China boxes clever on mooncakes
By Mina Hanbury-Tenison
Published: September 16 2010 23:29 | Last updated: September 16 2010 23:29
At a branch of Xing Hua Lou, a famous traditional bakery chain in Shanghai, the evidence of the upcoming Autumn Moon Festival is visible. Thousands of boxes of mooncakes are stacked high inside the store and the staff can barely move.
Outside the store, meanwhile, touts try to entice customers in with laminated pamphlets offering up to 25 per cent off the listed price.
The Autumn Moon Festival – which this year falls on September 22 – is a traditional Chinese holiday. It is feted by the consumption of mooncakes, the roundness of the sweet pastry symbolising the union of family members.
According to the Shanghai Confectionery Industry Association, 21,000 tonnes of mooncakes were sold in the city in 2009 – worth Rmb1.85bn ($275m). Sales for the whole of China were estimated at Rmb11bn according to China Reports Hall, a market research firm based in Xiamen.
“It’s the time of the year for businesses to show gratitude to their business partners, to the government officials and to their own employees,” says Shaun Rein, the managing director of China Market Research (CMR) Group in Shanghai. “It’s a vital way of building relationships.”
However, in recent years the gifting of mooncakes has taken on a new significance in China, where a show of purchasing power and price-indexed gratitude has become more important. “As people get richer, they need more expensive gifts,” says Mr Rein.
Food retailers have cashed in on this opportunity with zeal. At Xing Hua Lou, single mooncakes, which typically cost about Rmb5 each, are repackaged in gift tins. The lowest price for a basic boxed set of eight goes for Rmb78, while for those seeking luxury there is a Rmb780 version filled with abalone fins.
Western retailers such as Starbucks and Häagen-Dazs have also embraced the seasonal retail opportunity. Häagen-Dazs, whose mooncake vouchers are one of the most circulated in China, offers boxed sets that range in price from Rmb268 to Rmb988 – a steep price tag for many Chinese workers.
Kris Kaminsky, the food and beverage manager at the Portman Ritz-Carlton in Shanghai, says the hotel expects to sell about 20,000 of its boxes this year. The value is often not in the mooncakes, he says, but in the presentation. “We’ve created a very nice red box that looks like a jewellery box. It’s a box to be kept after the mooncakes are eaten.”
Mooncakes are also the most re-gifted item in China. “Many people give their mooncakes to someone else,” says Shen Hongfei, a well-known food writer. “Not because people don’t want to eat them but because some receive so many gift boxes that they want to offer them as presents. It’s a sign of respect and gives face.”
Byron Kan, the general manager of the Shanghai Centre, which houses the Portman Ritz-Carlton Hotel, has chosen to give Häagen-Dazs gift certificates this year to his corporate clients.
“[Mooncakes] are indeed vital, must-do corporate gifts,” he says. “But when companies started giving more and more extravagant mooncake gifts, to the point that the packaging and the gifts inside cost more than the mooncakes [themselves], the government decided to step in a few years ago and put a limit on the price.”
Now you can no longer buy a mooncake box with a watch as a gift inside or with solid-gold packaging.”
Many vouchers are returned for cash, allowing touts and middlemen to make a healthy profit margin. But as with any paper asset with an expiration date, the window for such buy and sell activity is limited. “The value of these mooncake vouchers go up and down according to how close one gets to the final date,” says Mr Rein of CMR.
Paul Smith, the president of Costa Coffee China, which expects to sell 8,000 boxes from its 70 outlets this year, offers his own solution. “We honour the vouchers for up to one year after the date,” he says.
“So if they don’t get to collect for this year, they can do it next year.”
Copyright The Financial Times Limited 2010.