                                              • Other retail channels are dominated by high earners
                                                                                                                                                • Figure 25: Frequency of having breakfast from other retail channels, by demographics, June 2013
                                                                                                                                            • The Consumer – Spending on Breakfast Foods

                                                                                                                                              • Key points
                                                                                                                                                • Definition
                                                                                                                                                  • Western breakfast loyalists are willing to spend more on home breakfast
                                                                                                                                                    • Figure 26: Spending on breakfast foods, by type of breakfast eaten most often, June 2013
                                                                                                                                                  • Flexible prices in food stalls attract both low and middle spenders
                                                                                                                                                    • Fierce competition among channels targeting middle spenders
                                                                                                                                                      • Figure 27: Spending on breakfast foods, by channel, June 2013
                                                                                                                                                  • The Consumer – Types of Breakfast Foods Eaten Most Often

                                                                                                                                                    • Key points
                                                                                                                                                      • Chinese breakfast remains most popular
                                                                                                                                                        • Figure 28: Types of breakfast foods eaten, June 2013
                                                                                                                                                      • Chinese and Western breakfast loyalists show distinct demographic profiles
                                                                                                                                                          • Figure 29: Types of breakfast foods eaten most often, by demographics, June 2013
                                                                                                                                                      • The Consumer – Attitudes Towards Chinese and Western Breakfast Foods

                                                                                                                                                        • Key points
                                                                                                                                                          • Organic ingredients have bright prospect
                                                                                                                                                            • Expanding product types and distribution networks are top priorities
                                                                                                                                                              • Figure 30: Attitudes towards Chinese and western breakfast foods, June 2013
                                                                                                                                                          • The Consumer – Attitudes Towards Breakfast Foods for Children

                                                                                                                                                            • Key points
                                                                                                                                                              • Growing interest in organic and green breakfasts for children
                                                                                                                                                                • Children’s meals are in strong demand
                                                                                                                                                                  • Food safety and nutrition are important to parents
                                                                                                                                                                    • Figure 31: Attitudes towards breakfast foods for children, June 2013
                                                                                                                                                                • The Consumer – General Attitudes Towards Breakfast Foods

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Convenient and quick-to-prepare breakfasts fit with tempo of modern life
                                                                                                                                                                      • Figure 32: Attitudes towards convenience aspects of breakfast foods, June 2013
                                                                                                                                                                    • Health-conscious consumers call for fresh, natural and low calorie breakfast
                                                                                                                                                                      • Figure 33: Attitudes towards healthy aspects of breakfast foods, June 2013
                                                                                                                                                                    • A need to address food safety and quality perceptions in low-end segments
                                                                                                                                                                      • Figure 34: Attitudes towards quality aspects of breakfast foods, June 2013
                                                                                                                                                                  • Key Issue – Unlocking Consumers’ Hidden Breakfast Needs

                                                                                                                                                                    • Key points
                                                                                                                                                                      • “Sub-health” is a real concern for the working population
                                                                                                                                                                        • Figure 35: Health issues among Chinese consumers, November 2012
                                                                                                                                                                      • Most consumers worry about the nutrition of out-of-home breakfasts
                                                                                                                                                                        • Figure 36: Agreement with the statement “The nutrition provided by out-of-home breakfast foods tend to be less balanced”, June 2013
                                                                                                                                                                      • A re-interpretation of traditional Chinese nutritional beliefs
                                                                                                                                                                          • Figure 37: Attitudes towards eating in the past 12 months, November 2012
                                                                                                                                                                        • Food therapy has a role to play in combatting sub-health
                                                                                                                                                                          • Adapting breakfast foods to suit modern health concerns: Chinese breakfasts
                                                                                                                                                                            • Traditional breakfast options offer questionable health benefits…
                                                                                                                                                                              • … but some outlets are adapting traditional options
                                                                                                                                                                                  • Figure 38: Yonghe King breakfast set meal options, August 2013
                                                                                                                                                                                • Adapting breakfast foods to suit modern health concerns: Western breakfasts
                                                                                                                                                                                  • Western breakfasts are not necessarily a healthier option…
                                                                                                                                                                                    • …but some operators are trying to improve their nutritional information
                                                                                                                                                                                      • Figure 39: McDonald’s nutrition calculator, August 2013
                                                                                                                                                                                    • Food safety still the major concern, but nutrition is growing in importance
                                                                                                                                                                                      • Food pyramid paves the way for nutritionally balanced breakfasts
                                                                                                                                                                                          • Figure 40: Pizza Hut’s breakfast set, August 2013
                                                                                                                                                                                        • Opportunities in the current breakfast business
                                                                                                                                                                                          • Convenience stores
                                                                                                                                                                                            • Figure 41: Family Mart shelf with fruit and vegetable products, August 2013
                                                                                                                                                                                            • Figure 42: Attitudes towards breakfast foods sold in convenience stores, June 2013
                                                                                                                                                                                          • Fast food chains
                                                                                                                                                                                            • Hypermarket, supermarket and food stalls
                                                                                                                                                                                              • Bakery houses and coffee shops
                                                                                                                                                                                                • What does it mean?
                                                                                                                                                                                                • Key Issue – The Market has not Kept Pace with Consumers’ Growing Demand for Convenience

                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                    • The crux of weekday breakfast choice lies in convenience
                                                                                                                                                                                                      • Current distribution networks are highly fragmented
                                                                                                                                                                                                        • Commuting creates opportunities for on-the-go breakfasts
                                                                                                                                                                                                            • Figure 43: Beijing and Shanghai weekly subway passenger numbers, August 2013
                                                                                                                                                                                                          • On-the-go occasion demands thoughtful packaging design
                                                                                                                                                                                                              • Figure 44: Consumer attitudes to the availability of on-the-go hot breakfasts, June 2013
                                                                                                                                                                                                            • Convenience of opening
                                                                                                                                                                                                                • Figure 45: Convenience store sushi rolls, August 2013
                                                                                                                                                                                                              • Convenience of carrying
                                                                                                                                                                                                                • Figure 46: Attitude towards the healthiness of cold breakfasts, June 2013
                                                                                                                                                                                                                • Figure 47: Seven-Eleven’s hot soymilk, August 2013
                                                                                                                                                                                                              • Convenience of consumption
                                                                                                                                                                                                                  • Figure 48: Bakery house sandwich, August 2013
                                                                                                                                                                                                                • Innovation in convenient usage in the international market
                                                                                                                                                                                                                  • Figure 49: Examples of convenient packaging breakfast for eat-on-the-go in international markets, 2013
                                                                                                                                                                                                                • Home breakfast choice driven by preparation time
                                                                                                                                                                                                                  • Figure 50: Attitude towards breakfast preparation times, June 2013
                                                                                                                                                                                                                  • Figure 51: CJ Bibigo Xian Cai Zhu Rou Shui Jiao (Vegetable and Pork Dumplings), 2013
                                                                                                                                                                                                                  • Figure 52: Top 5 claims on new breakfast cereals products launched in China, share of all launches in the segment, 2010-13
                                                                                                                                                                                                                  • Figure 53: Quaker Zi Yang Yan Mai Zhou (Healthy Oat Porridge), 2013
                                                                                                                                                                                                                • What does it mean?
                                                                                                                                                                                                                • Key Issue – Challenges and Opportunities in Organic Breakfast

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • Food safety and health awareness increase demand for organic food in the breakfast market
                                                                                                                                                                                                                      • Figure 54: Attitudes towards organic breakfast foods, June 2013
                                                                                                                                                                                                                    • Half of parents want more organic breakfast options for their children
                                                                                                                                                                                                                      • Figure 55: Attitudes towards breakfast foods for children, June 2013
                                                                                                                                                                                                                    • High costs limit the supply of organic food
                                                                                                                                                                                                                      • Organic still has a relatively narrow appeal
                                                                                                                                                                                                                        • Organic breakfast foods are an untapped opportunity
                                                                                                                                                                                                                          • Retail sector
                                                                                                                                                                                                                            • Figure 56: Organic instant and quick-to-prepare breakfast foods in China, 2013
                                                                                                                                                                                                                            • Figure 57: Organic fruit, vegetable and bakery products in the international markets, 2013
                                                                                                                                                                                                                          • Bakery and coffee shop sector
                                                                                                                                                                                                                            • Low profit margins in breakfasts can put suppliers off organic
                                                                                                                                                                                                                              • Companies can benefit from consumers’ willingness to invest in their health
                                                                                                                                                                                                                                • What does it mean?
                                                                                                                                                                                                                                • Appendix – Frequency of Having Breakfast from Different Locations

                                                                                                                                                                                                                                    • Figure 58: Frequency of having breakfast, by channel, June 2013
                                                                                                                                                                                                                                    • Figure 59: Frequency of having breakfast prepared at home, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 60: Frequency of having breakfast prepared at home, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 61: Frequency of having breakfast from a fast food chain, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 62: Frequency of having breakfast from a fast food chain, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 63: Frequency of having breakfast from a food stall, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 64: Frequency of having breakfast from a food stall, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 65: Frequency of having breakfast from a convenience store, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 66: Frequency of having breakfast from a convenience store, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 67: Frequency of having breakfast from other out-of-home outlet, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 68: Frequency of having breakfast from other out-of-home outlet, by demographics, June 2013
                                                                                                                                                                                                                                • Appendix – Spending on Breakfast Foods

                                                                                                                                                                                                                                    • Figure 69: Spending on breakfast foods, by spending level, by channel, June 2013
                                                                                                                                                                                                                                    • Figure 70: Spending on breakfast foods, by channel, June 2013
                                                                                                                                                                                                                                    • Figure 71: Spending on breakfast foods, by channel, June 2013
                                                                                                                                                                                                                                    • Figure 72: Spending on breakfast foods, by most popular types of breakfast eaten in the last 3 months, June 2013
                                                                                                                                                                                                                                    • Figure 73: Spending on breakfast foods, by next most popular types of breakfast eaten in the last 3 months, June 2013
                                                                                                                                                                                                                                    • Figure 74: Spending on breakfast foods, by other types of breakfast eaten in the last 3 months, June 2013
                                                                                                                                                                                                                                    • Figure 75: Spending on breakfast foods, by most popular types of breakfast most often eaten, June 2013
                                                                                                                                                                                                                                    • Figure 76: Spending on breakfast foods, by next most popular types of breakfast most often eaten, June 2013
                                                                                                                                                                                                                                    • Figure 77: Spending on breakfast foods, by other types of breakfast most often eaten, June 2013
                                                                                                                                                                                                                                • Appendix – Types of Breakfast Foods

                                                                                                                                                                                                                                    • Figure 78: Types of breakfast foods eaten, June 2013
                                                                                                                                                                                                                                    • Figure 79: Types of breakfast foods eaten in the last three months, any Chinese and any Western, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 80: Types of Chinese breakfast foods eaten in the last three months, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 81: Types of western breakfast foods eaten in the last three months, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 82: Types of other breakfast foods eaten in the last three months, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 83: Types of breakfast foods eaten most often in the last three months, Chinese, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 84: Types of breakfast foods eaten most often in the last three months, western, by demographics, June 2013
                                                                                                                                                                                                                                  • Repertoire analysis
                                                                                                                                                                                                                                    • Figure 85: Repertoire of types of breakfast foods eaten, June 2013
                                                                                                                                                                                                                                    • Figure 86: Repertoire of types of breakfast foods eaten, by demographics, June 2013
                                                                                                                                                                                                                                • Appendix – Attitudes towards Chinese and Western Breakfast Foods

                                                                                                                                                                                                                                    • Figure 87: Attitudes towards Chinese and western breakfast foods, June 2013
                                                                                                                                                                                                                                    • Figure 88: Most popular attitudes towards Chinese and western breakfast foods, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 89: Next most popular attitudes towards Chinese and western breakfast foods, by demographics, June 2013
                                                                                                                                                                                                                                • Appendix – Attitudes towards Breakfast Foods for Children

                                                                                                                                                                                                                                    • Figure 90: Attitudes towards breakfast foods for children, June 2013
                                                                                                                                                                                                                                    • Figure 91: Most popular attitudes towards breakfast foods for children, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 92: Next most popular attitudes towards breakfast foods for children, by demographics, June 2013
                                                                                                                                                                                                                                • Appendix – General Attitudes towards Breakfast Foods

                                                                                                                                                                                                                                    • Figure 93: General attitudes towards breakfast foods, June 2013
                                                                                                                                                                                                                                    • Figure 94: Agreement with the statement ‘I would like to see my breakfast cooked from scratch’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 95: Agreement with the statement ‘I would like to see more organic or green breakfast options available’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 96: Agreement with the statement ‘I worry about the safety of breakfast foods (eg containing excessive amount of additives) served out –of-home’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 97: Agreement with the statement ‘It’s bad for your health to have a cold breakfast’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 98: Agreement with the statement ‘I tend to choose breakfast low in fat’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 99: Agreement with the statement ‘I worry about the quality of breakfast foods served out-of-home’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 100: Agreement with the statement ‘I tend to choose breakfast foods that are quick to prepare’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 101: Agreement with the statement ‘I am worried about the high calorie content in some breakfast foods (eg fried bread sticks)’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 102: Agreement with the statement ‘I would like to see more hot breakfast options available to eat on the go’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 103: Agreement with the statement ‘The nutrition provided by out-of-home breakfast foods tend to be less balanced’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 104: Agreement with the statement ‘I would like to see more convenience stores selling fresh fruits or vegetables as breakfast’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 105: Agreement with the statement ‘I prefer having breakfast at home since it is cheaper’, by demographics, June 2013
                                                                                                                                                                                                                                    • Figure 106: General attitudes towards breakfast foods, by frequency of having breakfast prepared at home, June 2013
                                                                                                                                                                                                                                    • Figure 107: General attitudes towards breakfast foods, by frequency of having breakfast from a fast food chain, June 2013
                                                                                                                                                                                                                                    • Figure 108: General attitudes towards breakfast foods, by frequency of having breakfast from a food stall, June 2013
                                                                                                                                                                                                                                    • Figure 109: General attitudes towards breakfast foods, by frequency of having breakfast from a convenience store, June 2013
                                                                                                                                                                                                                                    • Figure 110: General attitudes towards breakfast foods, by frequency of having breakfast from other out-of-home outlet, June 2013

                                                                                                                                                                                                                                Companies Covered

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                                                                                                                                                                                                                                Breakfast Foods - China - August 2013

                                                                                                                                                                                                                                £3,170.69 (Excl.Tax)