The Chinese bakery industry has taken some beating since early 2020 when the covid-19 started, but the frozen bakery as a segment has, rather, enjoyed a shot in the arms, and has grown ever more rapidly.
The Chinese bakery industry’s sales declined by more than 40 per cent during the first quarter of 2020, and the industry has since entered a trajectory of slow recovery but are confronted with sharp drops in export orders, a shortage in human resources and raw materials and continued operating cost increases, according to the national bakery association.
The report did not specifically mention the frozen bakery or dough industry but according to TopGuide Advisory Shanghai, a consultancy focusing on bakery and alternative protein, the epidemic afforded the sector extra momentum, particularly during February and April period, when lockdown measures were popularly in place.
According to Tmall, in the year ending July 2020, per capita consumption of egg tart bases, pizza bases and other frozen dough products surged by about 40 per cent on an annual basis, as many people, confined in their homes, turned their eyes to frozen dough products.
The most recent Bakery China, a major exhibition that took place during 27 - 30 April, also drove home the impression that the frozen segment is spearheading the development of the bakery industry. TopGuide Advisory Shanghai counted off some 30 other frozen bakery companies attending the show altogether. The overall number was two to three times the number of such firms in the previous shows in the past few years. Only one bakery chain, with the name of Bliss Cake, attended the exhibition, and there were no heavyweight long-shelf life baked goods manufacturers in the show either.
One of the biggest booths was owned by Guangzhou Ligao, a firm that was formed as a result of the older baking ingredient firm acquiring a frozen dough start-up in 2015 and has seen the frozen dough business, amounting to RMB 956 mn (USD 149 mn), nearly triple on the basis of RMB 358 million (USD 56 mn) in 2017.
With a booth almost as big as Ligao, was the Taiwanese company Namchow, which has factories in Tianjin, Shanghai and Guangzhou, producing baking oil and fat and other ingredients as well as frozen dough. Namchow planned to go public in 2018 and is most likely start trading in the Shanghai Stock Exchange recently. Frozen dough output for the first time exceeded its annual production capacity by four per cent to 3578 tons in 2020, when the sales value of frozen dough products nearly doubled over the level of 2018 to RMB 114.5 mn (USD 18 mn) while its baking oil and fats, whipping cream, imported products and fillings all witnessed drops or slight increases on an annual basis.
In terms of year-on-year growth rate, Hefei-based Hefei Qige probably has grown fastest. In 2020, the company enjoyed a growth of more than 50 per cent over 2019, as it is rather focused on selling online and targeting individual households, buyers being mostly women in their late 20s and 30s. The company is currently raising funds to build a bigger factory as output has often peaked to its maximum capacity.
As usual, the majority of frozen bakery firms were still from Shanghai, Shandong, Guangdong, Zhejiang and Hefei City of Anhui Province, there were two companies from Henan Province and two companies from Hong Kong, the first time ever in the show. One frozen bakery company was spotted as coming from Southwest China’s Chongqing City, suggesting that the frozen dough industry has taken up presence already in inland areas and China’s mid and west part.
The exhibitors all focused on egg tart bases, pizza bases and frozen cakes and a few types of Chinese baked goods one way or another.
There was an obvious increase in the interest in frozen cakes over the past two years, as many companies added frozen cakes in their portfolios. Companies that have frozen dough for bread, Danishes, and croissant, etc., are few, suggesting the inherent technical difficulties underlying such products.
It is noteworthy that a few Western frozen bakery manufacturers such as Delifrance have factories in China but did not participate in the show.
During the exhibition, it is apparent that the industry related with traditional Chinese baked goods has continued to expand. Yingtan City of Jiangxi Province had a section for about a dozen manufacturers in the show.
Yingtan City had just co-organised an expo together with national association of bakery in Yingtan, the second of the kind. The first show was held in 2019. A bakery museum occupying 30,000 sqm is also scheduled to receive visitors in August.
Li said that Yingtan’s history of focusing on walnut cakes can be dated back to the reign of the Jiajing Emperor of the Qing Dynasty (1644-1911), when an imperial minister was exiled to Yingtan, bringing back the recipes for imperial walnut cakes. So originated the local walnut cake industry, which extended to bread and other Western baked goods in the past three decades. Production mode was artisan in nature or only partially used are machinery.
Mr Li Xiaoping, an official from the city said that some 200,000 people are engaged in the bakery industry, which turns out RMB 30 billion in output value.
Also conspicuous was the scale of home bakery equipment in the show. KitchenAid under Whirlpool, which entered China in 2015, attended the exhibition for the first time. Qingdao-based German firm of Hauswirt, Chinese companies Fontile and Galanz also showcased their bakery equipment for home use.
Angel Yeast, a listed company in the Shanghai Stock Exchange, also displayed their industrial bakery equipment in six different brands. Hitherto it had only demonstrated its mixes, yeast and other ingredients.
Present in the show are also some plant-based protein products. Besides Green Commons from Hong Kong, which showcased its OmniPork and a few Western brands including Califia, was also Rich’s, which exhibited their plant-based meat and oat milk.
Jiahe Food (SH 605300), which started trading on the Shanghai Stock Exchange at end April, also staged its oat milk, which was mixed with coffee, tea, coconut milk and others to produce beverages for consumers to sample. Jiahe Food produces non-dairy creamer, chocolate and syrup for tea shops and cafes mainly.
It is not usual for ingredient manufacturers and suppliers to directly launch a lower-stream product facing consumers. That is usually a big and by no means easy decision to make as their lower-stream customers may resent it.
A Chinese beverage manufacturer literally with the name Fresh and Live Fruit Juice Beverage Co, demonstrated its chickpea milk and oat beverages. It was apparent that the company was meant to produce fruit juice at the inception but turned to alternative protein, losing no chance in jumping on the bandwagon of alternative protein.
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