As prices rise and consumer spending decreases, competition in the market for Mid-Autumn Festival moon cakes has intensified.
According to industry statistics, Mid-Autumn Festival is one of the nation's three biggest holidays, and as many as 90 percent of the general public give gifts at this time. Moon cakes make up the largest part of these gifts, with total sales reaching between NT$2 billion (US$60.5 million) and NT$3 billion.
Pastry vendors said they can see the emergence of an M-shaped consumer market, where the market for expensive wine and tea leaf gift sets at the top of the pyramid remains relatively unaffected, while the market for moderately priced moon cakes at the base is directly affected since consumers may decide not to give gifts when times are hard.
Another reason for a shrinking moon cake market is that there are now many other kinds of gift sets on the market, and consumers may instead choose to buy fruit or other kinds of gifts rather than moon cakes, they said.
But regardless of the slow economy, business must go on. The companies competing for the main part of the moon cake market -- company orders -- have had to resort to a price war to get customers.
According to Kuo Yuan Ye Foods (郭元益食品) pastry vendors aiming for large corporate orders have sometimes slashed their prices substantially, giving discounts of as much as 72 percent, but that has only occurred in the days just before Mid-Autumn Festival.
This year, however, the company has seen competitors give the same discount at the beginning of the moon cake season. The result has been that the moon cake retail business still hasn't picked up, even though Mid-Autumn Festival is a little more than a week away.
wide range
To boost orders, Kuo Yuan Ye is offering moon cake boxes ranging in price from NT$200 to NT$1,600 in an attempt to cater to a wider range of companies. The company estimates that it will be able to maintain last year's order volume, with group purchases making up 65 percent of total sales volume.
Chen Hsi-yi (陳錫宜), a manager in the marketing department at Hun Ya Foods Co (宏亞食品), said the the number of moon cake orders received by the company so far show that many companies have cut down on their budget, while a few successful IT companies have maintained and even increased their budgets.
Their biggest order exceeded 10,000 boxes
The company is flexible and tailors its orders to meet the demands of companies with differing budget requirements, all in order to get a larger share of the group order market, he said.
Expensive moon cakes sold out earlier than normal and the company is now only accepting orders for boxes in the mid-price range between NT$400 and NT$500. The company expects orders to remain at the same level as last year.
Deputy General Manager Huang Chin-fa (黃進發) at Isabelle Taiwan Co (伊莎貝爾食品), a maker of mooncakes and wedding cookies, said that Isabelle has prepared for the M-shaped market this year by catering to both extravagant and moderate tastes and offering moon cake boxes in a range of prices from NT$200 up to NT$1,800.
The company's new flagship store has slashed prices by as much as 50 percent on some products and bargain-hunting customers have flocked to the store.
discounts
Adahesong Taiwan Salico Enterprise Co (大黑松小倆口) General Manager Chiu Yi-jung (邱義榮) said that although the prices on the company's price list have gone up, the sales force has found that consumers are reluctant to pay them. They have therefore been disinclined to charge the higher prices, instead giving discounts of up to 50 percent.
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