The moon cake market is increasingly tight

3 min read

As a long-standing bakery brand that soon appeared on the market in 1948, the Brodard Bakery brand of the owner of Bong Sen Joint Stock Company is earning hundreds of billions each mid-autumn season – accounting for 70% of total annual sales. Compared to the rest of the business segment, moon cake sales even account for about a quarter of the total revenue of the entire restaurant and hotel system. The profit margin is also extremely impressive, Brodard’s profit is currently fluctuating around 20 billion VND / year – equal to half the profit of Hai Ha or Huu Nghi Confectionery even though the revenue is only 10-20% compared to the two men. This great confectionery industry.

However, 2018 also marked the period when Brodard’s moon cake sales growth slowed down and officially went back after that. In 2019, Bong Sen achieved revenue of 103 billion VND – a decrease of more than 38%. It is known that in 2019, the enterprise decided to close 10 retail stores, focusing on developing stores with high efficiency. In addition, the company also cooperates with partners to build a new large-scale bakery with modern equipment and machinery to produce new trend cakes, ensure freshness, especially promote the moon cake line. Restructuring to enhance performance, long-standing brand name seems inevitable fierce competition of the market.

With the same movement, revenue in two other units, ACB Bakery and Thu Huong Bakery, in the last 2 years also showed a clear decline. In which, if in previous years, ACB Bakery’s revenue increased strongly, in 2019, it would decrease by 7.5% to 257 billion. Thu Huong Bakery also decreased from 58 billion (in 2018) to 46 billion (in 2019).

While consumer tastes are decreasing, the market share is strongly shared: This may be one of the reasons why the moon cake “gamble” cooled down. Not only that, the moon cake in recent years has become the focus of “money picking” not only of confectionery businesses but also hotels, restaurant chains to coffee chains actively participating in this field. This is even an opportunity to earn extra income for housewives, office workers, young people with homemade moon cakes, or cakes made in the form of jelly.

thu-1-7651-1601114905.png

In the latest move, Kido (KDC) announced its entry into the moon cake market in 2020 under the brand Kingdom. Talking about this plan, Mr. Tran Le Nguyen – General Director of Kido – shared that moon cakes have been present in Vietnam since the 90s. At that time, cakes were mainly handmade and sold in the district area. 5. Because of handmade and hand-made packaging, it is very easy to spoil, sometimes it is not season when the cake is moldy. The same goes for Kido’s moon cake profession. With the experience, machines and advantages gained, the Company quickly dominates the primitive bakery market with 70% market share.

And today, “I am also quite surprised that many units are very welcoming to our return, this is a good signal and increases confidence in the upcoming journey”, Mr. Nguyen said. Because, with a new brand like Kingdom, it is difficult to be listed on the shelves, but as a long-time customer, distribution is no longer a big problem.

According to Mr. Nguyen, not only the level of competition increased, the moon cakes in recent years have not had a breakthrough. In particular, the failure to create the atmosphere of the Vietnamese Mid-Autumn Festival suppresses the development of the industry.

With the returning mindset, Kido hopes to preserve the traditional culture of Vietnamese Mid-Autumn Festival. Accordingly, the first year the company will not put a heavy emphasis on profit, but as a trial step for the upcoming journey.

In retrospect, when not selling confectionery segment to Mondelez, Kido’s third quarter profit (formerly Kinh Do) usually accounts for 65-75% of the whole year profit, worth hundreds of billion dong. In 2020 alone, Kingdom plans to contribute to the Group’s revenue of about 160 billion VND and profit of about 36 billion VND.

thu-2-5801-1601114905.png

Source: ndh.vn – Translated by fintel.vn