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 Discuss the bread industry in Malaysia

Categories: BreadIndustry

Malaysia’s bread industry started as small- scale processing industry and expanded to medium scale processing industry today. It had tremendous growth and bread become famous and popular food in Malaysia. Bread products in Malaysia also been categorized as most popular substitute’s food of rice and noodle and necessities for consumers. Bread has been selected as good dietary sources; especially it contains high fibre wholegrain or whole meal.

Malaysia’s bread market worth RM 470 million to RM500 Million, and it has control over large share of 62% in market.

Nevertheless, it is still smaller compare to other countries bread industry such as Singapore and Thailand although it has constant growth of 4% per annum. Future growth of bread industry will continue increase and contributed to countries economic as consumers demand more premium bread due to the consumer’s lifestyle changed to healthier conscious, nutrition conscious, and demand for higher quality.(Nordin.A,et al,2008) The market for bakery and cereals in Malaysia increased at a compound annual growth rate of 8.

5% between 2003 and 2008.

The bread & rolls category led the bakery and cereals market in Malaysia, accounting for a share of 57.2%.(Janes,2010)

In Malaysia, largest player in bread industry are operated by Gardenia, occupied approximately 40 % to 45% of market shares with the capacity of producing 32,000 loaves per hour, which is the highest in the region. Its product been distributed in whole peninsular Malaysia with more than 20,000 retail outlets yet they do export their products to others countries like Singapore and Philippines. But Gardenia in East Malaysia is operating under subsidiaries of JWPK Holdings Berhad which produce and distribute products to east Malaysia only.

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(,2010) On the other hand, Stanson Bakeries, a subsidiary company under Silver Bird group, it produces High-5 brand of bread products and occupied approximately 30% of market shares, as second largest bread maker in Malaysia. (Stanton,,2009) Besides these 2 main players, there are other smaller players as larger regional bakeries such as Daily bakery at Johor, Federal Bakery and Angel Bakery under Kuala Lumpur and Klang Valley region, and Family Bakery in Central Peninsula Malaysia. Others such as Kilang Roti Florida Sdn. Bhd., Lee brothers Bakery, Economic Bakery factory.(Malaysia Business Listings,undated) While for retail bakery chains such as Kings Confectionery, Bee’s confectionery and bread boutiques like Bread Story.(Stanton,2009)

Bread Industry in Malaysia is categorized as oligopoly which has less number of large bread makers control in the market. Main players in bread industry will compete with each others for example Gardenia and Stanson Bakeries. There are non -cooperative behaviors among all these bread makers and resulted strong competition among them to occupy market shares for bread market. For example High 5 (under Stanson Bakeries) launched Sure Value 500 bread loaf sells at RM2.25 for 22 slices compare to Gardenia normal size white bread cost RM 2.30 . (Sivanandam.H,2009) The main intention is to help their firm from achieving a significant market share in the sandwich bread segment. ( Bursa Malaysia News, 2009) .During 2008 May, major of the bakeries were been subsidized by Government with 40 sen per loaf of 400gm white sandwich bread. This is t recue burden of consumers as do not need to pay high price for essential goods. Although white bread was under the price control Act, but bakeries allowed to increase prices for non- white bread products under their company. (,2008)

Bread industry eventually become an important driver to increase image of Malaysia as an International Business Centre as well as boost up economy of Malaysia by doing export trading to others countries. One of the brand, Gardenia has been recognized and awarded an honor by Malaysian Design Innovation Centre as innovative and pioneer spirit in year 2004 due to its variety of specialty products .(MDIC,2004) According to a survey done by research firm Nielson, surveyed on consumer’s favorite brands across 93 categories in Malaysia. Gardenia as the only one bread brand included in top ten favorite brand which identified by customers in Malaysia. There are more baking institution upcoming in the market, such as Malaysian Institute of Baking, an institution on teaching students to bake and invent different baked products. This shows that there are more opportunities in bread market as more graduates start their business in bread industry. (,2010) From this result, we can conclude that the bread industry in Malaysia has created famousness and consistent growth and contribution to Malaysia economy.(ChannelNewAsia,2009)

Question 2 -Discuss the 5 factors that lead to the growth of the bread industry in Malaysia in the context of Microeconomic studies.

a) Tastes

Consumer taste changes in favorable way for a products means consumer will demand more of the products. Vice versa, consumer taste changes in unfavorable way, the number of demand for that product will decrease, so it has positive relationship.( Farnham.P,2005)

According to the Third outline Perspective Plan, Malaysia population, there are 33.1% of the population are occupied by whom lesser than 14 years old and 42% of the population been occupied by who are between 15-39 years old. In different stage of age group, they will have different perception in terms of taste, preferences, and lifestyle. These two sectors of the population bring significant impacts on the food consumption products, due to their changes in perception towards foods.

For youngster like age between 14-19 years old, foods that are convenient, taste like snacks, creative and special, such as pre-prepared convenience meals But according to research done by Cone releases, 83% of majority consumers willing to buy a Brand’s product based on its products and packaging.( Kerkian.S ,2010). So from this statement, we can make an assumption that if the bread is creatively packaged and variety in taste, it eventually creates more demand for bread from these two groups of population in Malaysia.

With the increasing number of disease In Malaysia, such as high cholesterol, hearts attack, obesity, and others, consumers are more concern on what type of food they consume therefore pursuing healthier lifestyle through their eating behavior, and resulted change in consumer’s lifestyle In Malaysia.( Majeed. A,1999) Bread industry able to increase in their growth as some of the bread companies produced bread which to meet this group of consumers and tapped into the lifestyle trend. Products can be found in the market such as Gardenia’s break thru and High-5 Grain WholeMeal are meant for those consumers who are targeting and centered healthy lifestyle. As this healthy lifestyle is continuing promote in Malaysia, induces consistent growth in bread industry in future.

Conclusion: there is an upward shift in bread demand curve from D1 to D3 when there is a favorable change in taste.

b) Number of Buyers

This determinant has positive relationship as there are increment in number of buyers in the market it eventually increase the demand for the products as well. ( Farnham.P,2005)

According to the Third Outline Perspective Plan mentioned above, more than 70 % of populations are occupied by two main groups of citizens. Bread takes over rice and noodles are being common in the modern days, people who are from age of 14 to 39, they are main dominants in Malaysia population. Based on the taste they changed, breads are preferable as quick meal, eventually more demand from these groups of people.

According to the World Factbook, population age group from 15 to 64 years old had increased 62% to 63.5% from 2002 to 2008, and the age structure of Malaysia population are occupied by from 15 to 64 years old with 63.9% of total population. (, 2010) From all this data, we can conclude that, increases number of this age group lead increases in total population eventually increases demand for Bread, same goes to other industries. Besides that, there is growing number of Women workforce in Malaysia (Ivan.L,2008); Hence, there is high frequency of dining out instead of cook in the house. Especially for those family women, they tend to purchase bread for their children as breakfast as well as lunch; most of people treat it as most reliable substitutes of food for them. According to Dr. Chin, bread serves as lunch for working groups, so with the increasing number of women workers means increasing number in workforce, thus increase the number of buyers.

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