Breakfast Foods - China - July 2016

OVERVIEW
What you need to know
Covered in this Report
Definitions
Figure 1: Definition of Low/Mid/High MHI groups, by city tier
EXECUTIVE SUMMARY
The market
Total breakfast spending to reach RMB1,948 billion in 2021
Figure 2: Best- and worst-case forecast for breakfast foods, 2011-21
Out-of-home sector grows faster
Figure 3: Best- and worst-case forecast of out-of-home breakfast spending, 2011-21
Figure 4: Best- and worst-case forecast of at-home breakfast spending, 2011-21
Key players
At-home breakfast foods adding convenience features
Fast food restaurants to make full use of in-store dining spaces
Bakery stores and coffee shops to capitalise upon consumers’ aspirational lifestyle
Convenience stores are positioned as one-stop breakfast vendor of good value for money
Breakfast delivery service can target organisations and high-end subscribers
The consumer
Busy life drives people to eat breakfast out of the home
Figure 5: Percentage of consumers who eat breakfast at least 2-3 times a week, by location, Tier one cities, 2013 vs 2016
Figure 6: Breakfast consumption frequency, April 2016
Different types of breakfast vendors compete in different price tiers
Figure 7: Breakfast spending, April 2016
Western breakfast foods – cereals in particular – could gain popularity
Figure 8: Perception towards Chinese and Western breakfast, April 2016
Figure 9: Preferred breakfast foods, April 2016
Consumers looking for convenient on-the-go breakfast solutions
Figure 10: Ideal packaging of breakfast cereals, April 2016
Energy boosting benefits and more enjoyable weekend breakfasts are emerging needs
What we think
ISSUES AND INSIGHTS
Opportunity for promoting cereal products on breakfast menus
The facts
The implications
Opportunity for marketing energy ingredients in breakfast foods
The facts
The implications
Figure 11: Examples of food and beverages featuring energy boosting super foods, overseas, 2015-16
Fun and entertaining breakfasts during weekends
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Total breakfast spending exceeded RMB1.3 trillion in 2015
Urbanisation, rising cost of food and consumers trading up – the key market drivers
Out-of-home breakfast spending will grow faster than at-home spending
MARKET SIZE AND FORECAST
Breakfast market exceeded RMB1.3 trillion in 2015
Rising per capita spending drives year-on-year growth
Figure 12: Breakfast spending, RMB Billion, 2011-16
Figure 13: Per capita breakfast spending per day, RMB, 2011-15
Rising price of food
Figure 14: Year-on-year increase of average food price, 2011-15
Urbanisation
Figure 15: Per capita breakfast spending per day, RMB, urban vs rural, 2015
Trading up to healthier breakfast meals
Breakfast market will continue to grow towards 2021
Figure 16: Best- and worst-case forecast for breakfast foods, 2011-21
MARKET DRIVERS
Rise of an entrepreneurial society
Bigger breakfast during weekends getting popular
MARKET SEGMENTATION 
Urban population accounts for 79% of total breakfast spending
Figure 17: Breakfast spending, urban vs rural, RMB billion, 2015
Out-of-home breakfast spending takes 50% share in urban areas
Figure 18: Breakfast spending, at home vs. out of home, RMB billion, 2015
Out-of-home breakfast spending will grow faster than at-home spending
Figure 19: Best- and worst-case forecast of out-of-home breakfast spending, 2011-21
At-home breakfast spending will be driven by richer content
Figure 20: Best- and worst-case forecast of at home breakfast spending, 2011-21
KEY PLAYERS – WHAT YOU NEED TO KNOW
Adding convenience features into product design
Western fast food restaurants offering Chinese-style breakfast foods
Bakery houses and coffee shops tapping into consumers’ lifestyle changes and aspirations
Convenience stores becoming one-stop good-value breakfast vendors
New business model for breakfast delivery service providers
COMPETITIVE STRATEGIES
At-home breakfast foods evolving into more convenient forms
Instant preparation method
Figure 21: Example of instant congee, China
Snacking format
Figure 22: Examples of snacks targeting breakfast occasions, China, 2015-16
Beverages adopting filling propositions
Figure 23: Examples of beverages/dairy products with filling features, China, 2014-16
At-home breakfast foods targeting special demographics
Kids
Figure 24: Example of breakfast foods targeting kids, China, 2015
Young females
Figure 25: Example of nutritional breakfast meal replacement targeting young females, China, 2016
Fast food restaurants adopting more competitive breakfast pricing plans
Bakery houses and coffee shops capitalising upon ‘breakfast lifestyles’
Convenience stores targeting busy office workers
Figure 26: Example of CStore’s menu and shelf of fresh cooked foods, 2016
Figure 27: Example of FamilyMart’s private label fresh food packaging, 2016
New business model for breakfast delivery service providers
WHO’S INNOVATING?
At-home
Breakfast cereals adapting to local palate
Figure 28: Examples of breakfast cereals featuring traditional Chinese ingredients, China, 2015-16
More vegetables in Western cereals
Figure 29: Examples of breakfast cereals featuring vegetables, overseas, 2015-16
All-in-one cereal pots
Figure 30: Examples of all-in-one cereal pots, Western countries, 2015-16
Capsule soy milk machine
VR-enhanced at-home breakfast experience
Figure 31: Kellogg’s Ancient Legends cereals, UK, 2016
Sharing breakfast foods with neighbours
Out of home
Premium breakfast delivery services targeting high spenders
Slow breakfast at weekends
Breakfast bags
Promoting local breakfast culture
THE CONSUMER – WHAT YOU NEED TO KNOW
Elders, low earners and consumers in lower tier cities are more likely to eat breakfast at home
Out-of-home breakfast vendors compete in different price ranges
Western breakfast foods are gaining momentum amongst higher earners
Energy food, convenient on-the-go format and premium weekend breakfast are potential future trends
BREAKFAST CONSUMPTION FREQUENCY 
Older people and low earners are most likely to eat breakfast at home
Figure 32: Breakfast consumption frequency, April 2016
High earners go to fast food chains and coffee shops more often
Figure 33: Percentage of consumers who eat at out-of-home breakfast venues at least 2-3 times a week, by monthly personal income, April 2016
Convenience stores and bakery houses are particularly popular amongst those aged 25-29
Figure 34: Percentage of consumers who eat at out-of-home breakfast venues at least 2-3 times a week, by age, April 2016
Consumers in tier one cities eat at home less, and at breakfast stalls and convenience stores more often
Figure 35: Percentage of consumers who eat breakfast at least 2-3 times a week, by location, Tier one cities, 2013 vs 2016
BREAKFAST SPENDING 
In-home breakfast saves at least 30% as compared to eating out
Bakery houses and fast food restaurants compete within the higher price tier
Convenience stores sit somewhere in between
Coffee houses occupying the high-end segment
Figure 36: Breakfast spending, April 2016
PREFERRED BREAKFAST FOODS 
Chinese breakfast foods remain most popular
Figure 37: Preferred breakfast foods, April 2016
Consumers going for healthier breakfast foods
Figure 38: Preferred breakfast foods (selected), by age, April 2016
Western breakfast food is particularly appealing to high earners
Figure 39: Types of Western breakfast foods preferred, by monthly personal income, April 2016
PERCEPTIONS TOWARDS CHINESE AND WESTERN BREAKFASTS 
Consumers prefer Chinese breakfasts to Western breakfasts
Figure 40: Perceptions towards Chinese and Western breakfasts, April 2016
“Convenient for on-the-go” is the only perceived advantage of Western breakfast foods
Figure 41: Examples of healthy cereal bars fitting for breakfast consumption, overseas, 2014-15
Higher earners are more in favour of Western breakfasts
Figure 42: Percentage of consumers who like Chinese/Western breakfast, by demographics, April 2016
IDEAL PACKAGING FOR BREAKFAST CEREALS 
Cartons and portable sleeves are the preferred packaging types
Figure 43: Ideal packaging of breakfast cereals, April 2016
Young females prefer sachets
ATTITUDES TOWARDS BREAKFAST
Strong eagerness to eat a better breakfast during weekends
Figure 44: Attitudes towards breakfast, by demographics, April 2016
Looking for convenient on-the-go breakfast options
Figure 45: Attitudes towards breakfast, by demographics, April 2016
Energy-boosting breakfasts are desirable
Figure 46: Attitudes towards breakfast, by demographics, April 2016
Challenges for breakfast delivery services to profit
Figure 47: Attitudes towards breakfast, by demographics, April 2016
MEET THE MINTROPOLITANS 
Mintropolitans eat more types of breakfast foods
Figure 48: Preferred breakfast foods, by consumer segmentation, April 2016
Greater affinity to Western breakfast
Figure 49: Percentage of consumers who like Chinese/Western breakfasts, by consumer segmentation, April 2016
Craving a better breakfast during weekends
Figure 50: Attitudes towards breakfast, by consumer segmentation, April 2016
Energy seekers
Figure 51: Attitudes towards breakfast, by consumer segmentation, April 2016
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations