The PRC’s frozen dough industry continues to rise as Chinese tastes for bread and fast food cuisine evolve. Addressing the expanding frozen dough market in China, a Rabobank report entitled the Opportunities and Challenges in China’s Nascent Frozen Dough Industry: New Cost-cutting Tool for Bakery, Horeca and Retailing, zeros in on the nation’s expanding frozen dough market.
People in China are eating more bread and require solutions for making and delivering baked goods to keep up with demand, the study points out. The PRC’s frozen dough industry, still relatively small, can be traced back to 2004. That is when bakeries, cafes, Western-style restaurants, hypermarket chains and top-level hotels began to proliferate in major cities. Today it is increasingly recognized that frozen dough offers a much needed solution for such outlets, which in recent years have had to deal with increasing labor and rent costs.
Rabobank bakery analyst Sam Gao believes the new baked goods industry in China is set to develop quickly and promises enormous opportunities for businesses that tap into this emerging market.
“The key selling proposition for frozen dough is that it could help offset spiraling labor and rent costs for its downstream clients,” said Gao. “There is currently a labor shortage in the bakery industry…This shortage has a greater impact on store-based bakeries than on frozen dough manufacturers, as manufacturers are more automated and require fewer workers.”
Delivering on Demand
The industry faces challenges both internally and externally. China has 32 provinces, municipalities and autonomous regions, so it is quite common for each frozen dough manufacturer to own refrigerated trucks and warehouses. Additionally, the shortage of sophisticated technical experience in producing frozen dough inhibits the industry’s growth.
“The lack of reliable professional cold chain delivery services is a real issue. Drivers sometimes shut down electricity during transportation and turn it back on again before delivery, which causes the dough to thaw and refreeze, resulting in deterioration in quality. Most cold chain delivery companies only operate regionally within one or two provinces,” said Gao.
Food Safety Reigns Supreme
Food safety remains a key concern among consumers. As such frozen dough manufacturers need to enhance their marketing efforts and demonstrate a record of satisfied clients, while spotlighting a commercially successful product that has been free from the safety incidents that have detrimentally affected the credibility of other sectors of the food industry in China.
“There are real opportunities. European frozen dough players can bring in their technical know-how, produce frozen dough for a wide span of baked goods, and actively introduce new products to ‘wow’ and win customers quickly. This is how they can establish and maintain their competitiveness in the Chinese market in the long run, and share in the long term economic growth of China,” concluded Gao.
