While the segment has not been a traditional part of the diet in the country, products like breakfast cereals, cakes and biscuits have become increasingly popular with consumers over the past decade.
Structural changes to China’s economy to further stimulate domestic demand and consumer spending is now being implemented by the new Premier, Li Keqiang.
What a difference a year makes
This is a far cry from just a year ago, when China’s Bright Food bought up a 60% stake in breakfast cereal manufacturer Weetabix Food Company for £1.2bn (US1.92bn) and industry analysts were convinced the cereal concept would flop.
At the time, Bright said the acquisition would drive global growth of bands like the flagship Weetabix, Alpen Readybrek, Weetos and Alpen, but with a focus on Asia – and especially China – “to take advantage of the growing appetite in the country for packaged and convenient healthy foods.”
But one analyst told FNA’s sister title, BakeryAndSnacks.com, at the time that the move would likely fail as the Western breakfast cereal segment hadn’t worked in the Asian market.
“It’s not a format anywhere near their diet – consumers are very traditional,” said Sam Mulligan of Data Driven Marketing Asia.
However, market research agency Canadean believes that tastes are changing quickly among the country’s increasingly globalised middle-class consumers, for whom incomes and living standards are rising.
It says the consumption patterns of the middle-class and Chinese youth have shifted towards a preference for Westernised bread and baked products.
Moreover, with the urban population forecast to reach 800m by the end of the decade, this should further drive demand for bakery products, for which Canadean expects to see sales volumes exceed 12bn kg by 2017.
In 2000, China’s urban population reached 35% of the country’s total population but this is set to soar to 53% by 2020.
Rise of the international manufacturers
International manufacturers are set to play an increasing role, as consumers turn to foreign products. And as the economic changes initiated by the country’s new leadership allow increased foreign investment, American and European companies will find it easier to enter the Chinese market.
The already robust growth of the market, which has seen per-capita retail consumption almost double in the past decade, reached 7kg per person in 2012.
Canadean’s data indicates that in the period up to 2017, the market will increase at a rate of 9.20% in value terms, and 6.85% in volume terms.
This will be supported by consumers who trust the safety and health connected to foreign products, following a number of domestic food safety scandals in recent years.