China Bakery Houses (Responding to COVID-19) Market Report 2020
“In the period prior to COVID-19, the focus of many bakery house operators was to encourage trade up by premiumising their ranges, largely through flavour innovation. A key trend was…

China Bakery Houses (Responding to COVID-19) Market Report 2020

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Report Summary

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Providing the most comprehensive and up-to-date information and analysis of the Bakery Houses (Responding to COVID-19) – China market, and the behaviours, preferences and habits of the consumer.

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Covered in this report

The bakery house market has been growing at double digits in the past five years. As with most foodservice sectors, the bakery house category was significantly impacted by the COVID-19 lockdown. As a result, sales shrunk greatly in the first quarter of the year. However, the market is projected to rebound steadily in the next five years, with an annual growth rate of between 7% and 8%.

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Expert analysis from a specialist in the field

Written by Wen Yu, a leading analyst in the Foodservice sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

In the period prior to COVID-19, the focus of many bakery house operators was to encourage trade up by premiumising their ranges, largely through flavour innovation. A key trend was in blurring sweet and savoury ingredients, with a focus on adding a range of herbs. However, as with all foodservice sectors, the unexpected outbreak of COVID-19 shut down the category and has disrupted development plans. As the market is now slowly starting to recover, operators who are looking to get ahead of their competition are likely to target more staple offerings initially. Wen Yu
Foodservice Analyst

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Report Scope
        • Executive Summary

            • The market
              • Post-COVID 19: a burgeoning market with opportunities and challenges
                • Figure 1: Forecast of bakery house industry, by value sales, (adjusted for COVID-19), China 2014-24
              • A dynamic market with various kinds of players
                • Impact of COVID-19 on the bakery industry
                  • COVID-19 halts the fast growth, but sparks new opportunities
                    • Figure 2: Short, medium and long term impact of COVID-19 on Bakery Industry, May 2020
                  • Companies and brands
                    • Fragmented market led by big names
                      • Figure 3: Volume share & value share of well-known brands, China, 2019
                    • Smaller innovation-driven players flood the market
                      • Figure 4: Taro floss loaf from Fascino Bakery
                      • Figure 5: Cronuts from Woody Baker
                    • The consumer
                      • Bakery chains & hypermarkets dominate the channels
                        • Figure 6: Purchasing channels, February 2020
                      • Conventional purchasing channels appeal to all
                        • Figure 7: Perception towards purchasing channels, February 202
                      • Mainstream products are fluffy and soft
                        • Figure 8: Product penetration, February 2020
                      • Brands have various opportunities in developing new offerings
                        • Figure 9: Interested innovation, February 2020
                      • Leisure time eating overtakes all other consumption occasions
                        • Figure 10: Consumption occasion, February 2020
                      • Future premium space exists for considering consumers’ well-being
                        • Figure 11: Future potential, February 2020
                      • What we think
                      • The Impact of COVID-19 on Bakery Industry

                          • Figure 12: Short, medium and long term impact of COVID-19 on Bakery Industry, May 2020
                        • Opportunities and Threats
                          • Time to shore up online capacities and build private user pools
                            • Ready-to-bake offerings to become another revenue channel
                              • Raw material shortage results in rising ingredient costs
                                • What we’ve seen so far
                                  • Impact on the market
                                    • Double-digit growth market freezes in Q1 2020
                                      • Figure 13: Forecast of bakery house industry, by value sales, (adjusted for COVID-19), China, 2014-24
                                      • Figure 14: Forecast of total value sales of bakery house industry, China, 2014-24
                                    • Shifts in consumer behaviour
                                      • Consumers increase purchase from hypermarkets/supermarkets
                                        • Self-hygiene behaviours hint at a change in bakery food tasters and packaging
                                          • Health and stress alleviation become the main focus
                                            • How COVID-19 outbreak will reshape the industry
                                              • Independent bakery houses may find it harder to survive
                                                • Bakery houses forced to better utilise new means to reach consumers
                                                  • Push product innovation and in-store service
                                                    • Impact on the marketing mix
                                                      • Consumers dying to see more value for money options
                                                        • Figure 15: Impact from COVID-19 on selected factors in China, 27 May – 3 June
                                                      • Compete and cooperate with new selling channels
                                                          • Figure 16: BreadTalk products sold at FamilyMart China
                                                          • Figure 17: Fuwa Fuwa products sold at FamilyMart Philippines
                                                        • Bonding with consumers by rendering bread/cake making more fun
                                                          • Portable packs of bread and drinks to become more common
                                                            • COVID-19: China context
                                                              • Figure 18: Accumulative confirmed cases of COVID-19 in China, January to May 2020
                                                              • Figure 19: Status of returning to work, China, March to May 2020
                                                          • Issues and Insights

                                                            • Bakery chains can grab a slice of the action at meal occasions
                                                              • The facts
                                                                • The implications
                                                                  • Find ways to innovate with beverage or milk flavours
                                                                    • The facts
                                                                      • The implications
                                                                        • Add choices with better value for money in lower-tier cities
                                                                          • The facts
                                                                            • The implications
                                                                              • Figure 20: Differently-priced garlic-flavoured baguette from Tous les jours’s stores in Shanghai and Chongqing
                                                                          • The Market – What You Need to Know

                                                                            • Fast growing market cools amid the COVID-19 pandemic
                                                                              • Boundaries of the market continue to expand
                                                                                • Market has potential to grow larger
                                                                                • Market Size and Forecast

                                                                                  • Spending on bakery products rises at double-digit rate annually over the last five years
                                                                                    • Figure 21: Total market values sales, China, 2015-19
                                                                                  • The market takes a battering from the COVID-19 outbreak
                                                                                    • Figure 22: Forecast of bakery house industry, by value sales, (adjusted for COVID-19), China 2014-24
                                                                                • Market Factors

                                                                                  • Accessibility increases – more channels joining the market
                                                                                    • Competition brings more product formats/types
                                                                                      • The trend of “snacking on everything”
                                                                                        • Uncertainty in the recovery after COVID-19
                                                                                        • Key Players – What You Need to Know

                                                                                          • Bakery chains-led market with plenty of room for other players
                                                                                            • Players luring more consumers with various approaches
                                                                                              • Innovation becoming bolder and wilder
                                                                                              • Market Share

                                                                                                • Established brands showcase robust ability to cash in amid the fragmented market
                                                                                                  • Figure 23: Volume share & value share of well-known brands, China, 2019
                                                                                                • 85°C Bakery Café recovers from scandals well
                                                                                                  • Figure 24: Crossover handbags between 85°C Bakery Café and Strange Cat Family
                                                                                                • Unconventional bakery product providers not a threat yet
                                                                                                  • Figure 26: Soft European bread from bakery houses
                                                                                              • Competitive Strategies

                                                                                                • Upgrading consumption experience – different businesses pulling off different tactics
                                                                                                  • Figure 27: Wedome’s Tmall store and its online ordering system on WeChat mini programs
                                                                                                  • Figure 28: Wedome’s first automated smart store in Beijing
                                                                                                  • Figure 29: Wedome’s facial recognition cashier
                                                                                                  • Figure 30: Examples of Heytea & Lelecha’s themed stores
                                                                                                • Boutique bakery houses emerge in the market
                                                                                                  • Figure 31: Toast with milk tea bubbles and cream in Sihu Fresh Toast
                                                                                                  • Figure 32: Claimed red bean toast in Daddy Sweety
                                                                                                • Bite-sized products to take up more physical and virtual shelf space
                                                                                                  • Figure 33: Paris Baguette’s snack offerings
                                                                                              • Who’s Innovating?

                                                                                                • Bold combinations of ingredients sweep the market
                                                                                                  • Figure 34: Taro floss loaf from Fascino Bakery
                                                                                                  • Figure 35: Red wine longan walnut from Sunflour
                                                                                                  • Figure 36: Toast with milk tea bubbles and cream in Sihu Fresh Toast
                                                                                                  • Figure 37: Mugwort herb injeolmi from Our Bakery
                                                                                                • Creative Western bakery products inspire the domestic market
                                                                                                  • Figure 38: Cronuts from Woody Baker
                                                                                                • Local dairy firm participates in the market
                                                                                                  • Figure 39: Bread made of fresh milk & yogurt from U Bakers
                                                                                              • The Consumer – What You Need to Know

                                                                                                • Consumers’ increasing awareness of health benefits
                                                                                                  • Bakery houses need to shore up presence beyond tier one cities
                                                                                                    • Exotic products have to target the niche markets precisely
                                                                                                    • Purchasing Channels

                                                                                                      • Bigger players continue to dominate the market
                                                                                                        • Figure 40: Purchasing channels – “bakery chains & bakery section in hypermarkets/supermarkets”, by family structure, February 2020
                                                                                                      • Female-fuelled purchasing power at coffee houses
                                                                                                        • Figure 41: Purchasing channels – “coffee houses”, by age & gender, February 2020
                                                                                                      • Far fewer consumers in eastern China visit independent bakery shops
                                                                                                        • Figure 42: Purchasing channels – “independent bakery shops”, by Region, February 2020
                                                                                                    • Perception towards Purchasing Channels

                                                                                                      • Bakery chains and hypermarkets/supermarkets impress consumers most
                                                                                                        • Figure 43: Perception towards purchasing channels – “bakery chains & bakery section in hypermarkets/supermarkets”, February 2020
                                                                                                      • Tea shops earn better reputation among young consumers
                                                                                                        • Figure 44: Perception towards purchasing channels – “tea shops”, by age, February 2020
                                                                                                      • Divergent perceptions of hypermarkets depending on city tiers
                                                                                                        • Figure 45: Perception towards purchasing channels – “bakery section in hypermarkets/supermarkets”, by city tier, February 2020
                                                                                                    • Product Penetration

                                                                                                      • Consumers’ craving fluffy and soft bakery products
                                                                                                        • Figure 46: Products penetration – “cake & soft bread”, by monthly household income, February 2020
                                                                                                      • Novel Westernized baked goods need time to adapt
                                                                                                        • Figure 47: Products penetration – “hard bread and roll & doughnuts”, by purchasing channels, February 2020
                                                                                                      • Consumers in tier two and three cities are catching up with trends
                                                                                                        • Figure 48: Products penetration – “pie/tart & cream puff”, by city tier, February 2020
                                                                                                    • Interested Innovation

                                                                                                      • New-flavour bakery products lie ahead
                                                                                                        • Figure 49: Interested innovation, February 2020
                                                                                                        • Figure 50: Interested innovation – “herbs/spices as flavour”, by city, February 2020
                                                                                                      • Nut-related ingredients to become the next add-in for bakery products
                                                                                                        • Figure 51: Interested innovation – “cereals & seeds and nuts as real ingredients”, by generation, February 2020
                                                                                                      • Savoury bakery products with meat could become the new favourite
                                                                                                        • Figure 52: Interested innovation – “meat as real ingredients”, by monthly personal income, February 2020
                                                                                                    • Consumption Occasion

                                                                                                      • Snacking on bakery products
                                                                                                        • Figure 53: Consumption occasion – “during leisure time”, by family structure, February 2020
                                                                                                      • Hard bread and rolls preferred during workouts
                                                                                                        • Figure 54: Consumption occasion of consumers eating hard bread and roll, February 2020
                                                                                                    • Future Potential

                                                                                                      • Consumers willing to pay more for products good for gut health
                                                                                                        • Figure 55: Future potential, February 2020
                                                                                                        • Figure 56: Future potential – “good for gut health”, by family structure, February 2020
                                                                                                      • Low FODMAP formulation becomes a premium factor for some consumers
                                                                                                        • Figure 57: Future potential – “layered yeasted bread & pie/tart”, by product penetration, February 2020
                                                                                                    • Meet the Mintropolitans

                                                                                                      • Consume more bakery products than the other groups
                                                                                                        • Figure 58: Products penetration, by consumer classification, February 2020
                                                                                                      • More attracted to coffee houses
                                                                                                        • Figure 59: Purchasing channels, by consumer classification, February 2020
                                                                                                    • Appendix – Market Size and Forecast

                                                                                                        • Figure 60: Forecast of bakery house industry, by value sales, (adjusted for COVID-19), China, 2014-24
                                                                                                        • Figure 61: Forecast of total value sales of bakery house industry, China, 2014-24
                                                                                                    • Appendix – Methodology and Abbreviations

                                                                                                      • Methodology
                                                                                                        • Forecast methodology
                                                                                                          • Abbreviations

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