The baked goods market in China began to gain momentum in 1980 and boomed between 2000 and 2010. During this period, all kinds of foreign brands entered the Chinese market. Foreign baked goods have become the breakfast of many Chinese people. The most common baked goods in China include bread, cakes, biscuits and cookies.
Daxue consulting completed a report on the baking industry in China in 2018. This article pulls from the report to inform about the Chinese baked goods market with consumer analysis, current trends, competition analysis, distribution, and promotion.
The development of the baked goods market in China
The market size of baked goods in China is growing
The market size of the baking industry in China has been growing considerably fast in recent years, with more than 10% YOY growth rate. Compared with the worlds average level (18.7 Kg per person), the per capita consumption of baked products is still relatively low (6.9 Kg).
According to the China industry research institute, the retail value of the baked goods market in China was nearly 217 billion yuan in 2018.
Baked goods consumer analysis
Cakes and bread are the most popular baked goods in the Chinese market. In terms of gender, Chinese women are more interested in bread and cakes than men, which accounts for 65% of sales in 2017.
In addition, most sales in 2017 came from those who born in the post-80s and 90s. It can be inferred that bread in China and cakes in China are mainly preferred by young consumers. For them, bread is not only breakfast but also a popular choice for afternoon tea.
Consumers’ preference for baked goods in China
Nowadays, baked goods in China such as bread and cake are common for Chinese people to eat as snacks or breakfast. Young consumers and aging consumers have different preferences towards baked products. What they have in common is the desire for healthy and delicious baked goods.
Young consumers like baked goods with various tastes, this is one of the reasons why there are so many different flavors of baked goods in China. Besides, product packaging is also considered by consumers. Small packages are more preferred by young consumers for they are easy to carry and suitable for office workers to replenish energy.
On the other hand, aging people prefer baked goods with bigger packages since they like sharing snacks with their family or friends. Older consumers also tend to prefer soft baked goods with less sugar.
Online trends of baked goods in China
Interest trends & Semantic analysis
The search index of ‘bread’ on Baidu fluctuated around its average number in the past one year. Two low points were reached in June 2018 during the Dragon Boat Festival and February 2019 during the Spring Festival.
People search for bread on Baidu generally to query the definition of bread and browse the official website of famous bread brands. The most related keywords to “Bread” are “Bread with milk flavor”, “Cake”, “Old-fashioned bread”, “Bread websites” and “Learn to make bread”.
E-commerce landscape of different baked goods in China: How baked goods brands should to the Chinese market
Competition analysis: Bread, Cake, Biscuits and Cookies in the Chinese market
On Taobao/Tmall, the sales of domestic bread brands are higher than foreign brands for they are better at appealing to local tastes. In addition, international brands focus more on offline stores instead of e-commerce platforms to sell baked goods in China. One common distributor is coffee shops.
500g bread sells for around 40 RMB on Tmall, with small price fluctuation. Bread with a high sales volume is about 30RMB. Among them, milk is the most popular flavor of bread in China. The top seller of bread on Tmall is Three Squirrels with a price of 29.9RMB.
International cake brands mostly come from France, Japan, and South Korea. Chinese cakes brands also have more sales than foreign brands on Taobao/Tmall even though they have higher prices. In addition to being more fit to domestic flavor preferences, another possible reason for Chinese cakes higher sales is a closer delivery allows the cakes to be fresher.
On Tmall, the price range of cakes in China is between 9.9Rmb and 225.2RMB. Popular cakes are relatively cheap. However, the unit price of the imported cake is relatively high and with less quantity.
Large Chinese and International biscuits brands both sales well on Taobao/Tmall, since they all provide tasty biscuits with reasonable price.
Similar to cakes, the price range of biscuits and cookies in china is large. Popular biscuits are at relatively low prices (about 10RMB-30RMB) and usually have individual packaging. The top seller of biscuits is Tango with a price of 19.9RMB.
Retail and promotion of baked goods in China
Combination of online retail and on-the-shelf
Foreign baking brands generally take offline shops as their main distribution channel in China. Four normal forms for the baking industry in China are bakeries and coffee shops, supermarket, and convenient stores, imported food stores, and specialized snacks stores.
According to the research, young consumers (post-80s and 90s) usually choose to buy baked goods in China from bakery shops, coffee shops, and convenient stores. Old generations prefer to buy baked goods in China from the supermarket and hypermarket. In those stores, different types of baked goods are separately placed on shelves. In terms of packaging, many brands are using smaller packages to make baked goods be easily carried.
On the other hand, young consumers also prefer to buy baked goods on e-commerce platforms. The number of baking brands on JD is far more than brands on Tmall/Taobao, which mainly due to the higher requirements and deposit from Tmall for those brands want to enter the platform. Most Chinese brands have built official stores on e-commerce platforms to sell baked goods in China, which increased their sales in the market.
Chinese traditional pastries are made from rice or different types of flour, with fruit, sweet beans paste or sesame-based fillings. Unlike in China, western pastries often incorporate more cream-like fillings. With the growth of western culture in China, Chinese people began to accept western baked goods.
Western pastries and Chinese pastries had similar sales in April 2019. It shows that more Chinese people accepted foreign pastries.
Future trends in China’s baked goods market
Young consumers are the main force of baked goods consumption. The baking industry in China is constantly developing to adapt to their tastes, including the production and promotion channels of baked goods. In addition, consumers are increasingly focusing on food safety and healthy nutrition. Specifically, baked goods are changing the status quo of high sugar, high fat, and high calorie, and developing towards the direction of light and balanced nutrition. Low-sugar, low-energy healthy baked goods are the trend.
Except for tier-1 and tier-2 cities, Chinese lower-tier cities also have the great market potential for baked goods. Thus, many baked goods brands are trying to enter the baked goods market in China from lower-tier cities and directing marketing campaigns accordingly. Some independent bakeries are starting to attract customers in a variety of ways, including providing the experience service of DIY baked goods. Consumers are likely to recommend their experiences in the bakery stores to their friends.
source：DAXUE Cousult
