Increased production has not meant increased mooncake sales
A street-side shop selling mooncakes in Hanoi. Sales of the cake, a specialty for the Mid-Autumn Festival, have slowed this year as local consumers cut back on spending.
From household kitchens to modern bakeries thousands upon thousands of people and enterprises look to make a killing by selling mooncakes, a specialty of the upcoming Tet Trung Thu Festival (Mid-Autumn Festival).
This year, however, inflation-weary customers are loath to loosen their purse strings, and mooncake makers and traders are worried about slow sales. Consumer apprehensions over food safety and hygiene have also acted as a sales dampener, industry insiders say.
"High inflation has made local consumers tighten spending, thus mooncake sales this year have fallen sharply, by about 30 percent over last year," said Nguyen Khanh Vinh, manager of Le's Mart supermarket in Hanoi. Not many people are willing to pay a lot of money for a box of mooncakes, he said.
Mooncakes are traditionally given to youngsters and offered to ancestors around the Mid-Autumn Festival, which will be celebrated on September 12. In recent years, they have been gifted widely by companies looking to build business relations.
Mooncake makers said the prices have increased by 10-20 percent over last year due to higher input costs.
In mooncake shops mushrooming along the streets of Hanoi, like Ba Trieu, Giang Vo, and Cau Giay, most of the cakes are sold for about US$2. Others, elaborately packaged and made with expensive ingredients, like bird's nest, can retail for over $20.
"Only the rich can afford those expensive cakes. Money to buy a box of four is enough for my family to live on for a fortnight," said Nguyen Thi Thu, 38, who earns her living by selling fruit on an old bicycle, standing opposite a shop where the mooncakes are sold for up to $90 a box.
Tran Thi Hoa, a retailer on Ba Trieu Street, said at this time in previous years, her shop did not have enough cakes to sell.
"Many firms and agencies bought them to give as gifts to their employees. However, there are very few firms ordering cakes from us this year."
Vu Vinh Phu, chairman of the Hanoi Association of Supermarkets, said mooncake sales are very slow also because of worries about food hygiene and safety, after local authorities recently detected hundreds of tons of substandard mooncake fillings illegally imported into Vietnam.
"This season's sales of mid-price cakes could go down by 10-15 percent from last year, while expensive ones may see a fall of 20-30 percent," Phu said. "Amidst high inflation, locals will only buy essential products, and cut spending on many products like mooncakes and beverages. Many people buy the cakes mainly for their bosses or relatives."
Around two weeks before the festival, many mooncake shops in Ho Chi Minh City already announced their discounts of up to 50 percent, or buy-one-get-one-free deals. Price reduction is the only way they can try to sell out their stock, traders said.
Producers did not expect this. Phu said many of them even boosted production this year. Bakers that produce some 200-300 tons of mooncakes or more may face losses because of falling purchasing power.
Le Van Thinh, vice general director of Kinh Do, the country's largest confectioner, said his firm has increased mooncake production to 2,000 tons. The firm's high-end mooncake production has risen by 20 percent over last year.
Another producer, Bibica, said it has raised its mooncake output by 15 percent to over 500 tons, while Dong Khanh increased its output by 10 percent to 70 tons.
Not just mooncakes, but many other products like clothing, footwear and electronics have also seen sales plummet.
Vietnam's inflation rate reached 23.02 percent in August, the fastest in 33 months and the 12th straight monthly increase.
Inflation is cutting into sales volumes in Vietnam and has hurt consumer confidence, said Darin Williams, the managing director of Nielsen Co. (Vietnam) Ltd.
According to a Nielsen survey, as purchasing power is affected, "spend for necessities only" is now the consumers' motto. Up to 60 percent of consumers in Hanoi and Ho Chi Minh City said their purchasing power has reduced due to the escalating prices of goods. They said they have cut spending on eating at restaurants and traveling.
And on mooncakes.