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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. | 
