How to develop China's baking industry?

After 2000, with the growth of China's per capita consumption level, the adjustment of food and beverage consumption structure and changes in the pace of life, baked goods with the advantages of nutrition and health, fast and diverse, etc. have entered a period of rapid growth in China.

From the supply level, the production scale of China's baked goods industry continues to expand. The operating income of enterprises above the scale of China's pastry and bread industry grew from 112.981 billion yuan in 2016 to 208.117 billion yuan in 2020, with a compound annual growth rate of 16.50%, and it is expected that the scale of China's pastry and bread industry will reach 242.457 billion yuan in 2021.

From the consumption level, the bakery retail market is growing rapidly. in 2019, China's bakery retail sales reached 231.713 billion yuan, a year-on-year growth of 10.93%, and it is expected that China's bakery retail sales will reach 288.588 billion yuan in 2021.

But the market concentration of China's baking industry is low, the CR5 of China's baking industry in 2019 is 10.6%, much lower than that of Japan, the United Kingdom, Mexico, the United States and other countries, and the industry's competitive pattern is relatively decentralized.

2) At present, it is still mostly confined to the regional market, and there are only a few bakery enterprises that have truly realized branded chains. Regionalization is very obvious.

From the point of view of regional distribution of enterprises, East China has the largest distribution of enterprises, with the number of enterprises accounting for 40.38%; followed by Central China and South China, accounting for 22.95% and 10.57% respectively. The Northwest and Northeast regions have fewer bakery enterprises, accounting for only 3.93% and 5.49% respectively. The regional distribution of sales in the bakery industry also confirms this enterprise distribution. East China and Central China are the main sales regions for bakery products, accounting for 37.06% and 32.57% of sales respectively; Northwest and Northeast regions have a smaller share of sales.

3) Per capita consumption is low, and the core consumer group is the female population aged 25-35.

Baked goods are mainly categorized into four major types: bread, pastries, cakes and dessert mixes, which have been used as breakfast and staple food in Europe and the United States. However, in the Asia-Pacific region, due to the fact that people's living habits and dietary patterns have long been different from those in Western countries, baked goods are usually consumed as snacks rather than as meals.

In the gender distribution of bakery consumers, female consumers accounted for 76.9%, which is the mainstream of bakery consumers. In the age distribution, more than 57% of the bakery consumers are between 25-35 years old, and the young people who have just entered the workplace are the typical consumers of bakery stores. 24% of the bakery consumers are above 35 years old, which is higher than the percentage of the consumers of the same age in other food and beverage stores, and the middle-aged and old-aged groups have a higher consumption enthusiasm in bakery.

4) Increased market competition, product homogenization to marketing homogenization, China's bakery market is mixed, and cross-border players are pouring in.

Baked goods from scratch, experienced a long time of market cultivation and development process. However, at present, the domestic bakery products homogenization, marketing homogenization, management homogenization, strategic homogenization and other strange circle gradually highlighted.

The market is mixed, filled with many small brands. An ordinary county-level cities even have two or three brands, a prefecture-level city after rounds and rounds of shuffling, there are still seven or eight brands of the phenomenon, the baking industry business model is sloppy, maturity is not high. However, with the implementation of the market access system, the bakery industry to improve the threshold of entry into the product quality and product research and development as the core of the benign competition track, the high-end market has become the focus of attention of baking enterprises.

With the integration of external players who are good at marketing, and the emergence of cross-border, such as "bakery + tea" composite experience space, baked goods into the "fashion" DNA, but also for the baking industry has brought a new concept of development.

II. Bakery business model

The business model of China's bakery industry can be divided into "centralized factory + wholesale", "chain store mode", "centralized factory + e-commerce + cold chain logistics " mode. Among them, the first two modes are the main business model in the current market, while the "central factory + e-commerce + cold chain logistics" mode is an emerging model, accounting for a relatively small, but rapid development in recent years.

"Central factory + wholesale"

Enterprises set up production and processing factories in each city, through the production line and modern production equipment for the production and processing of food products, with the factory as the center of the circle, through the centralized logistics and distribution, the products will be wholesaled to the local and neighboring urban areas of the shopping malls, supermarkets or distributors. The products are then sold to the end consumers.

Orseth's point of view: this business model has a high degree of automation and significant scale effect. Bread in shopping malls and supermarkets is more like a necessity in life, and the sales group is wider, but the cycle of cultivating a mature dealer team is longer, and it is more difficult to establish a good and stable customer relationship with large-scale supermarkets.

"Chain-store model"

Chain-store model is divided into "centralized factory + stores" and the front store after the factory model two. Enterprises set up factories in the surrounding area to make finished or semi-finished products, and set up various bakery chains in densely populated commercial and residential areas in the city, including bakeries and pastry houses. The semi-finished or finished products made in the factories are delivered to the downtown stores for on-site processing and sales through specialized logistics and distribution.

Orseth's view: The chain store model provides consumers with a good shopping experience and strong terminal control, but the operating costs are high. As the model can create a warm and comfortable store atmosphere, maximize customer satisfaction in product quality and experience needs, as well as leisure and social functions, it is easy to form a brand influence, favored by high-end consumers.

"Central factory + e-commerce + cold chain logistics" mode

After the promotion of the new retail concept, bakery enterprises have gradually developed the emerging mode of "central factory + e-commerce + cold chain logistics", which is a combination of online and offline.

Orseth's point of view: the main advantage of this model is that there is no physical store, more asset-light, massive advertising in marketing, celebrity endorsement, low prices, promotional strategies to attract consumers, new users. But the biggest disadvantage of this model is that its service is difficult to keep up with consumer demand, the experience is worse than the store model.

Osage Brand Observation

Six Trends in Bakery Market

1. Branding and Upscale Trend: The brand concentration in the bakery market will be higher and higher

Competition in the bakery market will become more and more intense, and consumers will tend to prefer brand name and high quality mid-range and upscale products, and the capacity of the market for mid-range and upscale products will continue to grow. Consumers' brand awareness is maturing, and the brand concentration in the bakery market will be higher and higher.

2. Securitization Trend: Establishing a Practical and Reliable Food Safety Protection Wall

In the 21st century, a harmonious, healthy and orderly market environment has allowed the bakery industry to enter a golden development stage. Food safety, nutrition and health have been the focus of bakery enterprises in the new century, and will exist as a long-term development trend.

In recent years, due to the frequent occurrence of food safety incidents, the government and the public are paying more and more attention to food safety. Therefore, bakery companies need to put food safety throughout the production management, and actively complete the national certification to establish a reliable food safety protection wall.

3. Healthy and functional trend: low energy and healthy bakery products are the trend

With the further development of the national public nutrition program, some healthy raw materials and functional raw materials will have an important impact on the product structure.

Functional bakery products will have a huge development prospect in the future. Enterprises should add nutritional and health elements to their products, promote the upgrading of bakery product structure, and make all kinds of preparations for the upcoming great development of the bakery food industry.

Baked goods are changing the status quo of high sugar, high fat, high calorie, to the direction of light, nutritional balance, such as low fat, fat substitutes, low sugar, non-sugar sweeteners partially replacing sucrose, is a subject in front of the baking enterprises. Low-energy healthy baked goods is the trend.

4. Trend of fashion and diversification: Developing innovative products to meet consumer demand is the unchanging law

The bakery market is a guided market, and the market needs to be followed up with innovative products that are sufficient to satisfy consumer demand. In recent years, consumers' pursuit of "fashion", "quality", "status" and "health" has become increasingly strong. Bakery innovations have diversified, combining with confectionery and ice cream to form a whole new range of products. Developing innovative products to meet consumer demand is a constant rule.

5. Culture, personalization trend: to create a distinctive personality, deep cultural brand image

In addition to the pursuit of health and deliciousness, the pursuit of "quality" and "identity" of consumers is also becoming increasingly strong. Therefore, how to stand out in the homogenized product environment, how to stand out in the fierce market competition, to create a distinctive personality, culture and profound brand image, is an important issue facing the enterprise.

6. China's bakery industry is also undergoing consumption upgrade, which is reflected in the upgrade of the product itself and the upgrade of "product +"

And with the development of "bakery + tea", "bakery + coffee", "bakery + food" and "bakery + food", the bakery industry has become more and more popular. With the emergence of new business models such as "baking + coffee", consumer demand for baking is changing, from the original single demand gradually to social, fashionable composite demand change. The boundaries between coffee shops, bakeries and tea stores are becoming increasingly blurred. The bakery provides tea and coffee, the tea store provides baked goods, the coffee shop provides baked goods gradually accepted by consumers.