Health and Indulgence Make Premium Baked Goods in China

In line with the global “healthy” trend, biscuits with less sugar or with special benefits for health show rapid growth in China. Some healthy products with a light taste have emerged, such as oatmeal/dairy/nuts/fruits/vegetables made products, low-fat and low-sugar products.

Eda Erbeyli, project manager, Daxue Consulting

China has become the second largest market for the baked goods industry with an USD25.2 billion market scale (2016), second only to the United States. Retailers are increasingly open to imported products in more categories than ever before. The metropolitan areas of Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing and Chengdu offer the largest range of baked goods and imported foods and beverages.

Heath and Indulgence

The baked goods market benefits from the rapid expansion of artisanal bakeries in China. Chinese consumers become more likely to opt for fresh baked goods such as cakes and bread. We observe that some Chinese consumers are already trying to reduce their consumption of baked goods, especially products with high sugar content.

When purchasing baked goods, Chinese consumers are still looking to indulge themselves.

Chinese consumers prefer grainy (43%), fresh (37%) and crispy (37%) snacks, and they are more willing to choose organic products than before.

Popular Product Categories

In China, the most popular traditional sweet baked goods are:

• Clay oven rolls (黄山烧饼) are a variety of baked flat and crispy bread with sesame on the top, often served with soy milk as breakfast.
• Lard brittleness (猪油酥糖) is a crunchy sugar made from white sugar, sesame seeds, flour and soybean.
• Egg Yolk with Lotus Paste Shortcake (莲蓉蛋黄酥) is a Chinese cake that is made from egg yolk, lotus seed and flour.
• Peanut crisp (花生酥) is a kind of crunchy sugar mixed with cooked peanuts and melted syrup.

Manufacturers who want to enter this market will have to face the problem of flavor/taste adaptation. For example, many Chinese will consider some baked goods as “too sweet” (preference for salty taste) or “too dry” (preference for spongy or creamy textures). Another challenge is that the tastes preferences differ a lot from a region to another in China.

They will also face a matured market, a strong culture of snacking (street food/snacks) and a greater preference for salty tastes.

Market Drivers

The Chinese baked goods market is usually divided between bread, cakes and pastries, moon cakes, cookies and biscuits, and other snacks. Breads and cakes make up 61% of the total sales; then biscuits and other baked goods represent 39% of the total sales.

The baking industry in China is a competitive market and has great potential. At the end of June 2015, there were 1,344 bakery companies competing on the Chinese market.

In the domestic baking industry, the current Chinese leaders are:

• Holiland (好利来), specializing in are all kinds of yogurt cakes, and cheese cakes.
• Maky, Miqi (米旗) Food Co., Ltd, a food chain that specializes in mooncakes, cakes, breads, and western pastries.
• Wedome (味多美) is a well-known bakery chain in China, its star product is cream cake.
• Christine (克莉丝汀) Food Co., Ltd, (from Taiwan) the enterprise produces Chinese and foreign pastries, bread, decorative cakes and mooncakes.
• 85°C (from Taiwan), is focusing on cakes. The chain is well-known for its good quality/price ratio.
• Yuanzu (元祖), from Taiwan, is a chain specializing on moon cakes, and fruits cake.
• Ichido (宜芝多)

Foreign brands are ambitious; the current leaders are:

• Orion (奥利奥) Food Co., from South Korea produces mainly tarts, pies, chocolate cakes and tiramisu.
• Bread Talk (面包新语), from Singapore, specializes in all kinds of premium, high quality breads.
• Haagen-Dazs (哈根达斯) – from the US

There are others bakeries present in Chinese cities, like Paris Baguette (巴黎贝甜) (South Korea), Bon Matin Paris (早安巴黎), Tous les jours (多乐之日) – South Korea), Comptoirs de France (法派) – France.

Main Market Players

The main market players operating in the China biscuit markets are: Mondelez (亿滋) China, Fujian Dali Group (福建达利集团), and Orion (奥利奥) – China. Manufacturers from Denmark and the United Kingdom still have the largest market shares for biscuits on the Chinese market.

There is a significant growth of consumers buying salty snacks in China. Salty snacks, bakery products and confectionery are the most significant product categories purchased by consumers in first- to third-tier cities in China in convenience stores. In 2015, the increase was 12% for salty snacks, 7% for sweets, and 6% for baked goods.

Today, Chinese snack choices are healthier. Chinese rank fresh fruit as their favorite snack, followed by chocolate. In addition to fresh fruits, Chinese people also prefer nuts because consumers widely believed that nuts are delicious and convenient.

The data shows that from 2014 to 2016, 25% of new products on the Chinese snack market were meat or seafood flavored. 48% of consumers think that meat- and seafood-flavored snacks are delicious, and 46% think that such snacks are good to ease hunger.

Traditional salty snacks often consumed by the Chinese include:

• Meat (dried meat such as pork jerky and beef jerky),
• Nuts (melon seeds, pistachio, walnut, almond, chestnuts),
• Fruits and dried fruit,
• Traditional Chinese pastries (Osmanthus Cake, Mung bean cake, Red bean cake, Rice cake).

Biscuits and chips categories are showing a rapid growth. However in recent years, domestic and foreign brands faced with fierce competition.  Well-known domestic brands such as Master Kong (康师傅) and Shang Haojia（上好佳） have competed with foreign brands from big groups such as Danone（达能）, Kraft Foods（卡夫）, and Pepsi.

You can read more in our print magazine Asia Pacific Baker & Biscuit (Spring 2018)!