The versatility, simplicity of manufacturing, and future prospects for biscuits in Asia Pacific make it a sector of key interest for smaller food companies looking to expand into the region. Furthermore, manufacturers can be almost limitlessly inventive with biscuits, which lend themselves to experimentation with flavour, coating/filling, shape and packaging. Combined with ease of product transportation, storage, and a long shelf-life, the flexibility of biscuits makes them the ideal vehicle for smaller foreign companies to get a targeted foothold into growth regions.
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Biscuit growth around the world is being driven by a number of factors, many of which also affect trends in confectionery and other packaged food markets. These include on the one hand more cosmopolitan lifestyles resulting in longer working hours, higher disposable incomes and increased foreign travel increasing demand for snacking and convenience, and fuelling consumer interest in more exotic and added value products, including flavours such as mango or coconut.
On the other hand, increased awareness of health issues relating both to calorific content and artificial ingredients underpins an increase in low fat, portion controlled and organic options, as well as being a key factor in the faster growth of savoury biscuits and crackers.
Savoury biscuits and crackers outperform other biscuits
In Asia-Pacific, savoury biscuits and crackers are driving biscuit growth in the region, with value sales increasing nearly 30% over 1998-2002, compared to just under 16% for sweet biscuits, despite a lower unit price. Savoury biscuits are more easily positioned to take advantage of a number of key developments. Specifically, they lend themselves to the addition of functional or enriched ingredients, with Danone producing a number of calcium-enriched biscuits across the region.
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By GlobalDataSavoury biscuits and crackers can also take advantage of consumer preferences for experimental flavours/fillings such as chicken or spring onion, while re-packaging in individual and mini impulse packs allows these products to be positioned against other snack foods such as crisps.
Although sweet biscuits, especially filled/coated formats, tend towards more premium, luxury variants, which command higher unit prices, health is increasingly an issue in all markets, including those typically considered less mature. Conversely, savoury biscuit sales in Japan are also closely linked to trends in wine and cheese consumption, which peaked in 1999. With per capita wine consumption forecast to escalate over the next five years in China, this could well be another growth driver for savoury biscuits if consumers there adopt similar consumption habits.
Japan a difficult market to penetrate
As the largest, most mature market in Asia Pacific with the most westernised tastes, Japan is typically of interest to companies wanting to understand overall trends in the region. However, although volume sales in Japan are increasing faster than those in Western Europe and North America, growth is on a much lower scale than the rest of Asia Pacific. Equally, while per capita consumption in Japan is still much lower than in the west, indicating market potential, it is higher than most other countries in the region, with the exception of Singapore.
Unit prices are extremely high with individual or mini packs of biscuits more expensive than a chocolate bar and as such unlikely to be able to support further price increases. Since 1999 sales of savoury biscuits, a key growth area in the rest of Asia Pacific, have dipped in Japan, and are set to decline over the next five years suffering from competition with other healthy snacks and a lack of flavour and packaging innovations. Furthermore the market is dominated by high quality local brands such as Pocky (Ezaki Glico) and Country Ma’am (Fujiya), with foreign companies holding under 12% of the market. Taken together, these factors make Japan a less than viable prospect for biscuit manufacturers.
China shows better prospects
By contrast, China is a very different market to Japan, and is more indicative of exciting regional trends. Demand is still largely seasonal as biscuits are popular gift items, and centres around urban, more cosmopolitan areas where sophisticated savoury biscuits are favourites in cities such as Shanghai, Guangzhou, and Wuhan.
Although family size and value packs are depressing unit prices, companies like Danone and Ezaki Glico are working hard to position their brands as snacks rather than biscuits. As a result the popularity of snack packs and individually wrapped biscuits is set to grow, signalling an increase in unit prices.
Functional products enriched with calcium or vitamins, typically more expensive, are also on the increase, capitalising on the perception that savoury biscuits have a higher nutritional value. Nutritional value is also driving sales of branded biscuits over unbranded varieties, with traditional unpackaged plain sweet biscuits losing ground to better quality packaged products trickling into southern and northern China as a result of improving regional infrastructure.
With low per capita consumption and unit prices which compare favourably to other snack products such as crisps or chocolate, China will respond well to manufacturers able to overcome the seasonal and regional nature of the biscuit market.
Opportunities for foreign companies in Asia Pacific
Asia Pacific is forecast to contribute 19% of world biscuit retail sales by 2007, compared to less than 15% in 1998, and is the region most likely to see the greatest growth overall, particularly in savoury biscuits and crackers.
Only confectionery is set to grow faster. However, that market is already dominated by strong local manufacturers such as Lotte and Meiji Seika, with big name multinationals such as Nestlé, Mars and Cadbury Schweppes muscling in. There is little room for medium-sized foreign companies to enter the market, particularly with confectionery less amenable to distribution difficulties than the hardier biscuit.
The fragmentary and local nature of the biscuit market is also a boon for smaller foreign companies as local brands are facing increasing pressure from the major multinationals, and are likely to welcome the expertise and investment that foreign players can offer.
By Euromonitor International
For full details of Euromonitor International research reports in this area, click on one of the below:
The Market for Packaged Food in China
The Market for Packaged Food in Japan
Euromonitor Profile: Groupe Danone
Euromonitor Profile: Nestlé SA
