Thursday, 17 February 2011 11:30

Fonterra taps into Chinese ‘consuming class’

Written by 
Miao Li Ping Miao Li Ping

THE SCENE: downtown Beijing.

Beside a bus stop in a cluster of ordinary local shops is a bakery called Wei Duo Mei, open 6.30am to 9.30pm, seven days a week.

To Australians a bakery is no big deal, but to China’s rapidly increasing ‘consuming class’, or new wealthy, the bakery is something special, an opportunity Fonterra has been quick to exploit.

Enter Wei Duo Mei and gaze at its array of beautifully presented packaged foods – biscuits, breads, cheesecakes and decorated cakes.

It may look Western, but the food is distinctly Chinese, a subtle fusion of East and West. The background music is certainly Western, including 1960s hits.

This shop is one of 180 in a chain run by  Miao Li Ping and her family in Beijing.

The company began 16 years ago, and in recent years has expanded, with plans to open more stores in the neighbouring city of Tianjin.

Li Ping, a baker and cake decorator, now manages the development and sales operations. Through a translator she told me their factory makes many of the stores’ products.

“We have 1000 people working in the factory, mainly producing dough for the bread. Some is frozen, some freshly baked each day and delivered to the stores.  Another 3000 people work in our shops, It’s a big operation.”

Deliveries to the stores are made at midnight to avoid the challenges of Beijing traffic.

Smaller specialty items such as cakes are baked fresh in each of the stores. This includes the icing of the special occasion cakes. All told about 200 different products are produced and sold in Wei Duo Mei stores across Beijing. Li Ping and her family have been quick to seize on western ideas and give them a distinctive Chinese character.

“We were the first bakery in Beijing to have an open kitchen where the customers can see the bread and cakes being baked and decorated. This makes for good hygiene control and reassures our customers.”

Strict quality control measures apply; perishable items such as bread and some cakes have a 24-hour use-by date. Any stale goods go to piggeries.

The open kitchen also allows customers to see some Fonterra products, such as Anchor UHT cream used in cakes, and Fonterra mozzarella cheese, cream cheese and butter.

The partnership with Fonterra began in 1996 and will continue to grow says Li Ping.

“We use Fonterra products because of the high quality and because of the flavours they offer. Especially the creamy flavour.”

They don’t use margarine for “health reasons”.

The bakery at first targeted younger people, but now finds aged 40+ are also regular customers. Growth has been spectacular: 15-20% a year, consistent with Fonterra’s assessment that its food services market in China has grown by 30% in five years.

Wei Duo Mei is one of many bakery chains in China. Fonterra, through its innovation centre in Shanghai, works with bakers and chefs to design new product lines which use their ingredients.

Li Ping has visited New Zealand and has tried a few Kiwi bakeries. But though she’s interested in Western-style foods, she has to cater for the local palette. For example Chinese like their bread softer and sweeter than we do. Cheese is still an ‘exotic food’. But the packaging and presentation of the cakes and breads would put many Australian bakeries to shame.  The Chinese know the true meaning of the word quality.

The personal challenge for Li Ping is creating new products to meet the rising standards of the new consuming class.

Demand is rising and Li Ping anticipates within two years they will add 100 stores to the chain. Even more are planned.

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Fonterra taps into Chinese ‘consuming class’

THE SCENE: downtown Beijing.

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To Australians a bakery is no big deal, but to China’s rapidly increasing ‘consuming class’, or new wealthy, the bakery is something special, an opportunity Fonterra has been quick to exploit.

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