asia trends and implications

Asia Trends and Implications

March 2011

2010 Asia Marketing & Technical Meeting - Confidential

Table of Contents

• Macro Trends

• Product Implications

• Promotions

• Packaging

• Retail Concepts

• Appendix

– Country Specific Information

2


Macro Trends

• Rising Commodity Costs

– CPI(Consumer Price Index) is increasing as cost of living increases

– Implication: Decline in consumption of bakery products since staple food is rice, not bread and

cake

• Price War

– Local & international chains compete in retail price, further squeezing the margin from suppliers

• Health and Wellness

– Customer pay more attention on food safety than ever before

• The “Melamine "and “trans fat” events continuously impact the food industry (China)

• Western Influence– Younger generation investing in western influenced products and food

• Higher Quality Standards– Using Sub Brands

– Dairy Usage

• QSR/Convenience Stores– C-Stores moving into meals, drinks, and bakery products

– Coffee Chains and QSR‟s continue to enter Asian markets (Yum and BUX)

• Internet Influence– Increasing internet users / more internet savvy / social networking is more popular / more

transaction or marketing activity

3

Rising Costs and

Margin Implications

4


Customers are price sensitive, looking to reduce

labor and cost continuously

5


The ambient shelf is extending and the chilled shelf

become smaller to maintain cost

6

Food Safety and

Health and Wellness


Trans fat crisis in China

8

CCTV claim: Trans fat = DDT

CCTV: China Central Television ( China national Television)

Thousands of Medium and newspaper reprint.

7:30~8:00PM

6.Sep.2010


Market become more segmentation

Functional products (China)

Christine (GABA Cake)

GL GABA topping

9

Weiduomei

(No Sugar Cake for

diabetic people)

They use one local brand no sugar

topping 500cs/ month, but not

satisfied the taste .

We are developing GL No Sugar

topping and try to replace it.

2010 Asia Marketing & Technical Meeting - Confidential 10

More fruit usage

The usage of puree and IQF become popular (China)


Market Trends – Hong Kong

Health conscious

> The Hong Kong Nutrition Labeling and Nutrition Claim Regulation came into

operation from July 1, 2010, the 1+7 information including Trans Fatty Acid

and Saturated Fatty Acid contents are forced to declare.

> Melamine issue (Chinese dairy and dairy related products)

> Genetically Modified Organism (GMO)

> Low Sugar (less sweet)

11


More female teenagers are converting to

vegans for health reasons:-

Lose weight

Reduce high blood pressure

Reduce cholesterol

Less cancer

Good for health

Fresh and natural

Some are turning away from cakes and

desserts other than for special occasions.

Health & Wellness

(Vietnam)


H&W Opportunity (Vietnam)

Good for health - Vegan

Vege Sponge

Vege PizzaVege Cakes

Vege Moon Cakes

Vege Baverages

Bite side dessert/sliced cakes

Vege premixes for Pizza dough

& sponge mixes…

NDC for drinks and desserts…

Vege Buns

Western Influence and

Higher Quality Standards


Increase spending in the west

life style (China)

15

Western life style

New generation

……

……

West food

……

Cake


Market Trend – Cakes & Desserts

• More frozen Cakes & desserts

appear in premium supermarkets.

• More & more low cost desserts from local

suppliers, even copy some of our desserts


85C effect (more chilled products, better

merchandizing, coffee + pastry model) (China)

17

POSM

coffee + pastry model

24 hoursMore chilled products


Sub brands to offer premium products

18


Premium bakery using more dairy topping

on birthday cake to pursue best taste.

19

100% dairy topping

Customer blend

( Non-dairy: Dairy)

Enjoy 800

Blend Test

Don’t satisfied

GLPD

Blend Test


Bakeries and foodservice operators are looking at the opportunity to move up the

value chain by differentiating products, services and ambient in order to appeal to the

teenage consumer for comfort and lifestyle e.g. air con, chic,…

Change of Life-style

(Vietnam)

C-Stores and QSR’s


Market Trend - CVS

• Convenience store new categories: meal, drink, bakery products

http://images.google.com.hk/imgres?imgurl=http://pic.pimg.tw/thinkshot/492eb48639fad.jpg&imgrefurl=http://thinkshot.pixnet.net/blog/post/23673932&usg=__Dge1ia_sHTAqaRX6rwRKlsLFAJE=&h=332&w=500&sz=54&hl=zh-CN&start=6&itbs=1&tbnid=fRZZ6U1IpsjOfM:&tbnh=86&tbnw=130&prev=/images?q=%E4%B8%8A%E6%B5%B7+7-11+%E5%92%96%E5%95%A1&hl=zh-CN&newwindow=1&safe=strict&sa=G&tbs=isch:1


Market Trend – Coffee Chains

• International coffee chains increase no. of stores aggressively:

Costa Coffee

•Worked with BJ

Hualian Group since

2008, plan to open 300

stores in North China

in a few years;

•Recently they opened

stores in BJ

aggressively, up to 3

stores opening in a

week.

Pacific Coffee

•Start to work with China

Resources Enterprise (CRE) in

Jun. 2010;

•Now 4 stores in mainland China;

plan to open 200 stores in 3

years.

Starbucks

•Aggressive geographic

expansion, further expand to

inner cities, 2nd & 3rd tier cities.

•5 year plan in mainland China:

Increase no. of stores from

less than 400 to 1,000.

Increase city coverage

from 26 to 50.

McCafe

•Aggressive store opening in 2nd half 2010

•Up to 120 stores by end of 2010


Market Trend – YUM & SBX

• Both YUM & SBX provides diversified foods to gain more share from

different consumption occasion.


Market Trend - QSR

• Pizza Hut, McDonald, and KFC – wide geographic coverage in most cities.

• More international brands enter China

Carl’s Jr

•New comer

•Premium Hamburger

•Plan to open 100 stores in 8 years

• More & more Asia or Chinese food QSR expand rapidly, incl. national brands,

regional brands.


Honey Biscuit

Chocolate Muffin

Bun with purple

sweet potato and

mochi

Market Trend- QSR Enters Dessert Business

(Taiwan)


KFC launches hot dessert

under “K-Sweet” brand and

emphasizes fresh baked before

serving.


(Taiwan)



(Taiwan)

Internet and Social Media


Increasing internet users / more internet savvy / social

networking is more popular / more transaction or

marketing activity (China)

31

via internet

Input “cake” to search in Taobao

996,683

Relative Items

“21Cake ”

The bakery has no store.

Only E-shopping


Market Trend – Internet influence

(China)

• E shopping, group shopping are popular among young people

Dessert is one of the popular item for such impulsive shopping



(China)

• Social media is becoming an important communication tool for it‟s

interactive, sharing



(China)

• Internet menu by Pizza Hut


Retailing Concepts (Malaysia)

E-shopping

35

Place an order and have it delivered to your home or simply pre-order to avoid

queue during pick-up


Retailing Concepts (Malaysia)

Social Networking - A Popular Marketing Tool

36

Announcing new

product launches,

opening of new outlets,

promotions etc via FB.


Retailing Concepts (Thailand)

37

New Sales Channel on Social Network

Bakery supply shop:

use facebook to

announce new

arrival and offer

bakery recipe tie in

with other materials



New Sales Channel on Social Network

New products for

coffee break menu


13,888 16,448

21,740

22,617

24,156

14,684

17,872

22,061

25,026

27,901

2006 2007 2008 2009 2010

Consumer Expenditure on Food (US$ million)

Internet Users ('000)

E Shoppers (Vietnam)

Increase in the number of bakery web sites and internet surfers. Internet shopping

is becoming a trend in Vietnam

Product Implications


Asia Product Trends

• Ingredient Implications

• Bite Sized Treats

– Allows affordability

– Portion Control

– Convenience

– Multiple Layers & Textures

– Customization

• Cupcakes

• Layered Desserts

• Transformed Desserts

• Intricate Designs

• Dairy Replacement (cost reducer)

41

Healthier Ingredients



Taste preference

43


Promotion (Taiwan)

Bite Sized Treats


Clash Of The Donuts & Sushi

(Malaysia)

46

http://www.facebook.com/photo.php?pid=5595708&id=362127840447


Application Concepts (India)

47

Dollops Truffle Candles Muffin & sweet base tarts

Premium pastriesFruit tarts Valentine hearts


Application Concepts (PNW Blue) (Korea)

48

French Choux (Yogurt cream)

Strawberry Choux

Yogurt Strawberry Tart Big ChouxStrawberry Mousse

Yogurt Croissant

Fruit Yogurt

***Mix with Yogurt *** Plain

French Choux


Application Concepts (Bettercream) (Korea)

49

Bettercream

Plain

Bettercream

+ Mocha powder

Garlic Butter Bagel

Bettercream(60%)

+Butter + Garlic

Choco Cake

Icing

Muffin Topping

-Fill in the donut shell

Bettercream

+Cocoa syrup

-Manoffin cafe is specialized in muffin

-Better cream is used for topping of muffins


Application Concepts (Thailand)

Thai custard Creamy Bun using Non-Dairy Creamer as the ingredient


Vol au Vent Creamy Spinach with chicken using Cooking Cream


Vol au Vent Creamy Strawberry and Blueberry using Gold Label mix with creamcheese



Mister Donot using Rich’N Smooth Tropic

http://www.promotiontoyou.com/wp-content/uploads/2010/09/Mister-donut-fruito-berry-promotion.jpg


New Concept – Kobe Milk Roll

(Taiwan)

Cupcakes


Market Trend- Wedding Cake

• Wedding cake plays an important role in wedding ceremony. It is not only a

prop in ceremony, but also the prize for game.

• Delicate two-tiered wedding cake is popular now; easy for sharing makes cup

cake popular as well.

• Taiwan will celebrate its 100 years old birthday in 2011. A lot of people plan to

get married as the hundred year in Chinese is a part of wedding blessing

”百年好合”, it means “Eternal harmony in marriage” in English.

Cup cakes on bottom are easy for sharing in wedding

ceremony.


Market Trend- Wedding Cake (Taiwan)

Source: http://weddingcake.com.tw and http://cupcake.com.tw

http://weddingcake.com.tw/

http://cupcake.com.tw/


Market Trend- Wedding Cake (Taiwan)

Variety of cup cakes

Layered Desserts


Application Concepts

(Singapore)

59

A layer of biscuit tart, topped

with 2 layers of cream, assorted

fruits and a thin layer of sponge

cake.

Transformed Desserts


Application Concepts (On-Top) (Korea)

61

-Put dollop on the ice cream and dessert menu with OnTop

-With the ongoing promotion, these are currently popular items

-High-end coffee shop.

-Use Ontop for waffle

decoration and hot

beverage topping


Application Concepts (Gold Label) (Korea)

62

+

Gold

Label

Waffle toppingHoney Bread

Hot/Cold Beverage Topping

The best way to make a good dollop

The solution is 20+20

1. Pour 650g to ISI whipper

2. Insert a nitrogen gas & shake 20 times

3. Insert 1 more nitrogen gas

4. Finally, shake 20 times again

-The latest gained coffee chain

-Opened in 2009, currently they have 400 shops

-The consumption of Gold label is approx. 2,500

cases per month



(Singapore)

63

A local donut chained in

Singapore that started out

with take-away outlet. They

expanded to contemporary

café serving meals, snacks,

desserts and beverages to

keep the consumers

excited about donuts.



(Singapore)

64

Waffle sandwich with cream &

fruits /nuts. Great snacks for

your break time.


Application Concepts (Taiwan)

Fry non-dairy whip topping (Whippee) by liquid nitrogen as dessert


Strawberry Lover Honey Toast NT$250Chocolate Fantasy Honey Toast NT$220

Dazzling Classic Honey Toast NT$200


Toast crust Custard cream or

chocolate topping

Ice cream

Caramel dipping sauce

White bread cube


Industry is Driving Change

(Vietnam)

Entry of foreign players force local traditional bakery operators to seek change as followers

Mooncakes are challenge to differentiate with new application to keep its appeal for the youth

While traditional decorated cakes are admired more continental and contemporary design cakes are

taking root


Application Concepts (MK Cheesecake/Coffee Creamer)

(Korea)

68

[MK Cheese Cake] [Dunkin Coffee Creamer]

Café Latte Mocha Latte

Mother’s Kitchen

- Cheese cake

BR’s Ice cream cake

-Puts a piece of Mother‟s Kitchen cheesecake for „New York

Cheesecake Ice cream Cake‟

-One of best selling item

-Dunkin adds our coffee creamer for

bottled coffee.


Cake Concepts (Thailand)

69

Intricate Designs


Application Concepts (Malaysia)

71

Innovative

Birthday Cake


Application Concepts (Malaysia)

72

Yummy bowls of noodles and chicken porridge made from Rich’s Gold Label


Cake Design Concepts India

73



(Singapore)

74


New in Market- Two-tiered Birthday Cake

(Taiwan)



76



77

Dairy Replacements


Application Concepts (NST) (Korea)

79

MadeleineNST application -Bread mix

Gift set - Shilla

Costco package

-NST is used to make Madeleine instead of dairy ingredient

-This product has been one of the bestselling product in Costco

and Shilla bakery


Application Concept - Cooking

cream (China)

Customer: ZKungFu (300+ stores)

Category: Asian fast food

Application: Red Bean & Coconut Pudding

Recipe: water, Rich‟s Cooking Cream, fish jelly, sugar, red bean,

coconut fruit


Application Concepts (Versatie) (Korea)

81

DressingPizza Sauce

Black

Sesame

NAMASTE Pizza(Versatie + Curry)

-There are 3 major sauce companies in Korea.

-The industrial sauce makers are making pizza & pasta sauces as

well as salad dressings to supply food service channel like family

restaurants and catering companies.



Bubble green tea Slightly whipped Topping w/ salty flavor

Pour topping on top of green tea Sprinkle green tea powder onto topping

Salty and Sweet

Green Tea


Add Rich‟s Versatié in curry sauce to

create smooth creamy flavor.


@

Promotions


Promotion Concepts (Malaysia)

Dine-In + Buy A Cake = Free Meal + Drink

King‟s launched Membership Privilege Card

Amazing discounts as high as 50% on

purchase of 1kg cake on birthday month



Theme concept

86


Promotional Concepts

POS (India)

Valentine‟s Day Friendship Day Diwali


Special occasions (India)

IPL/ICC 20:20 World

cup

FIFA World Cup


Cold Stone Offers set menu for newly

introduced items

CostcoSend out discount coupon

to their members

Mr. Pizza TV commercial for

newly introduced menu

Promotion Concepts (Korea)


Promotion Concepts (Christmas–Free gift)

(Korea)

2007 2008 2009

Polar Bear Fairy

Wolf in sheep’s clothing

-Christmas promotion is very aggressive among the major cake companies.

-Most chain bakeries hand out gifts to Christmas cake customers.

-Paris baguette give out hat and gloves from 2007.

-These promotions are exposed through TV commercials and the magazines


Promotion Concepts (Christmas) (Korea)

2008 2009 2008

Snow man

Muffler

Bear’s Paw


Promotion Concepts (Singapore)

Match the names of

BreadTalk new range of

treats correctly and stand to

win discount vouchers!


Promotion Concepts (Singapore)

Popular FS chained-

restaurants such as

TGIF and Chili‟s offering

attractive Lunch Combos

to attract consumers.


Promotion Concepts (Taiwan)

85℃ issued Initial Public Offering on Nov. 22 and offered 15% off for all products sold in outlet

on the same day. Besides, during Nov. 22~Dec. 12, every purchase of NT$100 can join online

lucky draw for Tea Break Coupon with value of NT$1,000.

2010 Asia Marketing & Technical Meeting - Confidential95

Bluecup D-Day

Buy one get one free on a specific

date in each month

Bluecup Lucky Seven

Collect 7 stickers with each

purchase get FREE Bluecup

Trendy Mug

Promotion Concepts (Thailand)

Misdo Club 2010

Get membership of Mister Donut receive desk

calendar indicating special discount date in each

month: e.g. 30% discount every 30th, 20%

discount every Tuesday or 15% discount

everyday

Packaging Concepts


Special Packaging Design (Taiwan)


Packaging (Taiwan)


Panettone in convenient hand-carry packaging

Product Size/Packaging (Taiwan)

Retail Concepts


Retailing Concepts (Korea)

DanHaNa (DIY)

101

a. Danhana(Korean) = „Only One‟

b. People are getting more interested in making cakes for

special occasions with their own preference of decorations

and ingredients

c. No need for big investment

d. May not need to be in the populated area

e. No loss for leftovers

f. Less labor costs

g. The major consumers are student

Materials for decoration Tables for decoration

The area for coaching & supporting


Retailing Concepts (Korea)

102

[Internet Shopping mall]SPC group

SPC group operate e-store to sell whole their brands’

product through their well organized cold chain system

[DYI]

These are the menus that consumer can buy all

different pieces to apply for making cakes.


Retailing Concepts - Singapore

103

Learn how to bake tiramisu or

butter cookies through Kids

Baking Workshop.

Kids will discover the joys of

baking and hone their

exploration skills while

acquiring knowledge of

ingredients and baking skills.


Retailing Concepts - Singapore

104

KOI Café has successfully

brought back the bubble tea

trend into Singapore. They

adopt the business model from

the popular 50 Lan Bubble Tea

chain in Taiwan.

Consumers are getting more

health conscious towards their

daily food intakes and KOI Café

allows consumers to choose the

sugar level that they want for

their bubble tea!


Retailing Concept - Singapore

105

A new dining concept – Dessert

Buffet restaurant which

promises to inspire and offer

sugar rush experience with its

amazing variety of sweets and

desserts


E-shops and convenience stores are growing channels for cakes and

bakeries. The market share of e-shop raises up to 25-30% and

convenience store reaches to about 10%.

Retailing Concepts (Taiwan)


Retailing Concepts (Taiwan)

E-shoppingThe top 1 seller online is Assorted Mille Crêpe, Touched sells out about 6,000pcs per month. Its

success results from referral and word-of-mouth. Now they open visual outlet in department store.

107

http://touched.shop.rakuten.tw/image/?u=http://touched.tw.rakuten-static.com/qq03.jpg

http://touched.shop.rakuten.tw/image/?u=http://touched.tw.rakuten-static.com/qq01.jpg


Crown Bakery (Taiwan)

• Famous, Upscale Chain Coffee shop with bakery in Taiwan

• Big, attractive window display

• Layout: 2 counters. One inside and one outside on street -convenient for passers-by

• Staff keeps bringing out fresh baked goods – fresh perception

• High Variety– Different sizes (4, 6, 8 inch)

– Western influence like cheesecakes, Tiramisu and Christmas cakes

– Island chiller (Show cake) used to display goods that need refrigeration

– Unique characteristic on cake filling like pudding, fruit filling

Appendix

110

Malaysia

111


Malaysia Population

112

Population 2006 2007 2008 2009 2010

Population (In Million) 26.83 27.19 27.54 27.90 28.25

29.2

4.3

28.7 28.227.7 27.2

66.967.3

67.768.1

4.4 4.5 4.6 4.7

Source: Department of Statistics Malaysia (July 2010)


Executive Summary Malaysia

113

Decreasing young population and increasing ageing population

Budget airlines makes travelling abroad more affordable and hence consumers are

more exposed to trends. Consumer desire for more exciting products

Trade introducing innovative products to win consumer‟s limited spending dollar

Growing popularity of internet as a fast and effective marketing tool. A way to get

connected to consumers

Delivery service offered as a convenient alternative

More consumers utilize E-shopping to save time.

Increased promotions tide consumers over recession. Eg: Dine-in + Buy A Cake =

Meal & Drink Free

FS in retail locations surged from 1999 due to the rapid expansion of shopping malls

around Klang Valley, as well as secondary towns such as Penang,and Malacca

India

114


Snapshot - India

• No of bakeries 8000-10,000 (Western)

• Mom & Pops 80% of the market

• Chain Bakeries Very few and regional only

• ISBs Minimal but expected to grow in future

• Home Bakers Growing segment in large cities

• Cake Consumption Driver by birthday celebrations

• Expansion Drivers Franchised and entrepreneurial

115

Korea

116


Overall Market Trend (Korea)

117

[Bakery market]

- Number of stores of Chain Bakery is almost same

with Window bakery (Window: 4,400 stores, Chain: 4,300 stores)

- However, Chain bakery‟s revenue is 2.5 times higher

than window bakery (USD 1.6 B Vs. USD 634 M)

[Coffee Market]

- Coffee business is the most in demand business in Food

service market. (100 Franchisors / 6,000 stores)

- To step up higher, each of them are characterizing differently by having their own

recipes in dessert menu and interior concepts

[ISB]

- ISB companies are investing in building new facilities to compete with Chain Bakery

- Expand market share by having SSM every corner on the street

Singapore


Overview

• Singapore 2010 population : 5.08 millions (a growth of 1.8% vs 2009)

• Younger generation decreasing while aging population are increasing

119

12.70% 14.40% 20.70%

25.90%33.70%

33.30%

38.40%29.90%

28.60%

23.00% 22.00% 17.40%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

1990 2000 2010

55 and above 35 - 54 15 - 34 Below 15


Trends

• Singapore has one of the highest standards of living in Asia after Japan and Hong

Kong. (*Based on the Mercer Cost Of Living survey)

• They are becoming more affluent and educated, and most have traveled broad.

They demand more in terms of quality, service, convenience and variety for their

purchase to ensure their dollars are well-spent.

• Product lifecycles are becoming shorter too as consumers demand innovation and

variety.

• Foodservice industry growth in Singapore varies very much inline with the overall

economic growth. As Singapore heads toward recovery, we can see the re-entry

of popular brand name in chained restaurant as well as franchises and concept

restaurants.

• With the Singapore Health Promotion Board promoting healthy lifestyle since

2007, consumers are more health-conscious and knowledgeable about the

benefits of every products they consumed.

120

Thailand


Bakery Market in Thailand

122

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, rade interviews, trade sources

• Unpackaged bakery goods are likely to generate greater growth thanks to wider product availability and the

growing number of coffee shops and independent bakeries. Moreover, unpackaged bakery goods is expected to

show growth since consumers enjoy its high-quality ingredients and fine decoration.

Sales volume of bakery products: actual 2005-2009/ forecast 2010-2015

• From 2005-2010, the CAGR shows that

pastries product receive the strongest rate

at 41.5%, followed by cake, 38.8% and

Bread, 26.7%. However, from 2010-2015,

cakes sector is forecasted to get the

highest CAGR rate at 22.3%, followed by

pastries, 20% and Bread, 10.9%

respectively.

„000 tones


Market Trend

123

Consumer

• Bakery products are available in a range of prices from low to high. There are many

private label brands in bread, cakes and pastries. Premium brands are attractive to affluent

consumers which is a niche consumer segment. Nonetheless, consumers are still looking

for value-for-money products. While premium products are offered at a high price, they are

normally baked from high-quality and enriched ingredients.

• Consumers become not only health and wellness conscious but also concern about

beauty and good looking. Foods and drinks with functional ingredients have been developed

into the market e.g. snack with collagen or drink with Co Q-10. However, for bakery

segment now only S&P, the biggest bakery chain shop in Thailand, has recently launched

GABA bread and bread with Collagen Cranberry.

Operator

• M&P bakery operators have developed themselves to be more educated regarding bakery

and technical knowledge. They becoming more sophisticated as they have more chance to

explore to the industry in international market.

• As the price of commodity goods have been raised, pricing is now the key buying factor

over product quality. Operators are most likely to look for substitute products.

Vietnam


Demographics:-

– Population: 87m (growth rate app. 1%)

– Growth of middle income group

– Over 53% are under the age of 30 yrs

– 30% are between 15 – 30 yrs

– Population growth in major and 2nd tier cities e.g. Hanoi

Technology:-

– Increase of Internet shoppers and email solicitation

– Increase use Mobile devices – sms sales alert and surfing the

internet

Summary of Trend Drivers


Culture:-

– Cultural change influence from western education system i.e.

westernization i.e. a breakaway from tradition

– Teenage social gathering and hangout haunts driving growth of

desserts outlets located near school and colleges.

– Food safety and cleanliness

– Health & Wellness – motivated to stay young, fashionable and

energetic

– Dinning out rather than cooking at home.

Industry:-

– Entry of foreign franchise chains expansion e.g. TLJ, Bread Talk,

Coffee Bean, Hard Rock Café, Pizza Hut, etc.

– Increased activity from ingredient suppliers hosting seminars,

workshops and competition driving new product application for

differentiation

Summary of Trend Drivers

asia trends and implications

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