MID-AUTUMN FESTIVAL will, from this year, be even more celebrated by China’s 1.3 billion population than before, as the 3,000-year old festival has been gazetted a PRC public holiday from this year.
The full moon will shine its brightest this Sunday, 14 September, according to the lunar calendar for the second most celebrated festival in China (after lunar new year).
“This season’s demand growth for Angel moon cakes appears as strong as last year,” China Angel’s chairman Patrick Liang said in a telephone interview with NextInsight last week.
Group sales for the leading Guangdong moon cake maker grew 88% in FY07 to Rmb 199.4 million out of which moon cakes contributed 51%.
A key challenge to moon cake makers this year was the shorter selling period: the Olympic Games had glued consumers to the TV screen 8-23 August, and slowed down sales over a period of about 2 weeks.
Sales surge as China Angel gains market share
“We are getting a bigger slice of the market this year,” said Mr Liang when explaining his rationale for expecting China Angel's sales to surge despite the relatively stable nature of Shenzhen’s moon cake market. Even though capacity has since increased over 3-fold as a result, the new factory is able to house even greater capacity for moon cakes, pastries as well as snacks.
The shorter selling period caused some moon cake makers, in particular the smaller ones, to scale back production out of risk aversion against inventory return.
Larger players like China Angel did not scale back, however, as their experience of more than 10 years has shown that sales volume remains somewhat unchanged regardless of selling period.
It opened a new moon cake factory 3 times the size of its older facility just two months back in July.
For China Angel, relaxing its returns terms this year had already boosted sales by several million yuan.
The company is now allowing distributors to return up to 5% of their moon cake inventory to avoid out-of-stock scenarios at shopping malls arising from a surge in last minute demand from shoppers.
Mr Liang believes last minute sales will be boosted over the coming long weekend, which includes next Monday's public holiday in lieu of the Sunday public holiday.
”Other moon cake makers may focus on profit, but China Angel focuses on branding,” said Mr Liang.
Mooncakes are a business and social tool
That is why other than expanding its distribution channel, advertising and promotion is vital, with a budget of 5%-8% of FY08 sales.
In addition to putting up festive decorations such as banners, lanterns and other festive motifs, sponsorship of publicity events to engage consumers is key.
"When penetrating new provinces, we focus on event sponsorship and less on media ads," said Mr Liang.
In the past, these events included moon cake tasting sessions or Karaoke competitions, and can cost the moon cake maker up to Rmb 30,000 at a prolific shopping mall.
With such cost effective strategies in place, China Angel hopes to make a greater impact on regions outside Shenzhen, where it is No.1.
Even though capacity has since increased over 3-fold as a result, the new factory is able to house even greater capacity for moon cakes, pastries as well as snacks.
”Sales for the current quarter appears likely to be China’s Angel’s best performing one historically,” says the management.