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A review of the Biscuits and Snack Bars Industry in China in 2015
The retail value sales of the biscuits and snack bars industry in China grew 9% in 2015, reaching 60.8 billion CNY. However, the traditional biscuits industry was seeing a rather slow growth due to the stagnant sales resulting from, both consumers being tired of the old products and the rise of health and wellness foods. The rising raw materials’ and labor costs led to a 4% increase in the average unit price of biscuits. Cookies, as a premium holiday gift, registered the highest value growth of 14% in 2015. The trend that Chinese consumers tend to buy premium packaged products for gifts contributes to the faster growth of cookies than other biscuits categories. Another outstanding inclination of the consumers’ choices on biscuits and snacks is the increasing popularity of health and wellness food products. Chinese citizens are more aware of their health conditions, which directly affects their purchasing decisions. The foreign companies still dominate the middle and high-end markets due to their diverse and innovative products, but domestic companies are rising quickly to compete for the market share although they still have a long way to catch up the leading foreign companies. The biscuits and snack bars industry are forecast to keep 6% constant increase in CAGR value, reaching CNY80.5 billion by 2020. From the current market conditions, the traditional biscuits and snacks are not favored by Chinese consumers anymore; instead, the premium or health and wellness products are seen as competitive market products.
Current Market Competition
As one of the leading foreign company in the biscuits market in China, Mondelez China Inc. has been experiencing the stagnant sales of its well-known brand Oreo. In spite of which, it still leads in market shares with its diverse portfolio strategies such as Chips Ahoy and TUC. If Mondelez wants to keep the leading position in such fierce competitive environment, it then needs to extend its products into healthier or premium ones. In comparison, due to the success of its Hongu biscuits, Jiangzhong Pharmaceutical Co. Ltd. saw the largest increase in sales value in 2014, gaining a 2.5% market share since its inception two years ago. Another crucial part of Jiangzhong Pharmaceutical Co. Ltd’s success is due to their retail strategy. Having access to pharmacies and online platforms that mainly sells medicine and health products, Jiangz hong can directly promote their products to health-conscious consumers. Driven by the success of Jiangzhong’s Hongu biscuits, many companies started to emulate the same product or produce new health and wellness biscuits. These new players have been enjoying a rather dynamic growth in retail sales compared to the leading companies.
Besides Jiangzhou, You Yi Jia is also seeing a dynamic growth of over 45% in its retail sales in 2014 mainly due to its premium brand position and high-end packaged cookies. Chinese consumers nowadays, especially the middle-class favor premium products over mid-price or economic offerings. The tasty cookies and the premium package cater well to the consumers’ choice for holiday gifts or other occasions. In next following years, the premium and high-end imported biscuits are expected to dominate one part of the market share.
Market Opportunities & Trends
Two popular trends in this industry are premiumisation and health and wellness. The premiumisation trend led by You Yi Jia (Shanghai) Food Trading Co Ltd and the health and wellness trend led by Jiangzhong Pharmaceutical Co Ltd are two approaches to expand companies’market share. The latest report by Daxue Consulting revealed that among all the snacks consumed by the Chinese, almost 20% of which are fruits, followed by chocolates and nuts while the consumption of biscuits, bread and chips are rather low in proportion. So in order to increase the biscuits and snack bars consumption, converting the traditional biscuits with high sugar and cream to healthier ones with green and healthy ingredients will largely increase your market opportunities. In addition, with the rapid development of internet retailing, online channels will serve as a good platform to introduce more high-end and healthy biscuits from foreign countries, which will cater to the different needs of the Chinese consumers. If companies can capitalize the prevalent social medias to promote their new products that appeal to the growing trend of premiumisation and health and wellness, they will see a considerable increase in total sales.
Above all, the Chinese biscuits and snack bars industry are in its transforming period. In order to keep growth in total sales value and expand the business, companies are recommended to follow the trend of premiumisation and health and wellness. They also should consider developing some online strategy and non-orthodox methods of retailing for diverse sales avenues.