Home > Hong Kong Means Business > Inside China


 Print  Email
Content provided by :  Hong Kong Trade Development Council

Icing on the Cake

The growth of e-commerce has revolutionised many sectors in recent years, including electronics, clothing, travel and entertainment. Now this digital behemoth is also disrupting the cake industry, ushering in a new era of personalised and highly creative designs, threatening to consign traditional bakeries to the retail abyss that has already swallowed bookstores and DVD retailers.

The upshot of this is that the traditional baking sector has become polarised. Some establishments have embraced the leisure/dining model, while others have focused on creating more of a bespoke, online service.

Slice of the Market

In recent years, there has been a notable increase in demand for bakery products across the Chinese mainland, with Guangzhou just one of many cities that have seen rapid growth in the sector. With the industry now highly competitive, a number of well-known brands are fighting to sustain and develop their market share, while also looking to compete in the creative arena, with new designs and products seen as essential in the war to woo consumers.

With many of today’s city-dwellers increasingly favouring quick and simple meals, some bakeries have abandoned the front-shop-back-kitchen model. They have opted instead to provide a dedicated eating area within the shop, a place where customers can enjoy bread, cakes and pastries, as well as simple meals and drinks.

Baking on the shop floor as a means of boosting consumer engagement is also gaining traction. This has led to many bakeries discarding the previous practice of delivering products from a central factory. Instead, some bakeries have now morphed into restaurants, providing seating space for customers and creating a comfortable environment. A variety of sofas and padded chairs are available in designated eating areas, while popular meals such as spaghetti, fried rice and snacks now appear alongside conventional bakery items on menus.

According to the manager of one such Guangzhou establishment, certain parts of the bakery industry are now becoming more closely aligned with the leisure sector, with the consumption area now taking precedence over the bakery production facility.

The changes to the conventional baking sector have resulted in a splintering of the industry. While many bakeries have taken the leisure/in-house dining route, several have opted to specialise in bespoke production.

Carving a Niche

According to industry estimates, there are now some 30 handmade cake bakery workshops active in Guangzhou alone. Frequently, such establishments have three key elements in common – the production of custom-made cakes, the provision of door-to-door delivery, and a commitment to handmade confectioneries using only natural ingredients.

Within these three parameters, many customised cake producers have established their own distinct niche. Some, for instance, target the wedding market by offering fondant cakes, while others specialise in cakes with unusually intricate designs. Again, there are also some producers looking to work more closely with consumers on a range of DIY products, while others are keen to emphasise the healthy nature of their product.

As consumers become more demanding in terms of food diversification and safety, product segmentation in the bakery market is expected to become increasingly prevalent, ultimately leading to the creation of distinct brands. At present, the battle is to establish those brands, with mid- to high-end consumers expected to demonstrate a significant loyalty to companies that embody the premium end of the sector.

For more China market opportunities, please visit: http://research.hktdc.com.

 Print  Email