In recent years, the baking industry has seen an accelerated reshuffle of brands. Brands such as "Panda Does Not Leave," "Tiger Head Bureau," and "Mo Mo's Pastries Bureau" have gone from rapid expansion to desperate survival in just a few years, with some even closing down. How do we view this phenomenon? What role has capital played in it? What is the connection between the entry of capital and the accelerated reshuffle of the industry? What are the advantages and disadvantages of capital entry? At the same time, some baking brands have established themselves through different marketing strategies. What are the differences in their marketing strategy directions? Why can they stand firm in the baking industry? What are your views on the future of the baking industry? Which type of bakery can continue to survive and develop? How should bakery stores respond to today's economic and consumption patterns?
Frost & SullivanFrost & SullivanLou Lei, Executive Director of Frost & Sullivan's Greater China Region (hereinafter referred to as 'Frost & Sullivan'), was interviewed by CCTV Finance Channel, sharing his observations on the baking market.
CCTV Finance
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Q: In recent years, the baking industry has seen a rapid reshuffle of brands, with names such as 'Panda No Go', 'Tiger Head Bureau', and 'Mo Mo Dimsum Bureau' experiencing a shift from rapid expansion to desperate survival in just a few years, with some even going bankrupt. How do you view this phenomenon?
Behind this phenomenon is the result of multiple factors interacting with each other, which includes not only changes in the external environment but also reveals deficiencies in brand internal management.
Why can it expand rapidly in a short period of time:
1Brand rejuvenation and precise positioning: These are typical new consumer brands that have not been around for long, but have quickly gained the favor of young consumers with their youthful brand image and precise product positioning. For example, Hooters' macaroni tiger rolls and Panda's door-to-door service stand out in the market with their unique selling points.
2Online and offline integration with internet traffic strategies: New consumer brands deeply understand the art of internet traffic, utilizing an integrated online and offline business model to fully leverage social media, short videos, and other internet tools for rapid brand dissemination and sales growth.
3Explosive expansion fueled by capital: In addition,2020Year-end2022Against the backdrop of a new wave of consumer investment in recent years, a large number of new consumer brands have gained the favor of capital. The resolution of funding issues has enabled these brands to achieve explosive expansion in a short period.
Why have we now reached a situation where we are left with no way out:
1The consumer environment has returned to rationality: As the market matures, consumers are making more rational choices about products and no longer blindly pursue popular online influencers and best-selling products. The baking market has also shown a trend towards returning to value for money, putting some high-priced and low-consumption frequency online influencer baked products under market pressure.
2The return of capital to rationality and the cooling of investment enthusiasm: As the capital market's enthusiasm for large consumer investments gradually wanes, brands find it increasingly difficult to obtain substantial capital support, their expansion speed slows down, and they even face the risk of capital chain breakage.
3Insufficient enterprise management and team capabilities: Due to their short establishment time, these brands are not yet mature in talent cultivation and management systems, leading to problems such as management chaos and unstable teams during rapid expansion.
4Over-reliance on traffic and marketing: Brands that overly depend on traffic and marketing methods develop their business too much based on external factors. Once the market environment changes, it becomes difficult for brands to cope. At the same time, excessive marketing can also have a negative impact on brand reputation and profits.
5There are significant weaknesses in the business model: Some brands have flaws in their business models, such as over-reliance on online food delivery platform traffic. Once platform policies change or competition intensifies, it becomes difficult for brands to maintain their market position.
In summary, the phenomenon of brand reshuffling in the baking industry is an inevitable result of market development. The baking industry has broad prospects, and for new consumer brands, to stand firm in the fierce market competition, they need to examine their internal models and balance development speed with quality. In the future, brands should continue to innovate, improve product quality, and focus on consumer experience to achieve sustainable development.
Q: What role has capital played in this? What is the connection between capital entry and the accelerated reshuffling of industries? What are the advantages and disadvantages of capital entry?
In the process of brand reshuffle in the baking industry, capital has played a crucial role. Take Hutouju as an example; it gained control within a short period of time, includingIDGMultiple rounds of financing, including Sequoia Capital and Challenger Capital, have rapidly driven the valuation upwards.20Hundreds of millions. The injection of these capitals has provided a strong financial backing for emerging brands, promoted rapid brand expansion, and quickly established a powerful brand influence in the market.
However, the entry of capital has also brought about a double-edged sword effect. On one hand, capital provides valuable resources for brands, helping them quickly occupy markets and enhance brand power; on the other hand, capital also sets higher demands on brands, especially in terms of business models and operational management. This high-pressure test forces brands to deal with challenges in supply chain management, store staff management, new product development, market expansion, and other aspects within a short period.
If the brand's management team is not fully prepared and able to cope with these challenges, rapid capital investment may instead become a burden on the brand. Once a balance cannot be found between quality and scale, the brand may expose its weaknesses due to rapid expansion, and even lead to a backlash against brand value.
Therefore, when facing capital entry, brands should not only see the opportunities brought by capital but also be vigilant about the challenges it poses. Only by focusing on internal strength cultivation and improving management levels and operational efficiency can brands remain invincible in the fierce market competition.
Q: At the same time, there are also some baking brands that have established themselves through different marketing strategies. Can you briefly discuss the differences in marketing strategy directions among these brands? Why are they able to stand firm in the baking industry?
The current domestic baking market shows a diversified positioning and development direction, with three strategies particularly prominent: affordable, high-end, and online celebrity brands. Although these strategies are different, they each successfully found their footing in the market.
Affordable brands: Such brands focus on cost-effectiveness and healthy, stable quality as their core competitiveness. They differentiate themselves from time-limited products by offering affordable and reliable products, mainly competing in markets such as supermarkets, snacks, and school meals. The essence of this strategy lies in meeting consumers' basic needs for daily consumption and winning market reputation with sustained and stable quality.
High-end brands: High-end baking brands are committed to creating an image of imported, professional, and masterpieces. By emphasizing the uniqueness and high quality of their products, they adopt a similar competitive strategy with high-end dining venues such as Western restaurants. The success of this strategy lies in meeting consumers' pursuit of a high-quality life and consolidating their market position by strengthening positioning.
Internet celebrity brand: Online celebrity baking brands have become a hot topic in the consumer goods industry in recent years. They have rapidly attracted a large amount of attention through innovative marketing strategies and have become hot topics on social media. However, online celebrity brands also face the dual-edged sword effect. Before becoming an online celebrity, brands usually aim at becoming internet celebrities and focus on marketing. But once they become online celebrities, how to get rid of the online celebrity label and achieve sustainable development becomes an important challenge for brands.
For online celebrity brands, marketing is undoubtedly the key to breaking through the market. However, relying solely on marketing is not enough to support the long-term development of a brand. After becoming an online celebrity, the brand needs to ensure that its products themselves are competitive enough to withstand the scrutiny of consumers and the market. At the same time, the brand also needs to find a balance between popularity and development speed, maintaining market attention while controlling expansion rates to ensure profitability and brand image stability.
In summary, whether it is an affordable, high-end, or internet-famous baking brand, the key to their success in the market lies in accurately identifying their positioning and formulating appropriate marketing strategies around that. At the same time, brands also need to continuously enhance their own strength to ensure the sustained competitiveness of their products, services, and brand image.
Q: What are your views on the future of the baking industry? Which type of bakery can continue to survive and develop? How should bakeries respond to today's economic and consumption trends?
According to Frost & Sullivan's calculations, the baking industry has more than2,000The market scale is hundreds of millions, with an average annual growth rate approaching10%Its potential cannot be ignored. However, the highly decentralized, regionalized, and segmented characteristics of the market also bring unique challenges and opportunities to the baking industry.
Looking at the benchmark enterprises in the current market, whether they are time-honored brands such as Daoxiangcun, Xinghualu, and Juxiangyuan, regional brands like Haolilai and Xingfu Western Biscuits, or imported foreign brands like Brioche and Paris Baguette, each has carved out a niche in the market with its unique competitive strategies and target customer groups. These successful cases demonstrate that different types of baking enterprises can survive and develop in different ways.
For the future development direction of bakeries, there are several suggestions:
1Steadfast progress: In a highly competitive market, maintaining a steady development pace is crucial. By continuously optimizing products and services, enhancing brand reputation, attracting and retaining consumers. At the same time, paying attention to market dynamics and changes in consumer needs, flexibly adjusting business strategies.
2Actively embrace young consumers: Young consumers are an important consumer group in the baking market. Brands need to learn and adapt to the preferences and habits of the new generation, using new media channels such as social media and short videos for marketing and promotion. At the same time, pay attention to fashion trends and innovations, continuously developing products and services to meet the personalized needs of young consumers.
3Adhere to the original intention of the product: While pursuing innovation and fashion, brands must not neglect the essence of their products. High-quality products are the foundation for a brand to stand firm in the market. Brands need to always adhere to the original intention of their products, continuously improve product quality and taste, and win the trust and loyalty of consumers.
In addition, when facing today's economic and consumption trends, bakeries should also pay attention to the following points:
1Cost Control: Against the backdrop of fluctuating raw material prices and rising labor costs, brands need to strengthen cost control and improve operational efficiency. By optimizing supply chain management and reducing inventory costs, they can lower costs and enhance profitability.
2Digital Transformation: Utilize advanced technologies such as big data and artificial intelligence for digital transformation to improve brand operational efficiency and consumer experience. For instance, understand consumer needs and market trends through data analysis to formulate more precise marketing strategies; improve production efficiency and product quality through smart devices, etc.
3Sustainable Development: With the increasing awareness of environmental protection, brands need to pay attention to sustainable development issues. Measures such as using environmentally friendly materials and packaging, and promoting green production methods can help enhance brand image and consumer loyalty.
In summary, the baking industry will continue to maintain a decentralized, stratified, and diverse competitive landscape in the future. Brands need to develop appropriate competitive strategies and development directions based on their own characteristics and market demands, while also paying attention to issues such as cost control, digital transformation, and sustainable development to achieve long-term stable development.
*This interview has been broadcast on CCTV Finance Channel. The reporter is Wang Yannan, and the original title was 'Observations on the Baking Market'. "Panda doesn't leave" cake store closes down on a large scale Baking Track Accelerated Rebranding', 'Baking Market Observation' Meet consumers' diversified needs Baking merchants adjust strategies to stay ahead of the curve
