| Health
awareness drives bakery market in Hong Kong and China
07 Apr 2005
Author: Francisco Redruello
Health
awareness is on the increase in China and Hong Kong, with
improving living standards and recent events such as the SARS
outbreak in 2003 and the avian flu epidemic in 2004, making
consumers all the more concerned over how they can manage
their health. The latest research by Euromonitor International
shows that bread manufacturers have been quick to capitalise
on these health concerns by launching new health-oriented
products that come, for example, fortified with vitamins and
minerals. Mankattan Carotene Whole-wheat bread and Garden
Whole-wheat Sandwich, launched in 2003 in China, are just
two new products which were marketed on their health properties,
while Garden Life Hi-Fibre Bread is another product that has
tapped into growing consumer health concerns in Hong Kong.
Quickening
pace of life makes positive impact on bread sales in China
Hong
Kong represents a more mature market than China in terms of
bread consumption. According to Euromonitor International’s
research, in 2004, Hong Kong represented the second largest
retail per capita consumption of bread in Asia at 8kg after
Singapore, whilst China delivered the third lowest retail
per capita consumption at a mere 1kg in the same year.
However,
China represents a much faster-growing market for bread due
to its relative nascence. Growth can be seen particularly
in urban areas where, due to the increasing pace of life,
many people do not have the luxury of spending an hour at
breakfast. This has given rise to the demand for nutritious
and convenient food. Although bread competes with traditional
Chinese breakfasts such as steamed buns, sales of western
style bread are also on the increase thanks to the speed with
which it can be prepared and eaten. Other traditional Chinese
breakfasts such as congee and dim sum tend to be eaten outside
of the home, and are generally consumed at a relatively leisurely
pace. Improving income levels may also be credited for the
increased consumption of bread in China, as consumers become
more adventurous in their buying habits.
Southern
China records most dynamic growth
According
to Euromonitor International, over the review period 1998-2004,
the southern part of China witnessed the most dynamic performance
in bread consumption, growing at 98% in Southwest China and
89% in South China, in retail volume terms. This increase
can be largely attributed to the influence of neighbouring
Hong Kong, which has led to a boom in the number of bakeries
in the southern regions and has helped to promote the shift
away from more traditional breakfast food.
Eastern
China and North & Northeast China take the lion’s
share in actual sales
However,
it is East China and North & Northeast China that recorded
the largest retail volume sales of bread in 2004. Combined,
they account for over 50% of total bread consumption in China
this year. The North & North Eastern diet is less heavily
reliant on rice and tends to be more flour-based. As such,
bread is more readily accepted than in other regions where
the diet centres strongly on rice as the main staple.
In
contrast, the Northwest and Southwest regions of China constitute
the areas with the weakest demand for bread, which is underpinned
by low disposable incomes as well as traditional consumption
habits in these regions.
Uni-President
cashes in on Mid China opportunity
Given
that Mid China has approximately 40 million more inhabitants
than the North & Northeast region, overall volume sales
of bread in Mid China were relatively low in 2004 compared
with that of the North & Northeast region. Factors such
as lower disposable income, fewer bread manufacturers and
the limited availability of products have contributed to the
relatively low consumption of bread that characterised the
Mid China region in 2004.
Supermarkets
boost artisanal bread sales in HK
The
Hong Kong bread market has traditionally been dominated by
industrially produced bread. In 2004, industrially produced
bread accounted for 94% of total volume sales in Hong Kong.
However, according to Euromonitor International, unpackaged/artisanal
bread showed good growth between 1998 and 2004, growing by
some 23%. This sits in contrast to packaged/industrial bread,
which grew by 9% over the same period.
The
increasing popularity of unpackaged/artisanal bread in Hong
Kong may be partly attributed to the growing participation
of supermarkets such as Wellcome and Park’n’Shop
in the sales of unpackaged bread that has been baked in-store,
albeit not from scratch. Indeed, supermarkets were the main
distribution channel for total bakery sales in 2004 at 45%,
up from 37% in 1998.
Supermarkets
have the advantage of having ready-made distribution networks
in the form of their numerous existing outlets around Hong
Kong, which is key to encouraging volume growth. Growth is
also encouraged by supermarkets offering discounts after 6pm
on bread that has been made on the same day.
New
Industrial manufacturers emerge in China
In
China, by contrast, due to the fragmented nature of the bread
market, unpackaged/artisanal bread formed the majority of
bread sold in 2004, at 60% of total sales volume across the
country as a whole. This may be attributed to the current
lack of industrial standards in this under-developed market.
However, Euromonitor International found that industrially
produced bread grew faster than the artisan variety between
1998 and 2004 at 91%, compared with 73% for artisanally produced
bread. The high level of promotional activity in terms of
advertising and marketing by the multinational players was
an important factor contributing to the dynamic performance
of packaged/industrial bread between 1998 and 2004. Marketing
activities included inviting celebrities such as sports people
to be product ambassadors and the use of TV commercials.
With
a progressively mature Chinese market comes the arrival of
more stringent industrial standards to raise the average quality
of bread. Furthermore, as growth is derived mainly from urban
areas where consumers tend to have greater levels of disposable
income and better standards of living, consumers are likely
to increasingly opt for packaged bread, which provides them
with a better guarantee of hygiene and safety. |
