CHAPTER 5 INDUSTRY & MARKETPLACE

CHAPTER 5

INDUSTRY & MARKETPLACE

5.1 The Industry

5.1.1 Definition of Bakery Industry

            Bread is an essential item in the Malaysia diet, with household penetration of almost 100%. The industry for bread and bakery products has been very stable for some years, but there has been considerable movement within different sectors of the marketplace, as manufacturers and retailers have attempted to increase their share through product innovation and revolution.

5.1.2 Shape of the Industry

             The bread industry in Malaysia has many changes lately. It has appeared as a small-scale growing industry, and then grown to medium scare and now, the birth of a new trend call the boutique bakery. The bread industries in Malaysia expand in the speed of light and bread products are gaining much demand among the community. Bread has literally been tagged as the most famous substitute of rice, primary diet of Malaysians. The bakery products industry in Malaysia dominates a large share of 62%, recorded a value of almost RM 2 billion per annum on 2003 with quick grow of 65 million over the previous year  (Anon,2003). The bread and the bakery products market is estimate to grow of about 4% per annum in the coming years reaching RM2.9 billion by 2006 (Anon, 2002)..

            In 2005, the commercial bread industry brought in $23.8 billion dollars despite an overall decline in the volume of bread shipped. Revenue growth in the bread industry (18% between 1998 and 2003) has been primarily attributing to shifting consumer taste away from traditional sliced varieties and toward more quality breads. Even with the slight demand in consumption, bread products remain the second most famous grocery item, behind carbonated drinks.

5.1.3 Development of the Bakery Industry

            In most cases, the rise of bakery products demand in Malaysia is in line with the population's growing affluence. The main factor for the increased consumption for bread is because bread can easily replace the similar diet, rice. Both are high in carbohydrate and protein contents. People in a hot and humid zone suited to these eating patterns where high caloric food is needed for energy spare as perspiration. Rice is the main traditional diet for everyone but it requires dishes prepared separately. Preparation is time consuming and could be inconvenience for some modern families. Thus, bread, which can provide similar diet with rice, comes quite handy to replace rice as meal. Therefore, it is not surprising that bread has become the primary food for breakfast in most of the families. Breads, with butter or jam for breakfast and sandwich are in the way to take over rice and noodles.

            The distribution of bakery has been widening due to the factor of road improvement with new expressways being build in Malaysia. This has enabled a better distribution of bread from cities to rural areas. With a better road system, bread products from the factory can be easily transported to convenience stores, standard grocers, supermarkets and mini-markets. In addition, the main highways have help to shorten the travelling time of bakery products by half.

            Other than that, a wide type of bread has increase the demanding of bakery products in Malaysia. For example, Gardenia Bakeries produces a variety of tasty bread products such as Gardenia Twiggies, Gardenia Muffins and Fluffy Bun. Various types of choices make bread a popular food and it is affordable for all range of people in all ages and incomes. The needed now is on health bread, where Gardenia Bakeries introduced their health bread, the Gardenia Breakthru which with low glycogenic index, more protein and fiber. High 5 Bakery, also announced their official acquisition of licensee for the manufacture and distribution of Roman Meal breads from The Roman Meal Company in the US which best known globally for their nutritional a health bread over the century in October 2004.

            Media, both internally and externally plays an important role in increasing bread demand in Malaysia. The western culture has been seized by some in Asian countries, and therefore tend to pick up western living styles, which includes eating and serving bread as their meal. Local bread companies such as SilverBird(High 5) and Gardenia Bakery also spend a huge amount of money in advertising their brands and products through different medias. 

5.2 The Marketplace

In above figure, High 5 Bakery falls under the bakery market, along with other brands such as Gardenia. This market then extended to a larger bakery industry which falls under the sector of food and beverage.

5.2.1 Current Condition of the Marketplace

            At the present, the Malaysia bread industry is dominated by two large local bakeries, which are the Gardenia and Stanson Bakeries, each with their own popular brands of Gardenia and High 5 respectively. These two companies hold approximately 76% of the retail market (Rydings, 2005). They compete between themselves by producing attractive bread products. Gardenia bakeries started in Malaysia in 1986 and product America-style sandwich bread, using the traditional sponge and dough method. With short period, it became the bread market leader with an astounding 99% brand recall rate and 80% top-of-mind recall (Anon, 2004). Today, Gardenia's overall production capacity reach 32,000 loaves per hour (the highest in the region) and products over 20 varieties of loaf bread, buns, rolls and snack cakes in five different factories. Whereas Stanson Bakeries and its marketing unit are subsidiary companies of the Stanson Group under the Silver Bird Group Bhd.. The Stanson Bakeries manufactures the European variety of breads, using their authentic European Recipe. The group started in 1999 and is currently contributing about RM45 million, close to 90% of Silver Bird's turnover (Dhesi, 2004).

       Between these two main local bakery companies, the smaller bakeries still able to find their ways to survive the competition. These small bakeries are family owned and structured and are usually started as a single shop before extending to more outlets. These family bakeries however, do not only produce bread products, but also produce higher margin delicacies such as cakes and cookies.

These bakeries operate in the city where the population of people is high and most importantly, where the working group people are. Among the few local confectionary retail chain shops are the King's Confectionary, which started in 1973 in Kuala Lumpur and now with 49 retail outlets, the Season's Confectionary and Bakery, the Angle Cake House and more.

5.2.2 Changes in Marketplace

            Bread boutique is the current new trend of bakeshops in Malaysia hat has evolved through the exact application of innovative marketing. These boutiques are available in shopping malls and are well known for their designer breads where the bread products attract the customer's ease and willing to spend on the breads. This concept was first introduced in Singapore in July 2000 with the brand name, Breadtalk. IN Malaysia, the first shop, Breadstory started in September 2002 and these boutiques have developed speedily in short period. In between three years, Breadtalk has opened as many 23 outlets in Singapore which Breadstory has 15 in Malaysia. The authentic and unique thing about these boutiques is their store-design, which allows customer to see products being prepared in the kitchen through large glass in hygienic manner. These boutique's owners are working very effectively to bring their concept to overseas market.