Table of Contents
Executive Summary
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- The market
- Post-COVID 19: a burgeoning market with opportunities and challenges
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- 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
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- 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
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- Figure 3: Volume share & value share of well-known brands, China, 2019
- Smaller innovation-driven players flood the market
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- Figure 4: Taro floss loaf from Fascino Bakery
- Figure 5: Cronuts from Woody Baker
- The consumer
- Bakery chains & hypermarkets dominate the channels
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- Figure 6: Purchasing channels, February 2020
- Conventional purchasing channels appeal to all
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- Figure 7: Perception towards purchasing channels, February 202
- Mainstream products are fluffy and soft
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- Figure 8: Product penetration, February 2020
- Brands have various opportunities in developing new offerings
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- Figure 9: Interested innovation, February 2020
- Leisure time eating overtakes all other consumption occasions
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- Figure 10: Consumption occasion, February 2020
- Future premium space exists for considering consumers’ well-being
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- Figure 11: Future potential, February 2020
- What we think
The Impact of COVID-19 on Bakery Industry
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- 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
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- 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
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- Figure 15: Impact from COVID-19 on selected factors in China, 27 May - 3 June
- Compete and cooperate with new selling channels
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- 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
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- 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
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Issues and Insights
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- 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
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- Figure 20: Differently-priced garlic-flavoured baguette from Tous les jours’s stores in Shanghai and Chongqing
The Market – What You Need to Know
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- 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
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- Spending on bakery products rises at double-digit rate annually over the last five years
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- Figure 21: Total market values sales, China, 2015-19
- The market takes a battering from the COVID-19 outbreak
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- Figure 22: Forecast of bakery house industry, by value sales, (adjusted for COVID-19), China 2014-24
Market Factors
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- 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
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- 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
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- Established brands showcase robust ability to cash in amid the fragmented market
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- Figure 23: Volume share & value share of well-known brands, China, 2019
- 85°C Bakery Café recovers from scandals well
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- Figure 24: Crossover handbags between 85°C Bakery Café and Strange Cat Family
- Unconventional bakery product providers not a threat yet
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- Figure 26: Soft European bread from bakery houses
Competitive Strategies
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- Upgrading consumption experience – different businesses pulling off different tactics
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- 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
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- Figure 30: Examples of Heytea & Lelecha’s themed stores
- Boutique bakery houses emerge in the market
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- 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
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- Figure 33: Paris Baguette’s snack offerings
Who’s Innovating?
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- Bold combinations of ingredients sweep the market
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- 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
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- Figure 38: Cronuts from Woody Baker
- Local dairy firm participates in the market
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- Figure 39: Bread made of fresh milk & yogurt from U Bakers
The Consumer – What You Need to Know
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- 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
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- Bigger players continue to dominate the market
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- Figure 40: Purchasing channels – “bakery chains & bakery section in hypermarkets/supermarkets”, by family structure, February 2020
- Female-fuelled purchasing power at coffee houses
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- Figure 41: Purchasing channels – “coffee houses”, by age & gender, February 2020
- Far fewer consumers in eastern China visit independent bakery shops
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- Figure 42: Purchasing channels – “independent bakery shops”, by Region, February 2020
Perception towards Purchasing Channels
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- Bakery chains and hypermarkets/supermarkets impress consumers most
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- Figure 43: Perception towards purchasing channels - “bakery chains & bakery section in hypermarkets/supermarkets”, February 2020
- Tea shops earn better reputation among young consumers
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- Figure 44: Perception towards purchasing channels – “tea shops”, by age, February 2020
- Divergent perceptions of hypermarkets depending on city tiers
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- Figure 45: Perception towards purchasing channels – “bakery section in hypermarkets/supermarkets”, by city tier, February 2020
Product Penetration
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- Consumers’ craving fluffy and soft bakery products
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- Figure 46: Products penetration – “cake & soft bread”, by monthly household income, February 2020
- Novel Westernized baked goods need time to adapt
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- 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
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- Figure 48: Products penetration – “pie/tart & cream puff”, by city tier, February 2020
Interested Innovation
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- New-flavour bakery products lie ahead
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- Figure 49: Interested innovation, February 2020
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- Figure 50: Interested innovation - “herbs/spices as flavour”, by city, February 2020
- Nut-related ingredients to become the next add-in for bakery products
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- 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
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- Figure 52: Interested innovation – “meat as real ingredients”, by monthly personal income, February 2020
Consumption Occasion
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- Snacking on bakery products
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- Figure 53: Consumption occasion - “during leisure time”, by family structure, February 2020
- Hard bread and rolls preferred during workouts
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- Figure 54: Consumption occasion of consumers eating hard bread and roll, February 2020
Future Potential
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- Consumers willing to pay more for products good for gut health
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- Figure 55: Future potential, February 2020
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- Figure 56: Future potential – “good for gut health”, by family structure, February 2020
- Low FODMAP formulation becomes a premium factor for some consumers
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- Figure 57: Future potential – “layered yeasted bread & pie/tart”, by product penetration, February 2020
Meet the Mintropolitans
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- Consume more bakery products than the other groups
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- Figure 58: Products penetration, by consumer classification, February 2020
- More attracted to coffee houses
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- Figure 59: Purchasing channels, by consumer classification, February 2020
Appendix – Market Size and Forecast
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- 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
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Appendix – Methodology and Abbreviations
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- Methodology
- Forecast methodology
- Abbreviations
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