The baked goods market in China gained momentum in 1980 and experienced significant growth between 2000 and 2010. During this period, numerous foreign brands entered the Chinese market, establishing baked goods as a popular breakfast choice for many Chinese people.

In 2022, China’s baking industry surged to RMB 285.3 billion, continuing its post-pandemic recovery and benefiting from consumer upgrades and diverse consumption trends. Emphasizing health and nutrition in baked goods, the sector is poised for steady growth, with a projected scale of RMB 351.8 billion by 2025. According to the insight of International Food Exhibition,2022 saw a 6% year-on-year increase in production, reaching 19.6 million tons. This data reflects the industry’s resilience and adaptability, capturing the essence of its dynamic evolution.

Gen Z are the main consumers of baked goods in China

The main consumer groups for baked goods in China consist of female individuals born in the 1990s and 2000s, students, and white-collar workers.

In response to the evolving preferences of Generation Z, prominent baking brands are proactively focusing on improving product aesthetics to align with contemporary trends. Furthermore, they are diversifying their product offerings and integrating wholesome ingredients to cater to the health-conscious preferences of this younger generation.

Chinese consumers are open to bakery products with foreign influence

In the 1980s, individual bakeries emerged, introducing baked pastries from Hong Kong and Taiwan (China) to the mainland. These establishments featured shops at the front and bakery workshops at the back, focusing on Western-style bread.

Evolving into the 1990s, modern bakery enterprises, such as Orion and Xu Fuji, adopted a mass production model characterized by centralized intensive factories, distributing prepackaged products in supermarkets and retail stores. This strategic transition aligned with shifting consumer preferences, driven by a taste that resonated with Chinese tastes, effective marketing strategies, and increased convenience in both purchasing and storage.

Transitioning into the 2000s, there was a significant expansion phase marked by the rapid growth of offline branded bakery chains, such as BreadTalk and Holiland. The prevalent business model was characterized by a “central kitchen + frozen dough” approach, and the consumer preference shifted towards Japanese-style bread.

Three business models of bakery industry: daily convenience, better experience, and online competition

There are three distinct business models of bakery industry catering to different market segments. The first type is designed for daily consumption and is primarily available through mainstream sales channels such as supermarkets and convenience stores. Examples of this category include Toly Bread and Mankattan.

The second type, represented by brands like Holiland and BreadTalk, targets mid-to-high-end consumers. These brands operate through self-owned chains of shops strategically located in major cities, emphasizing a premium and refined customer experience.

The third type is positioned for the lower-end market, facing challenges due to intense competition from numerous small bakeries that operate through online sales channels. Brands like Bliss Cake and Le Cake operate in this category, navigating a competitive landscape where their bargaining power is influenced by the fierce presence of smaller bakeries vying for attention in the online marketplace.

Future trends in China’s baked goods market

E-commerce platforms are boosting the rise of the bakery market in China. Beyond providing a cost-effective alternative to physical stores, e-commerce facilitates brand visibility through strategic online activities. Additionally, it empowers these brands to test the market and make informed adjustments based on valuable customer feedback.

Notably, Western-style bakeries, such as BreadTalk and Le Pain Quotidien, actively utilize popular Chinese social media platforms like WeChat and Weibo. By their official accounts, they share product information, promotions, and events, engaging with followers and often collaborating with influential figures to broaden their audience.

Moreover, some independent bakeries are starting to attract customers in a variety of ways, including providing the experience service of bakery classes for customers to Do it yourself (DIY) bakery products. Consumers are likely to recommend their experiences in the bakery stores to their friends and post their experience on the social media.

If you would like to learn more about the food industry, please visit the SIAL China website for more information.

Source: Da Xue Consulting

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