How should we view the future development trends of the bakery industry?

As a typical fast-moving, time-sensitive consumer food industry, the bakery sector continues to maintain robust growth in both market size and output. In 2021, financing deals targeting the bakery industry occurred at an average rate of one per month—some even exceeding RMB 100 million. It is common to see long queues forming outside various bakeries, underscoring how prominently baking has emerged within the broader food industry. This is an opportunity-rich landscape—'a land flowing with milk and honey.' Yet alongside evolving consumer lifestyles, spending patterns, and habits—and amid disruption from emerging business models and new technologies—the bakery industry still faces significant growth challenges. Next, we will explore development strategies for the bakery industry across multiple dimensions: industry trends, consumer behavior, store-level operational scenarios, and avenues for operational growth—aiming to help bakery professionals better understand the current state of the industry and identify new opportunities arising amid ongoing transformation. Five Key Trends Shaping Bakery Development Based on Youzan’s practical experience and explorations in building private-domain ecosystems for bakery businesses, the report identifies five prominent trends currently defining the industry’s evolution: 1. Rapid Industry Growth, Far Outpacing the Global Average. Although China’s bakery industry started relatively late compared to Western countries—where baked goods are traditionally consumed as breakfast or staple foods—and although cultural and dietary differences mean baked products are still not widely regarded as main meals in China, rising consumer awareness has driven explosive market growth. China’s bakery market growth now significantly exceeds the global average and is projected to sustain an annual growth rate of approximately 8% over the next five years. This high growth rate has spurred continuous diversification in domestic bakery formats, broadening consumption methods and scenarios. The industry has entered a new phase marked by the rise of Chinese-style bakeries and the emergence of new brands. While growth remains strong, per capita consumption still lags considerably behind major global countries—indicating substantial untapped market potential. 2. Capital Influx Fueling Diversified Development. In 2021, multiple investment firms recognized the bakery sector’s potential, completing 26 funding rounds totaling RMB 6.14 billion. This capital inflow catalyzed the birth of numerous emerging bakery and pastry brands and accelerated overall industry diversification. Single-product offerings can no longer satisfy consumers; brands must continuously evolve across product appearance, ingredients, packaging, and marketing approaches to meet evolving demands. 3. Increasingly Diverse Consumer Profiles. Whether online or offline, women and young people remain the primary consumers of bakery products. As culture evolves and integrates, Chinese dietary structures are shifting—many consumers have developed weekly bakery purchasing habits, with both purchase frequency and spending steadily increasing. Moreover, consumers strongly prefer branded products—a preference shared by 90.2% of respondents—though only 13.9% demonstrate high brand loyalty. Ingredient lists also rank among their top concerns, reflecting heightened demand for food safety and healthfulness. Regarding timing, merchants’ integration of online and offline operations has broken down temporal and spatial service constraints, enabling bakery consumption throughout all hours of the day. 4. Slowing Growth for Traditional Festival-Related Products; Classic Flavors and Small-Sized Cakes Most Popular.

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Third, rankings among the Top 10 towns/subdistricts shifted markedly. For instance, Xinzhuang Town—which ranked fifth in 2024—leapt to first place this year. As a core industrial and residential hub in Minhang District, Xinzhuang has recently undergone intensive commercial renewal, including projects such as Hengyuan·Xinguangli, Xindu Mantianxing, and Tianhui Plaza. A wave of popular bakery brands has since moved in, underpinning steady growth in essential consumption for mature communities and large numbers of local workers. Similarly, Huinan Town rose from ninth to third; Chuansha New Town jumped from twelfth to fourth; and Gucun Town surged from seventeenth into the Top 6—all closely tied to recent population inflows and industrial development in suburban areas. Conversely, Dachang Town—last year’s top-ranked area—slipped to fifth place, primarily due to comprehensive业态 adjustments at Dahua Hucheng Mall, closures of several expiring storefronts, and widespread shutdowns of scattered neighborhood bakeries. Fourth, Commercial Complexes: From Quantity Competition to Brand Competition Top 10 Commercial Complexes by Number of Bakery Stores Source: Xiangfandi Vanilla Commercial complexes measuring 30,000 square meters in scale collectively host 1,162 bakery stores—accounting for 26% of the citywide total. As these complexes have become the primary agglomeration points for bakery stores regionally, competition is fierce—so much so that many complexes report nearly identical store counts. Consequently, eight of the Top 10 complexes share identical rankings. In 2024, Changning Longemart led the city with 28 bakery stores—a classic example of an established shopping district boosting foot traffic through diversified tenant mixes. By 2026, Jiuguang Center had overtaken it to claim the top spot. However, the highest number of bakery stores per single complex has generally narrowed, reflecting deliberate efforts by developers to reduce homogenization: scaling back redundant deployments of budget-friendly chain brands while actively introducing flagship stores, distinctive boutiques, and premium bakery concepts. This year’s list features several noteworthy newcomers: Shanghai Jinshan Wanda Plaza and Shanghai IKEA Shopping Centre have both entered the top tier; Qiantan Taikoo Li and Longhu Baoshan Tianjie—newer commercial developments—also made the list. These entries not only attest to the rapid maturation of suburban commercial infrastructure but also highlight the growing appeal of emerging business districts to bakery brands. Source: Xiangfandi Vanilla Fifth, Chain Brands: Domestic Players Ascend, Foreign Brands Retreat Top 10 Chain Brands by Number of Bakery Stores Source: Hongcan Network There are 215 chain brands operating three or more stores, totaling 2,271 outlets—51% of all bakery stores citywide. Shifts in this ranking constitute the most vivid marker of the bakery market’s evolution over the past two years. Sun Beibei, ranked fourth in 2024, saw its store count surge from 78 to 122—propelling it to the top position. Its success stems from a community-oriented, value-driven strategy and location choices tightly aligned with residential needs—effectively cracking the code for growth in a saturated market. Tao Su Shijia rose from seventh to third; Luxihe Tao Su entered the Top 10 for the first time. New Chinese-style bakeries—leveraging locally resonant flavors and the momentum of national trend culture—are steadily capturing market share. Conversely, several legacy chain brands accounted for the largest share of store closures this round: Kristin, Jing’an Bread & Cake, and Cheesecake, among others, all significantly downsized operations. Former leading foreign brands also contracted sharply: 85°C shrank from 121 to just 74 stores—a near 40% reduction; Paris Baguette dropped from 110 to 79; and other international players—including BreadTalk (Singapore) and Tous Les Jours (South Korea)—followed suit. Traditional foreign bakery brands—hampered by slow product iteration and relatively high pricing—continue losing market share, making the transition between old and new industry camps increasingly clear.

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