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Mainland Bakery Industry Polarises into Leisure and Bespoke Sectors

Dining in or the online ordering of custom cakes are the two options currently dividing the baking industry.

Photo: Gateauisation: Could custom cakes become the norm? (Xinhua News Agency)
Gateauisation: Could custom cakes become the norm?
Photo: Gateauisation: Could custom cakes become the norm? (Xinhua News Agency)
Gateauisation: Could custom cakes become the norm?

The growth of e-commerce has revolutionised many sectors over recent years, including electronics, clothing, travel and entertainment. Now this digital behemoth has turned its attention to the world of cakes, ushering in a new era of personalised and highly creative designs, while 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 polarised. On one side, there are those establishments that have embraced the leisure/dining model, while others have looked to create more of a bespoke, online service.

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

Today, with many city dwellers increasingly favouring quick and simple meals, a number of bakeries have renounced the front-shop-back-kitchen model. Instead, they have opted 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 having bread and cakes delivered from a central factory.

As an extension of this, several bakeries have now morphed into restaurants, prioritising providing seating space for customers and creating a comfortable environment. This has seen a variety of sofas and padded chairs introduced into the designated eating area, while 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. This has seen the consumption area now take 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, a number have opted to specialise in bespoke production.

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 hand-baking using only natural ingredients.

Within these three parameters, many of these customised cake producers have managed to establish 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 output.

As consumers are becoming more and more demanding with regard to both food diversification and safety, product segmentation in the bakery market is expected to become increasingly evident, 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 those companies that come to embody the premium end of the sector.

Natalie Lu, Guangzhou Office

Content provided by Picture: HKTDC Research
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