Mondelēz, an American confectionery snack food company, wants to fill the “white space” in China’s food market through baked snacks, starting with the addition of a packaged cakes product line to its crème-filled sandwich cookie brand Oreo, according to Joost Vlaanderen, president of Mondelēz Greater China, speaking at the Consumer Analyst Group of New York (CAGNY) conference earlier in February.
Having entered China in 1996, the cookie brand has already conquered the stomachs of Chinese consumers for decades with its signature products, presenting as a sweet childhood memory for most Gen Zers. The sweets have also won over today’s younger generation, becoming not only an accompaniment for a cup of tea or coffee but also has been adapted to a ‘cherry-on-top’ ingredient for other desserts like cakes.
With such popularity in the Chinese market, the brand is not resigned to being just a side food, but to be a protagonist in one of the country’s growing food markets. It is reported that China’s baking industry had reached a market scale of 235.8 billion RMB by 2020 with a growth rate of over 9% between 2015 and 2019, higher than the global average, showing huge market potential.
As the market is expected to see further growth at the rate of 7% in the following five years, it has drawn in investors who have been cashing in since last year. Several homegrown dessert brands such as Happy Cow Cakery, Bliss Cake, and Dim Sum Bureau of Momo have seen capital investment from Sequoia Capital, IDG Capital, and those backed by Tencent, one of China’s tech giants.
In fact, Mondelēz has also long been eyeing China’s baking industry, with one such attempt including the Oreo moon cake box in 2017, tapping into one of China’s most important traditional festivals – the Mid-Autumn Festival. In 2020, teaming up with the local brand Holiland, Oreo brought out new products including air cake boxes, half-baked cheese, and double cheesecakes, that young dessert lovers in China can’t get enough of.
The company took a stride last November, shaking hands with the Chinese bakery brand Enxicun last November, paving the way for its development of baked foods in China. Enxicun, an industry leader in China, specialises in high-end healthy baked foods using low-temperature technology, with offerings ranging from mousse cake and Mille Crepe to Chinese sticky rice cakes.
The collaboration, therefore, will be a significant step for Mondelēz to leverage the local partner’s expertise to broaden its product varieties for young Chinese who want to tuck into sweets but not at the expense of their health. With Enxicun’s local presence scattered across the country, it will also help the foreign player to reach out to Chinese consumers. It seems Mondelēz is on track to unlock another market in China with this new offer, however, it remains to be seen how the new strategy plays out in the near future.