Innovation Supports the Asian Baked Goods Market Growth

Research agency Euromonitor offers a forecast regarding the Asian baked goods market, which is expected to grow from a value of USD74bn this year, to almost 4% year-on-year up to 2024. One of the most important trends is that bakeries and pastry shops are expected to invest in technology to automate their production lines in order to meet rising demand, according to a press release.

In the latest FHA Insider Special report, ‘Baking industry embrace technology for transformation’, industry experts shared their insights into global purchase trends of bakery equipment and how bakeries and food professionals are using technology to grow their business.

The report is developed by FHA-HoReCa, an event organized by Informa Markets. The next edition will take place March 3-6, 2020, in Singapore, and it is a comprehensive industry event of Asian hospitality and foodservice supplies.

Aileen Supriyadi, a research analyst for Euromonitor, explains the growth due to the expansion of distribution channels, manufacturing facilities, and product innovations in terms of flavors and product types in various countries. “The growth is also pushed by the [rising] artisanal baked goods production as consumers are demanding fresher and healthier products, including products that have no preservatives, low sugar, or lower trans-fat,” Supriyadi says.

China and Japan’s top baked goods sales have held 75% of regional sales for more than a decade. Over Euromonitor’s forecast period, these two high rankers are expected to drive further growth in the region, the report shows. “Additionally, artisanal baked goods’ growth is further pushed by unique concepts offered by producers that may become viral and pique the curiosity of consumers,” Supriyadi added. “For example, the ‘Dirty Bun’ (buns topped with liberal sprinklings of chocolate or matcha powder and are messy to eat) that went viral in several countries including Taiwan and Singapore in 2018.”

Indeed, with the combined bakery and pastry industries in Asia-Pacific poised for more traction, bakeries and pastry shops are gearing up to offer more innovative treats with the help of technology. For example, we look at artisanal gelatos which are now becoming part of a pastry shop’s offerings across the region. “We see a market full of opportunities,” said Achille Sassoli, market development director of the Carpigiani Group, a manufacturer of production equipment. In addition to pastry shops adding artisanal gelato in all its variations, he pointed out that restaurants are introducing gelato and sorbet in their menu as a dessert, and as an element in their recipes.

In a recent report, MarketandMarket’s estimated the global bakery processing equipment market at USDD8bn in 2018 and projected to reach a value of nearly USD10.3bn by 2023 — growing at a compound annual growth rate (CAGR) of 5.2% from 2018. The research firm added that Asia-Pacific is estimated to account for the largest market share in 2018 — driven by the growing demand for baked products in developing countries such as India, China, and Australia. The growth of the baked goods markets in the region over the years, followed by improvements in the bakery industry, has created new opportunities for the manufacturers in the bakery processing equipment market as well, findings showed.

Demand aside, Kelvin Teo, regional sales director of Swiss equipment manufacturer Rondo for Southeast Asia and Legal Representative for China, said that factors such as manpower shortage, increased hygiene requirement and regulations, the need to maintain consistent quality even when producing high volume of baked goods, and the economy of scale brought about by increasing production levels are also strong factors for bakery operators to upgrade their equipment.

While improved productivity gains can be made from technology investment, the report touched on the user perspective as well. Chef Gary Lim, president of the Singapore Pastry Alliance, felt that chefs should not be overly reliant on machinery and should instead work on enhancing their knowledge and skills in the production kitchen environment. Pointing out some of the disadvantages such as the high cost of equipment, he also noted the long-term impact on the authenticity of the trade if the business becomes fully dependent on machinery production.

“Machines cannot totally replace humans due to certain jobs which still require a human touch. But on the other hand, it can help to increase production volume and quality, better consistency and reduce physically labor-intensive jobs to promote company profit,” he said.

Concurring, chef Daniel Tay, founder of Singapore-based Foodgnostic, a private label food manufacturer specializing in cakes said: “Skills are always important. You must have the skills first, before you can use the technology.”