China’s fragmented bakery market likely to consolidate: Mintel

By Douglas Yu contact

- Last updated on GMT

China's top 10 bakery companies account for less than 15% of the total retail market share
China's top 10 bakery companies account for less than 15% of the total retail market share

Related tags: Chinese bakery market, China

China’s fast-growing bakery market is likely to experience consolidation as larger players develop, analysts at Mintel have suggested.

The Chinese bakery market is highly fragmented, with the top 10 companies accounting for less than 15% of retail value share. Many businesses are regional operations, according to Mintel, and the three companies with the highest share are Toly, Pan Pan and Dali.

Unlike the chocolate category in China, in which western brands dominate the market with nearly 70%​ share, “multinationals are present, but do not dominate,”​ Mintel food and drink research manager Chris Brockman told BakeryandSnacks.

“The largest bakery company in the world by far, Grupo Bimbo, has a very small presence in the market with just one plant,” he added.

Compared to the West and the world’s more established retail bakery markets, Brockman said China is still young and dynamic and offers better growth opportunities.

“The market is likely to consolidate over the coming years as larger players develop,”​ he added. 

A key difference between Western markets and China is the domination of the sweet bakery segment. Bread is not a staple part of the Chinese diet, and sweet bakery is worth almost three times that of bread and bread products in China.

Focus on premiumization

Western-style bakery (adapted to Chinese tastes) is seen as trendy and has been a key focus in China through out-of-home chains such as Paris Baguette, 85°C Bakery Cafe, Holiland and BreadTalk, according to Mintel.

The out of home channel is important in terms of setting trends.

“The focus is on premiumisation of sweet bakery products predominantly, and on taste, indulgence and appearance,”​ Brockman said. “This also affects the retail market, although the retail market is also driven strongly by snacking, gifting and seasonality.”

The premiumization trend can be seen during the upcoming Candy & Snacks Expo​ in Ningbo this month.

Interest in additive-free

In the US, the focus is on health and addressing diet trends such as low carb, gluten free and paleo diet trends, which have affected bread and bakery consumption, Brockman pointed out.

Mintel's Bakery Houses China Report

Mintel said its latest report suggests Chinese consumers may be open to a greater focus on health. In addition, both local and ethnic flavors are strong areas of interest, suggesting provenance, whether local or foreign, is an important area to develop.

China Bakery

“Gluten-free bakery is a strong segment in the US as 16% of all bakery launches to date in 2016 in the US have been gluten free,” ​he added. “That doesn't really exist in China,”

However, given rising consumer concern over food safety, no additives or preservative claims have been a focus in China, Brockman said.

“No additive or preservative claims have almost doubled in use in the past five years to account for an 8% share of all new bakery launches in 2016 to date.”

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