Sector Trend Analysis - Bakery products in China

December 2017

  • United States dollar (US$)

Executive summary

China is the tenth-largest bakery product market in the world, with retail sales valued at US$26.1 billion within 2016. China also ranks as the ninth-greatest importer of bakery products with US$980 million imported in 2016.

Canada’s exports in China were estimated at US$3.14 million, with a compound annual growth rate (CAGR) of 53% from 2012 to 2016. This solid growth trend indicates that the Chinese market is an interesting business opportunity for Canadian exporters.

The baked good subsector is the largest of the three subsectors within bakery products category and made up 96% of overall value sales in 2016 (Euromonitor International, 2017).

Indonesia, Hong Kong and Malaysia were the top three suppliers of bakery products to China in 2016. Combined, these three countries held over 44% of the total available market share (Global Trade Tracker, 2016).

According to the Mintel Global New Products Database (GNPD), there were 7,154 new bakery products launched in China from January 2012 to December 2016, with an average of 1430 product launches a year.

Contents

Positioning bakery products in the world

Top five bakery companies worldwide in 2016, US$
Company International Sales Sales in China
1. Grupo Bimbo SAB de CV 11.1 billion -
2. Kellogg Co 8.7 billion -
3. Yamazaki Baking Co Ltd 4.7 billion -
4. General Mills Inc 3.9 billion -
5. PepsiCo Inc 2.6 billion 0.2 billion
6. Artisanal 191.2 billion 17.8 billion
7. Other 62.1 billion 2.2 billion
8. Private label 27.7 billion 1.2 billion

Source: Euromonitor International, 2017

*Fixed 2017 Exchange Rate

Top ten bakery products retail markets worldwide in 2016, US$
Country Retail Sales
1. USA 68.40 billion
2. China 25.90 billion
3. Brazil 23.30 billion
4. Japan 21.20 billion
5. Italy 19.20 billion
6. Germany 17.10 billion
7. France 16.50 billion
8. Mexico 14.70 billion
9. Turkey 12.60 billion
10. United Kingdom 10.40 billion

Source: Euromonitor International, 2017; Global Trade Tracker, 2017

The bakery products market in China in 2016, US$
Indicator Value
Retail sales, 2016 25.9 billion
CAGR (2012-2016) of retail sales 12.21%
Imports of bakery products from the world, in 2016* 923 million
Exports of bakery products to the world, in 2016* 627 million
Dependence on imports 3.56%

Source: Euromonitor International, 2017; Global Trade Tracker, 2017

*latest import and export data available is 2016

Top ten importers of bakery products* worldwide 2016, US$
Country Imports $US (billions) Top suppliers & market share - #1 Top suppliers & market share - #2 Top suppliers & market share - #3 Canada's share
United States 5.48 Canada 46.6% Mexico 22.3% Italy 3.2% 46.60%
United Kingdom 2.88 Germany 19.36% France 18.49% Belgium 11.16% 0.93%
France 2.68 Belgium 23.24% Germany 22.53% Italy 13.4% 0.06%
Germany 2.56 Poland 16.18% Netherlands 15.5% France 13.3% 0.01%
Canada 2.06 United States 80.3% Mexico 4.2% United Kingdom 2.2% -
Belgium 1.36 France 29.3% Netherlands 24.1% Germany 17.1% 0.10%
Netherlands 1.16 Belgium 36.9% Germany 27.8% France 7.2% 0.04%
Italy 1.14 Germany 27.4% France 18.2% Austria 12% 0.00%
China 0.97 Indonesia 22.17% Hong Kong 10.98% Malaysia 10.54% 0.34%
Spain 0.93 Germany 23.22% France 20.40% Italy 14.40% 0.00%

Source: Global Trade Tracker, 2017

*Note: For the purpose of this report, “bakery products” was defined using the following HS codes: 1904 – 1905

In 2016, Canada exported over US$2.5 billion worth of bakery products to the world, with 95.2% going to the United States. However, China accounted for US$3.1 million of Canada’s bakery products in 2016. More specifically, 66% of Canada’s main bakery exports to China mainly consist of cereals and cereal products at a value of US$2.06 million. As flour is the main ingredient in bakery products and Canada’s top bakery good export commodities to the world in 2016 were bread, pastry, cakes and biscuits, Canadian grain producers could focus on increasing their exports of wheat flour to China.

Bakery products* export gap, 2016 (US$ millions)
2012 2013 2014 2015 2016 CAGR** (2012-2016)
China imports of bakery products* from the world 375.3 502.2 592.4 811.2 923.5 25.2%
China imports of bakery products* from Canada 0.5 1.1 1.7 2.9 3.1 53.5%
Gross export gap 374.8 501.1 590.7 808.3 920.4 -28.2%

Source: Global Trade Tracker, 2017

*Note: For the purpose of this report, “bakery products” was defined using the following HS codes: 1904 – 1905

**CAGR: Compound Annual Growth rate.

Consumer attitude and economic drivers

Despite a slowdown in the Chinese economy in 2016, rising consumption from younger generations who are more willing to adopt Western lifestyles and Western food than their parents and grandparents recorded strong growth for baked goods in China. With the accelerating pace of life for the younger generation, they preferred baked goods for their daily meals, in particular for breakfast or afternoon tea, to meet their on-the-go demands (Euromonitor 2017). Baked goods in China are expected to grow at a CAGR of 5% at constant 2016 prices over the forecast period, which is slower growth than was registered over the review period. Slower growth will result mainly from rising consciousness about healthy diets among consumers, who are increasingly preferring home-made baked goods or other healthy food substitutes for baked goods. However, an increase in consumption of healthy cereal bars may neutralize this forecasted decline.

Retail environment

According to Euromonitor, pastries recorded the fastest current value growth in 2016, mainly due to a rich product portfolio, from traditional Chinese to popular western products. Major new products launched by both packaged food manufacturers as well as bakery shops also contributed to fast food expansion of pastries in China.

Due to rising costs of production affecting raw materials and labour, the average unit price of baked goods increased by 4% in 2016. However, with rising disposable incomes, consumption of premium baked goods increased dramatically which also led to a price surge. An example would be the continued development of online retailers that made it easier for consumers to have access to foreign goods, which usually sell their products at a higher price than domestic brands.

Historic/Forecast retail sales of bakery products in China
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Year Sales*
2012 16.30
2013 18.70
2014 21.10
2015 23.00
2016 25.90
2017 29.60
2018 33.30
2019 37.60
2020 42.70
2021 48.40

*US$ billions - fixed exchange rate

Historic/Forecast retail volume of bakery products in China
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Year Volume*
2012 6,790.00
2013 7,368.50
2014 7,943.40
2015 8,407.70
2016 8,838.30
2017 9,252.90
2018 9,652.90
2019 10,044.30
2020 10,438.60
2021 10,833.10

*000' Tonnes

Historical retail value sales of bakery products in China, in US$ millions and period growth (%), current prices – fixed 2017 exchange rates
Category 2012 2013 2014 2015 2016 CAGR(2012-2016)
Bakery products 16,331.0 18,650.3 21,069.8 23,037.3 25,894.2 12.2%
Baked goods 15,734.7 17,979.5 20,323.1 22,209.9 24,980.1 12.2%
Breakfast cereals 596.3 670.8 746.7 827.4 914.1 11.3%

Source: Euromonitor International, 2017

Forecast retail value sales of bakery products in China, in US$ millions and period growth (%), current prices – fixed 2017 exchange rates
Category 2017 2018 2019 2020 2021 CAGR(2017- 2021)
Bakery products 28,028.5 30,050.9 32,198.4 34,486.3 36,887.7 7.1%
Baked goods 27,018.1 28,956.1 31,012.3 33,203.2 35,503.2 7.1%
Breakfast cereals 1,010.4 1,094.8 1,186.1 1,283.1 1,384.5 8.2%

Source: Euromonitor International, 2017

Historic retail volume in tonnes (‘000) of bakery products in subsectors in China
Category 2012 2013 2014 2015 2016 CAGR(2012-2016)
Bakery products 6,790.0 7,368.5 7,943.4 8,407.7 8,838.3 6.8%
Baked goods 6,649.5 7,217.2 7,781.7 8,235.7 8,656.5 6.8%
Breakfast cereals 140.5 151.3 161.7 172.0 181.8 6.7%

Source: Euromonitor International, 2017

Forecast retail volume in tonnes (‘000) of bakery products subsectors in China
Category 2017 2018 2019 2020 2021 CAGR (2017-2021)
Bakery products 9,252.9 9,652.9 10,044.3 10,438.6 10,833.1 4.0%
Baked goods 9,061.2 9,451.1 9,832.3 10,216.2 10,600.7 4.0%
Breakfast cereals 191.7 201.8 212.0 222.4 232.4 4.9%

Source: Euromonitor International, 2017

Top five bakery products company shares in China– retail value sales % breakdown
Company 2012 2013 2014 2015 2016
Fujian Dali Food Co Ltd 5.3 5.5 5.6 5.6 5.6
Shenyang Toly Bread Co Ltd 1.8 1.8 1.9 2.2 2.5
Orion Group 2.1 2.2 2.3 2.4 2.4
Nestlé SA 1.4 1.3 1.2 1.1 1.1
Fujian Changting Panpan Foodstuff Co Ltd 0.8 0.9 1.0 1.0 1.0

Source: Euromonitor International, 2017

China’s bakery product industry is led by a domestic company, Fujian Dali Food Co Ltd , who accounts for 5.6% of the available market share in 2016. Although the top five bakery product companies in China account for 12.6% of total bakery sector, 71% of market share in 2016 was accounted for by artisanal (due to an increase in the number of independent bakeries and cake houses growing rapidly). Manufactures are continuing efforts to push bakery products, an indication that the bakery sector is growing and would allow possible opportunities for Canadian companies.

New product launch analysis

This section combines all three subsectors (baked goods, breakfast cereals, and biscuits) and analyses the bakery products category as a whole, based on new product launches from January 2012 to December 2016.

According to the Mintel Global New Products Database (GNPD), there were 7,154 new bakery products launched in China from January 2012 to December 2016, with an average of 1,430 product launches a year. Of these products, 37% were new products and 63% were a combination of new variations (packaging, formulation, and variety/range extensions) of existing products. In addition, 6,850 of the total were branded while 304 were private-label products.

Within the 7,154 new products launched, the top five ingredients used consisted of white sugar, salt, wheat flour, sodium hydrogen carbonate, and emulsifiers. White sugar, salt, and wheat flour are the most commonly used ingredients in over 5,000 products. Of the bakery products category in China the fastest growing ingredients include vegetable oils, palm oil, skimmed milk powder, and disodium diphosphate, each with a growth calculated over 30% within the last year (Mintel GNPD, 2017).

Within the last five years of new bakery products launches in China, 24% were imported from the United Arab Emirates (UAE), the USA, Italy, Turkey, and Germany combined, while 76% were domestic (Mintel GNPD, 2016). As grain products are core ingredients in bakery products and China’s consumers have an increasing preference for international bakery products, there presents a possible export opportunity for Canadian companies who are known for their excellence in bakery ingredients and products.

New product launches of bakery products in China January 2012 to January 2016
2012 2013 2014 2015 2016
Yearly product launches 1,260 1,053 1,839 1,524 1,478

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Top five claims
2012 2013 2014 2015 2016
Halal 53 78 166 149 133
Children (5-12) 59 67 120 83 79
No additives/preservatives 60 54 83 84 112
Low/no/reduced sugar 88 42 109 52 47
Social media 2 3 18 122 179

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Imported status
2012 2013 2014 2015 2016
Imported 0 14 101 1,237 1,253
Not imported 1 19 95 127 137
Other 1,259 1,020 1,643 160 88

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Storage
2012 2013 2014 2015 2016
Shelf stable 1,247 1,032 1,814 1,510 1,459
Frozen 11 20 23 14 14
Chilled 2 1 2 0 5

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Top five packaged types
2012 2013 2014 2015 2016
Flexible 898 875 1,479 1,333 1,328
Carton 85 42 113 37 20
Rigid box 22 21 53 35 19
Flexible sachet 64 38 13 9 0
Tub 26 22 34 18 12

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Top five flavours (incl. blend)
2012 2013 2014 2015 2016
Unflavoured/plain 177 149 232 196 260
Chocolate 64 78 114 91 87
Milk 53 42 98 70 69
Sesame 54 45 64 45 27
Egg 46 30 71 36 19

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Top five ingredients*
2012 2013 2014 2015 2016
White sugar 761 803 1,626 1,360 1,243
Wheat flour 737 751 1,617 1,401 1,272
Salt 604 652 1,441 1,236 1,134
Food and drink additives 734 755 1,391 1,077 982
Vegetable oils 563 575 1,183 988 892

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

*Note: that the totals for ingredient counts will add to more than the total launches as products can use multiple ingredients

New product launches of bakery products in China January 2012 to January 2016 - Top five companies
2012 2013 2014 2015 2016
Mondelez 0 5 42 57 42
Ezaki Glico 7 7 19 31 43
Dingyuan Foods 4 9 19 34 24
Xin Meng Food 21 13 14 16 21
Hsu Fu Chi 2 6 16 30 11

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

New product launches of bakery products in China January 2012 to January 2016 - Manufacturer type
2012 2013 2014 2015 2016
Branded 1,228 1,017 1,766 1,425 1,414
Private label 32 36 73 99 64

Source: Mintel Global New Products Database (GNPD), 2017.

Note: ranking are based on 2012-16 data

Subsector analysis

Baked goods

The baked goods subsector remains to be the largest of the subsectors within the bakery category. Baked goods have sustained a steady and consistent growth from 2012 through 2016, reaching value sales of almost US$ 25 billion or 96% of total bakery value sales by the end of 2016. As seen in the chart on page 4, the sector is forecasted to continue this steady growth at a CAGR of 7% through 2021 (Euromonitor international, 2017).

Cakes is the dominant category within baked goods and continues to sustain a lead portion of baked good sales through 2021. Not only are cakes dominating the market in terms of retail sales, they are also the fastest growing subcategory with a 12.89% CAGR. Bread and pastries have also been showing fast growth with both at approximately 11.5%. This is an indication of the maturity of the category along with the increase in competition from bread and pastry categories.

Historical retail volume in percentage* of baked goods categories in China
Category 2012 2013 2014 2015 2016
Bread 24.47% 24.75% 24.98% 24.71% 24.28%
Cakes 17.57% 17.83% 18.03% 18.02% 18.12%
Dessert mixes 0.61% 0.59% 0.57% 0.57% 0.55%
Pastries 57.35% 56.83% 56.42% 56.70% 57.05%

Source: Euromonitor International, 2017

*Note: Percentage calculation done by AAFC based on data from Euromonitor International

Forecast retail volume in percentage* of baked goods categories in China
Category 2017 2018 2019 2020 2021
Bread 23.89% 23.44% 22.96% 22.50% 22.17%
Cakes 18.17% 18.21% 18.23% 18.19% 18.16%
Dessert mixes 0.52% 0.50% 0.46% 0.43% 0.41%
Pastries 57.42% 57.86% 58.35% 58.88% 59.27%

Source: Euromonitor International, 2017

*Note: Percentage calculation done by AAFC based on data from Euromonitor International

China’s baked goods sector is led by the artisanal subsector with a 71% market share in 2016. Artisanal products are generally perceived as healthier than packaged products. Apart from artisanal, two of the top baked goods companies are domestic players such as Fujian Dali Food Co Ltd (5.6%) and Shenyang Toly Bread Co Ltd (2.5%) that make up 8.1% of retail value share combined in 2016. Private label products accounted for a 5% value share of baked goods in China in 2016, and were mostly sold by supermarkets and hypermarkets at cheaper prices.

Top five Chinese baked goods companies and market shares in China – retail value sales % breakdown
Company 2012 2013 2014 2015 2016
Fujian Dali Food Co Ltd 5.3 5.5 5.6 5.6 5.0
Shenyang Toly Bread Co Ltd 1.8 1.8 1.9 2.1 2.5
Orion Group 2.1 2.2 2.3 2.2 2.3
Fujian Changting Panpan Foodstuff Co Ltd 0.8 0.9 1.0 1.0 1.1
Nestlé SA 1.4 1.3 1.2 1.1 1.1

Source: Euromonitor International, 2017

*Note: Percentage calculation done by AAFC based on data from Euromonitor International

Breakfast cereals

Breakfast cereals continued growing in 2016, recording a 9% increase in current terms. Growth was due to the increasing popularity of light, quick, and convenient breakfasts. Western-style breakfasts such as ‘milk and cereal’ are becoming more popular in first- and second-tier cities, as they are believed to be nutritional as well as timesaving (Euromonitor, 2017). Moreover, with increasing knowledge of nutritional issues in China and extensive advertising of their many nutrients, RTE (ready-to-eat) cereals seem to be an admirable choice for breakfast.

The breakfast cereal subsector is broken down into three main categories of children and family breakfast cereal, and hot cereal. Hot cereals hold around 81% of retail volume within this category, followed by family’s breakfast cereals at 15% and children’s cereals at 4%.

Breakfast cereals are expected to grow at a CAGR of 6% at constant 2016 prices over the forecast period, which is slower than growth posted over the review period. The leading companies will continue to focus on segmentation, providing products to meet the different demands of various consumer groups.

Historical retail volume in percentage* (%) of breakfast cereal categories in China
Category 2012 2013 2014 2015 2016
Hot cereals 81.5 81.4 81.4 81.2 80.8
Family’s breakfast cereals 14.8 14.8 14.9 15.1 15.5
Children’s breakfast cereals 3.7 3.7 3.7 3.7 3.7

Source: Euromonitor International, 2017

*Note: Percentage calculation done by AAFC based on data from Euromonitor International

Forecast retail volume in percentage* (%) of breakfast cereal categories in China
Category 2017 2018 2019 2020 2021
Hot cereals 80.4 79.9 79.3 78.7 77.9
Children's breakfast cereals 3.8 3.8 3.8 3.8 3.8
Family breakfast cereals 15.9 16.4 16.9 17.5 18.2

Source: Euromonitor International, 2017

*Note: Percentage calculation done by AAFC based on data from Euromonitor International

This subsector is dominated by large multinational companies like Cereal Partners Worldwide SA, and Kellogg Co, who hold 80% of the total breakfast cereal market share (Euromonitor International, 2017). Although dominated by the top two companies, the Chinese breakfast cereal market still has many small players that account for 20% of the remaining market share (Euromonitor International, 2017).

Historical retail volume in percentage* (%) of breakfast cereal categories in China
Company 2012 2013 2014 2015 2016
Cereal Partners Worldwide SA 41.3 40.0 39.9 39.8 40.1
Kellogg Co 39.5 38.2 38.9 39.4 39.8
Daher International SAS 9.1 8.5 8.5 8.4 8.1
PepsiCo Inc 10.1 9.1 8.6 8.2 7.8
Bright Food (Group) Co Ltd 0.0 4.2 4.2 4.2 4.2

Source: Euromonitor International, 2017

Conclusion

China’s bakery products market will continue to see growth over the next five years and could potentially be a larger export market for Canadian products. More specifically, as flour is the main ingredient in bakery products, grain producers could focus on increasing their exports of wheat flour to China, while processed foods manufacturers can increase their exports of ‘bread, cakes and pastries’.

Market access

China has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Chinese importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.

If you have questions about exporting your agriculture or food products, or are looking for support please contact us at mas-sam@agr.gc.ca

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International Market Intelligence page.

For additional information on Food and Hospitality China please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@agr.gc.ca

Resources

Sector Trend Analysis - Bakery products in China
Global Analysis Report

Prepared by: Hadi el Zein, Market Analyst (Co-op Student)

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