Cake and bread ≠ baking industry, Lady M Beijing has three stores in a row, and guochao dim sum shops have quietly risen

Text/Forbes China

Image source: Visual China

Recently, the stores of Internet celebrity cake brand Lady M in Sanlitun, Chaoyang Joy City and Xidan Joy City in Beijing's popular business districts have been withdrawn, including Lady M's first store in Beijing, Chaoyang Joy City Branch. The relevant person in charge of Lady M said that the closure of the store is true, the store is in the adjustment period, and the specific plan is not convenient to disclose. At present, Lady M only has two stores in Beijing, the China Central Center store and the newly opened INDIGO store.

According to the official website, Lady M was founded in New York in 2001, usa, and its French classic mille-feuille cake is the most representative, which Travel + Leisure magazine called "Chanel of the cake industry". Lady M's first store on New York's Upper East Side, the Lady M boutique store, is almost on par with Times Square and is a punch-in point for visitors to New York. Some food critics have described rows of cakes as treasures stored on white counters. If you don't look closely, guests will mistakenly think that this is an upscale French jewelry store.

In 2013, Lady M began overseas expansion, setting her first stop in Singapore. In 2017, Lady M entered the Chinese mainland market. As of press time, Lady M has 23 stores in 12 cities including Shanghai, Beijing and Guangzhou, and most of them are located in the core areas of popular business districts. Whenever a new store opens, you can always see a long queue.

On September 3, 2017, Lady M Chinese mainland first store opened at the Shanghai International Finance Center. Due to the excessive business, the Shanghai IFC branch has successively adopted measures to restrict purchases and dine-in meals. Even so, there is still a huge flow of customers outside the store, and scalpers are flooded. After opening 72 hours, the Shanghai IFC store was forced to suspend operations. It is understood that the price of Lady M single cake is divided into 68 yuan and 75 yuan, and the price of a whole 9-inch cake is 500-900 yuan. Before Lady M opened the delivery service in 2019, there were Lady M cake errands on Taobao, salted fish and other websites, and the purchase price was 1-2 times the price of the store.

As the first generation of Internet celebrities in the cake industry, Lady M is now absent, which is related to its business ideas. According to industry insiders, Lady M has expanded rapidly in recent years with its own brand advantages, but its price is not balanced with innovation and upgrading, and the degree of experience. Compared with the same type of products on the market, Lady M cake has a single type, the price is high, the audience is not wide, and the consumption frequency of consumers is not high.

In the same situation as Lady M, some established bakery brands have experienced a three-step approach of "shutting down, shrinking, and retreating" in recent years. Yizhiduo Cake Shop, which has a 22-year operating history, announced the suspension of production, and the Shanghai store closed almost overnight; Christine and Kesongfang, which have been open for 30 years, closed more than 100 stores; The old bakery brand Donghaitang in Guangzhou closed down; and the buoyancy forest of Hangzhou's local bakery entered the closure period. In addition, the popular yuanmai hill, Grandpa Ruike, and Beske are also unable to escape the fate of closing the store, and the founder of the "baking O2O first share" Beske is listed as a dishonest executor. Foreign-funded baking brands such as German Original Taste Factory, Uncle Torthas, and Meishi Donnazi have lost Chinese mainland market.

According to the "2020-2026 China Baking Industry Supply and Demand Situation Analysis and Market Operation Potential Report" released by Zhiyan Consulting, the market size of China's baking industry in 2020 is 235.8 billion yuan, and it is expected to maintain a growth rate of about 7% in the next five years. With the gradual improvement of national and industry standards, enterprises pay more and more attention to food safety, and the professionalism of baking production has been significantly improved. Baking is gradually infiltrating from first- and second-tier cities to third- and fourth-tier cities and below. According to Euromonitor data, since 2016, China has become the world's second largest bakery market after the United States. Baking consumption symbolizes the quality of life, and baked goods have become the new people's livelihood food.

At the same time, the drawbacks are equally obvious. It is reported that the industry concentration of China's baking industry CR5 (the market share of the top five companies in the industry) is 10.6%, which is significantly lower than the 43% in Japan, and the regionalization characteristics of the vast majority of baking companies are very obvious. The phenomenon of homogenization of bakery products has become more and more intense, from product homogenization to marketing homogenization, from management homogenization to strategic homogenization.

At present, the entire baking industry has ushered in an accelerated reshuffle period, and the alternation of new and old is constantly staged. On the one hand, new tea drinks such as Starbucks, Luckin, Xicha, and Naixue's tea, coffee brands vigorously layout the roasting business, such as Naixue's tea mainly "a cup of good tea, a soft European bag". On the other hand, online e-commerce and takeaway platforms have expanded the consumption scene, and central factories + e-commerce services + cold chain logistics have become the most respected industrial business model in the baking industry.

In the increasingly crowded track of the baking industry, the national tide baking brand has performed prominently and is becoming an emerging force in the industry. Mo Mo Dim Sum Bureau, Hutou Bureau Scum Cake Row, YuefengTang, Papa Sugar Handmade Toast, Luxi River Peach Crisp and other national tide baking is favored by capital.

According to the data, on June 25 this year, Mo Mo Dim Sum Bureau announced that it had obtained a round of financing of hundreds of millions of yuan from Today's Capital, completing the fourth round of financing within one year. On July 6, Yuefengtang announced that it had received a US$10 million investment from Kai Cheng Capital. On July 14, Hutou Bureau Standard Chartered Bakery announced the completion of nearly $50 million Series A financing. All three bakery brands plan to accelerate the expansion of offline stores during the year.

It is worth noting that compared with Western-style pastries such as bread cakes, Mo Mo Dim Sum Bureau, Hutou Bureau Standard Strike Cake Line, and Luxi River Peach Cake are mostly sold with Chinese dim sum to create healthy and high-value new Chinese dim sum. Traditional dim sums such as mochi, peach crisp, egg yolk crisp, pineapple crisp, and flower cake not only have a long shelf life than Western pastries, but also have a high national popularity and are more easily accepted by the public. According to the China Food Safety Network, since 2018, Chinese dim sum has increasingly the potential for global development. "For the Australian market, the export of traditional Chinese dim sum series such as Qingtuan, Babao Rice, Mung Bean Cake and Shortbread has increased significantly, with exports reaching US$24,417.6 in the first quarter of this year alone, an increase of 5 times over the same period last year."

Red Food Network believes that the baking category has certain particularities in China, and it is a new modern category produced by the integration of Chinese and Western catering cultures. At present, the old baking brand and the former Net red baking brand are in trouble, and the emerging brands are constantly rising and ushering in the spring of development. However, the brand itself has a life cycle, and if there is no overall innovation and upgrading and product iteration, it is easy to "short-lived". With the diversification of consumer demand and the continuous entry of new brands in the market, it is more important for the baking industry to enrich the brand connotation and further explore how to keep the brand standing in the market and not falling. While foreign internet red cake shops and bakeries enter the Chinese market, they also hope that more Chinese baking brands will "go global".