Japanese bakeries and related businesses are scrambling to penetrate and expand into ASEAN market which have a growing follower of consumers who love Japanese soft-type of bread. The secret to this lies in the Japanese baking technology which produces a soft, springy texture to bread.
Consumers who have become more and more health conscious find Japanese bread to be light and easy to consume, making it a good and healthier alternative compared to the heavier traditional meals with rice.
In Indonesia, the people there like softer foods, and Japanese bakery chains like Yamazaki Baking had enjoyed tremendous success in the country since its opening there 4 years ago through joint venture with Mitsubishi Corp and retailer Alfamart. Yamazaki’s products have now become popular lunch and snack items, with its ultra-fluffy ‘shokupan’, a white sandwich spongy bread, contributing almost a quarter to Yamazaki’s annual revenue of US$13.2 million. Yamazaki has also adjusted some of its products to Indonesian taste by introducing savoury variants like the tuna-flavored sandwiches. Naturally, the bulk of its products cater more to the sweet variants, as Indonesians also love sweet baked products. Yamazaki success is evident as its breads are now sold at over 5,600 stores in Indonesia.
Despite Yamazaki success, Sari Roti brand, owned by the Salim Group, dominates this market with 90% share of all breads sold to retailers. Sari Roti has a strong distribution network of 15,000 stores for its breads. It must be noted however that Sari Roti will not be successful if its not because of its partnership with Japanese companies Pasco Shikishima and predecessor of trading company Sojitz, tapping the baker’s bread making technology.
However, the entry of ‘upmarket’ Yamazaki has posed a significant challenge to Sari Roti, as the latter needs to be aggressive in new product developments to ensure that its dominant position will not be eroded easily. One example is Sari Roti launched Double Soft Bread to compete with Yamazaki’s fluffy white bread.
Japanese breads are not only popular in Indonesia, but it has also penetrated neighbouring Malaysia. In the Philipines, Sojitz is preparing to break into the market in 2019 through partnership with Ryoyu, a baker based in western Japan. Bread has been a long-time staple for the Filipinos. Sojitz plans to open a factory in Manila to supply bread to the modern retail stores. Sojitz entry into this market means it will be competing with its Indonesian partner, Salim (Sari Roti) which had already built its presence there.
Latest report by Euromonitor Plc showed that Southeast Asia's growing bread market has reached US$5 billion in value with consumption growth at 5% annually driven by Indonesia, Vietnam and Thailand. There is still a huge room for growth as per capita consumption of bread in these countries are still less than 1/5 of Japan’s.
Meanwhile, a separate report by Mintel showed that Japan is the largest packaged bread market by volume in Asia Pacific although the market remains static in terms of average value growth. Australia maintains the highest per capita consumption of packaged bread, reaching 20.4kg per person/year. In China, the growth of bakery foodservice chains and interest in Western-style and premium bakery products is driving growth, although on a per capita basis, consumption of bread/bread products remains low at just 0.58kg. (see Chart 1.0)