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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.
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