China’s industrial baked goods market was valued at $25.4bn for 2013, according to Euromonitor International, up from $19.6bn in 2012.
According to Shanghai consultancy firm Daxue Consulting, per capita consumption of baked goods has more than doubled since 2000, reaching nearly 5kg per year.
While this yearly consumption figure remains fairly low, around eight times lower than Britain, Daxue consultant Thibaud Andre said the market showed great potential.
“Bakery in China is experiencing a social phenomenon which has already occurred in wine and coffee,” Andre told BakeryandSnacks.com. “To eat bakery is considered trendy and a Western style."
Two types of Chinese bakery consumers
There are two types of Chinese bakery consumers.
Firstly, those who go to famous franchises like Starbucks or Costa Coffee to enjoy branded baked goods – the same as those found in Europe and the US, he said. Secondly are consumers that enjoy the appearance of Western baked goods but not the taste, and therefore opt for local takes on Western bakery, he said.
For the second wave of consumers, local shops with names like ‘Paris Baguette’ sell products that resemble European baked goods but cater to local taste preferences, Andre said. For example, he said shops sell croissants filled with cheese and meat to appeal to the inclination towards salt.
“Consumption is a mix of traditional Western bakery products and Chinese taste,” he said.
Andre said it was the ambiguity between the attraction of Western products and lack of awareness about these traditional baked goods that led to hybrid bakery products.
Brimming with potential – but how do you tap into this?
China’s consumers have a willingness to develop their knowledge of the bakery sector and imitate Western consumption patterns, which spelled opportunity for international companies, Andre said.
Manufacturers, he said, should therefore get involved in educating Chinese consumers about traditional European or US baked goods through special events, for example.
Future growth within the sector would be driven by the younger generation interested in Western food and with money to spend, he said.
“The market is quite young, so there are still plenty of opportunities, especially in second or third-tier cities where the market is less developed.”
Western companies must understand that the appearance of baked goods would be vital to their success, he said. “Generally speaking, Chinese consumers really pay attention to the appearance of the product. It should be pleasing to the eye. Attractive and colorful packaging will help.”
Consumers also have a preference for packaged products, he added, because they are considered safer – an extremely important factor for Chinese consumers that have endured food scares like the melamine baby food scandal.