China's snack market promise
With ever-expanding, urbanised middle classes powering the general economic transformation, cakes, pastries and sweet pies are being scoffed in great volumes and now hold 53.5% of the bakery market share in China, according to this latest report.
“The two most important motivations for snack consumption in China are good value for money and indulgence,” Canadean research analyst Ronan Stafford told BakeryandSnacks.com.
“Within cakes, indulgence is the most important, so that idea of buying a treat,” he added.
Differences in taste
Yet foreign food companies entering the Chinese market must be prepared to make adjustments.
“China represents a strong opportunity but products must be tailored to fit the market,” Stafford explained.
In particular manufacturers must be careful not to go too sweet as Chinese consumers tend to be less driven towards these kinds of products, according to Stafford.
When entering the Chinese market in the mid-nineties, Oreo’s cookies were reformulated to contain less sugar as well as making changes to the color and cream flavor in order to suit these differences in taste.
Within the snack sector, the Canadean report revealed that bread and rolls are another leader. “But this isn't a traditional meal component yet in Chinese culture,” explained Stafford.
Rural migration: From field to city
The UN put the total population of China at 1.35 billion in 2012. Of that number there has been a dramatic shift in recent years with approximately 600 million people now calling the city home, a number set to reach around 800 million by the end of the decade.
Despite this huge population, a large proportion of this pool of potential customers lay out of reach of manufacturers due to their rural location. This recent migration towards the metropolis has influenced the way in which manufacturers can distribute their products, putting heavier emphasis on supermarkets and changing consumer opportunities, Stafford explained.
"City workers may be more likely to go to the supermarket to buy packaged foods, rather than going to smaller street vendors or going home," he said.
Last year management consultancy firm McKinsey reported that by 2025 China will have 221 cities with a population of more than a million. Currently, there are 160 of these megacities in China, in contrast with just 35 in Europe.