The scale of this market is made even more interesting by estimated compound annual growth rates of between seven per cent and nine per cent between 2004 and 2009. A more recent Datamonitor report projected the Chinese market to be worth $15.6 bn in 2009.
Cakes and pastries make up the bulk of the market at around 60 per cent of both volume and value reflecting the preference for sweeter tasting foods. Breads and rolls are becoming a stronger product category as bakery foods are gradually becoming accepted, especially as a breakfast food.
As China emerges from many years (possibly even centuries) of isolation to claim its rightful place as a world superpower, many different aspects of daily life are changing. Disposable incomes are increasing. That brings lifestyle changes which affect the retailing landscape particularly strongly. Like in many developing countries, shopping malls are appearing. In China this is happening at a scale and at a rate that is stunning. Food retailing is part of that change. Western retail operations have moved in, with some success, bringing higher quality retailing standards, especially in the area of food safety but also in quality and choice. Carrefour has been the pioneer in developing the hypermarket format; WalMart is making aggressive moves to penetrate the market by attempting to buy the Taiwanese Trustmart business; Tesco has a joint venture with Taiwanese supermarket operator Hymall.
The supermarkets have brought their in-store bakery concepts and formats with them. European style breads have begun appearing in these businesses, but the majority of the shelf space is given over to sweet breads, cakes and pastries as well as the soft, sweet and filled breads that are preferred by the Chinese consumer. Beside the in-store bakery, packaged foods stock the grocery shelves. Some large businesses such as Mankatten and Luxe Foods have built factory-scale bakeries. But these units are relatively small when compared to UK or USA equivalents. Their volume base is heavily biased towards producing burger buns for China’s rapidly developing fast food industry. KFC in particular has been very successful in spreading out from the coastal strip and becoming popular in the regional cities. That popularity has fuelled a nationwide demand for burger buns and so production facilities and distribution networks have been built to cope with the demand. This is a growing market where one thing definitely leads to another.
There are nationwide trends that can be seen in many aspects of the food industry. The demand for convenience as the new consumer finds they have much less time for preparing food at home; the demand to be stimulated with new flavours, new forms, new foods. Western foods are becoming more popular as Chinese people become aware of new tastes and want to experience world cuisine.
Yet a food category cannot be built on faddish consumer moods to “try something a bit Western or a bit new”. The bakery category has much stronger growth motors behind it than simply fashion. China has culinary traditions that are every bit as strong as France or Italy. The hot spice of Sichuan, the sweet notes of Shanghai or the richness of Cantonese cooking are all well known cooking styles that do not naturally include baking in their rich repertoire. Rice and noodles are the main source of carbohydrate so why indeed should the baking industry play any form of role in feeding the Chinese people?
