The market for health and wellness bakery products is still very much in its infancy in the Asia Pacific region. Only 6% of global health and wellness bakery value sales (totaling US$43 billion, € 29 billion in 2006) are generated in that region. However, with a compound annual growth rate (CAGR) of 14% during the 2002-06 review period, the sector shows a lot of promise, especially considering Asia Pacific is the world’s most populous region. Global business intelligence provider Euromonitor International, Chicago, Illinois, USA, takes a look at the five major categories of healthoriented bakery products — fortified/ functional, naturally healthy, better-for-you, organic and bakery products for food intolerances — and their performance in the Asia Pacific region.
ASIAN PACIFIC POPULARITY. Unlike Western markets, where naturally healthy and better-for-you bakery tend to dominate, in Asia Pacific 43% of the US$2.6 billion ( € 1.75 billion) value sales accrued in 2006 by healthoriented bakery foods came from fortified/functional products, and 85% of this was generated in China and Japan. In China, where nutritional deficiencies remain widespread in rural areas, basic vitamin and mineral fortification predominates. This is also true for the region’s other emerging economies including Thailand, India and Indonesia.
Biscuits targeted at children are the most popular medium for fortification. Shanghai Danone Biscuits Foods’ fortified Danone Milk Crisps is China’s top fortified/functional biscuit brand as well as the country’s third-leading biscuit brand overall. China’s fortified/functional biscuit market remains highly dynamic, with a 20% value increase in 2006, providing plenty of opportunity for new players.
Although Japan’s fortified/functional biscuit market experienced one of the region’s lowest value growth rates in 2006, at just below 4% according to Euromonitor International, it is the country with the most innovation in this area. In 2007, Ajinomoto launched Amino Vital Sports Cube, a cookietype product enriched with essential amino acids designed as a performance-boosting snack for consumers who are actively engaged in sports. Asahi Food & Healthcare added two new products to its Slim Up Slim Daily line: Baked Meal Cocoa and Baked Meal Sesame featuring apple polyphenol (an antioxidant) and L-carnitine to promote fat loss. In addition, the company added to its Slim Up Slim Precious line. Apart from promoting weight loss, Slim Up Precious Baked Meal is also promoted as a "beauty food" with added collagen, CoQ10 and hyaluronic acid. Beauty foods are a popular and growing trend in Japan.
Relaxation is very popular with Japanese consumers. In June 2007, Yamazaki-Nabisco introduced Waffle Snacks with Probiotics and GABA, and Choco-Chip Cookie GABA. Gamma-aminobutyric acid (GABA) is a neurotransmitter that calms the brain.
HIGH-FIBER HIT. Naturally healthy high-fiber products make up the second-largest health and wellness bakery category in Asia Pacific, with 2006 value sales of US$1.1 billion ( € 744 million), according to Euromonitor International. More than half of this came from high-fiber bread and the majority of the remainder from breakfast cereals (which have not really taken off in the region as yet) and biscuits. Japan is the largest market for naturally healthy high-fiber bakery products, followed by India and China. High-fiber bread is still much less of a mainstream product compared with most Western countries, and this is often reflected in price premiums. For example, in India the average unit price markup for high-fiber bread is around 30%.
Category value growth across the region in 2006 was just below 9%. China and Indonesia were the most buoyant markets with value growth of almost 20%, while the more highly developed and saturated market environments of Japan, South Korea and Taiwan hovered around the 3% mark.
BETTER-FOR-YOU. Better-for-you bakery is not a big hit in Asia Pacific. In 2006, category value sales amounted to only US$184 million ( € 125 million), compared with US$2.9 billion ( € 1.96 billion) in North America and US$2.2 billion ( € 1.5 billion) in Western Europe. Betterfor-you products accounted for less than 0.5% of total bakery value sales in Asia Pacific, while in North America it claimed 4% of sales. Even in a highly developed packaged food market like Japan, betterfor-you items such as reduced-sugar and reduced-fat biscuits and cakes rarely pop up on supermarket shelves, and category value sales were only US$30 million ( € 20 million) in 2006.
Consumers in Asia Pacific prefer to go for the "real thing" when indulging in their pastries. If it is time to cut down on rich food, they tend to opt for naturally healthy alternatives or for indulgence items that are inherently low in fat such as cup jellies. Euromonitor International predicts a CAGR of 6% for the region’s better-for-you bakery category over the 2006-11 period, which is rather sluggish considering the low value sales base.
ORGANIC NICHE. Even more niche than better-for-you is organic bakery, with regional value sales of only US$132 million ( € 89 million) in 2006. Notable sales are restricted to three countries: Japan (US$120 million, € 81million), South Korea (US$6.5 million, € 4.4 million) and Hong Kong (US$3.2 million, € 2.16 million). In Hong Kong, organic bakery sales (mainly biscuits and breakfast cereals) enjoyed the highest growth rate, albeit from a low base of 13% in current value terms of all health and wellness bakery products. In Mainland China, organic remains slow to catch on, which is largely due to complex regional regulations and a lack of consumer trust. However, as the Chinese government appears to be making a concerted effort to establish and enforce organic standards, this situation may soon improve. Organic products aimed at children will be the first segment to celebrate success in mainstream packaged food retailing.
AVOIDING ALLERGENS. According to Euromonitor International, bakery products for food intolerances is the smallest health-and-wellness niche category of them all — gluten-free bakery achieved a miniscule US$4 million ( € 2.7 million) in value sales in 2006 and bakery products for diabetics US$77.6 million ( € 52.5 million). Only two countries cater to these two target groups — Japan and China. In China, the number of diabetics is rising fast, and this has boosted demand for specialist bakery items.
Although changing lifestyles and increasing "Westernization" are anticipated to create a big surge in the number of diabetics in Asia Pacific in coming years, the market for specialty offerings is likely to remain fairly limited. This is due not only to the often hefty price premiums but also by the general disinclination of health professionals and medical associations to endorse such products, which they generally view as superfluous and not offering any real benefit in managing diabetes. As for gluten-free products, it is unlikely that they will ever venture beyond their tiny niche domain, mainly because Asian diets are largely based on rice rather than wheat, although there are regional exceptions such as in northern China.
Although the health and wellness market in Asia Pacific is small, there has been a good amount of growth over the past few years indicating the market should increase in the future.
Simone Baroke is a research analyst at Euromonitor International. For more information on market data and research analyses, go to www.euromonitor.com or call (+1) 312 922 1115.