China insights report: opportunities for Australian cake-makers

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This report is a part of Food Innovation Australia Limited’s China Insights series which explores different food products in mainland China.

Chinese consumer markets for Western-style cakes and cake mixes are still in their infancy, yet early stages of development and demand for this food category are growing rapidly.

In China’s first tier cities, individual cake slices on premium supermarket shelves are sold regularly and have gained popularity among Chinese with an acquired taste for sweets. Cakes are also now featured in convenience stores such as 7-Eleven and Lawsons.

A number of Western restaurant chains and cafes, have become above all very successful in China including Starbucks, Wild Bean and Café Zarah to name a few. These days, Café Shops are stealing a march on traditional teahouses with its variety of Western style desserts and treats.

The rapidly changing appetite for Western-style cake has helped to position convenience pre cut cake slices as a premium food product in China.

Similar to the large bakery chains operating in China such as Holiland, Ganso and Bread Talk, China Starbucks stores offer a selection of cake flavour and fillings popular and favoured by Chinese consumers.

Similar to the large bakery chains operating in China such as Holiland, Ganso and Bread Talk, China Starbucks stores offer a selection of cake flavour and fillings popular and favoured by Chinese consumers.

Cake mixes

Cake mixes are also gaining wider acceptance among Chinese consumers as baking at home becomes increasingly accepted. Although ovens are still relatively uncustomary in China, they are increasingly and quickly becoming widely obtainable among the wealthy /emerging middle class in China. Usual western household appliances have been embraced for extra convenience and luxury, the likes of ovens notably tend to be much more widely common among Chinese living in first tier cities. The primary target market for many Australian manufacturers.

Chinese consumers, particularly female white collar workers, noted that they baked at home occasionally on weekends – mainly cakes and pizza. They often shared images of their creations via social media.

Some of these consumers were located in third and fourth tier cities, pointing to market opportunities outside of China’s large eastern seaboard cities. (especially with the increased purchasing popularity option and affordability by China’s eCommerce platforms). While some consumers value the added food safety assurance of personally mixing their ingredients, others pointed to the high cost of baking – particularly when using items such as imported cheese, milk and butter – and indicated it would be an activity they would indulge in but rarely due to overall cost.

Manufacturers that can demonstrate a comparatively lower preparation time and cost saving on required ingredients, may be able to gain a competitive advantage in this category.

Brands

Major brands

  • Betty Crocker, Duncan Hines, Dr Oetker, Farina Bella, Bob’s Red Mill, Hodgson & Mill.

Niche brands

  • Cherrybrook Kitchen, Green’s, Yes You Can, King Arthur Flour.

Selected product information

Product Retailer Manufacturer Origin Serving Size Price (Rmb)
Chocolate cake flour mix Carrefour (Easy Store) JinLongYu China 300g $23.90
Chocolate fudge cake Carrefour Betty Crocker USA 540g $46.90
Plain cake mix BHG Farina Bella Turkey 450g $29.00
Golden butter cake April Gourmet Greens Australia 470g $36.50

 

Packaging and flavours

Cake mixes feature standard cardboard packaging with printed colourful images. There were no packaging innovations observed in the study period. Health claims such as gluten free, low fat and reduced sugar appeared on some cake mixes in premium international supermarkets.

Regular chocolate cake is a popular flavour in China, along with vanilla, plain, butter and marble cake. Niche flavours and products include berry coconut (slice), blueberry (muffin), and salted caramel (cupcakes).

Promotions

One cake mix promotion was observed during the study period – a sample tasting at a premium domestic supermarket chain for a French butter cake that was prepared in-store.

Trends and opportunities

Some international supermarket operators noted that cake mixes are still purchased primarily by their expat customers, though they expect sales from domestic consumers to grow steadily in the years ahead as oven baking becomes more popular.

A limited range of cake mixes is now available at hypermarkets in major cities and supermarket chains with mainly Chinese customers such as BHG, indicating a greater acceptance of cake mixes among the Chinese.

Smaller-sized baking products such as cupcakes, muffins and brownies can be found on the shelves of premium international supermarkets, pointing to growth opportunities for these products as demand steadily increases.

Competition in this category is still relatively limited, and there will be opportunities for manufacturers that can demonstrate strong product differentiation, such as unique flavors appealing to Chinese consumers, innovative packaging, easy to make and convenient along with demonstrable health benefits ingredients (reduced sugar, sugar free, low fat, gluten free, dairy or wheat free).

Opportunities currently exist for e-commerce and through traditional brick and mortar retailers, for manufacturers that can effectively connect with and market to their target consumers – particularly female white color workers and mothers in the 25-35-year-old category.

Choosing the right partner

A reputable Chinese distributor is critical. One Chinese international buyer at a premium international supermarket noted that many Australian companies are choosing poor quality partners with limited resources and experience in market. In fact, some are actually feeding Australian manufacturers with misinformation (regarding import regulations and requirements).

Once a relationship has been forged, it should be strengthened over time. In order to strengthen the relationship and grow business, several distributors claimed that their US and EU suppliers, both large and small, would:

  • Visit China several times in a year.
  • Arrange to meet the partner at trade shows, both in China and overseas.
  • Invite the partner to their home country to inspect their manufacturing facilities – so that the distributor was able, in turn, to better promote the products to their own retail customers; and
  • Split the cost of promotions such as domestic trade shows.

This report is a part of Food Innovation Australia Limited’s China Insights series which explores different food products in mainland China.