The mooncake economy

Mooncake (月饼) is a very special product. This round shape Chinese pastry only appears during the Mid-Autumn Festival (中秋节), which falls on the 15th day of the 8th month of every lunar year. It will appear in the market about 2 months before the Mid-Autumn Festival, and will disappear after that.

When the time arrives, you will see its advertisement and promotion all over the media, be it radio, television, newspaper, magazine, flyers, ... Special booths will be setup in shopping complex to sell this product. The market is dominated by restaurants and baker houses, with involvement of some other smaller players. Brand names such as Oversea Restaurant (海外天), Kam Lun Tai Restaurant (锦伦泰 ), Jade Pot Tea House (玉壶轩), Tong Kee Brothers Confectionery (棠记兄弟), The Baker’s Cottage (麦可思 ), Hei Yue Tong (喜月堂), Lavender (紫馨), Foh San Restaurant (富山), Six Happiness Restaurant (六福), Tai Thong Restaurant (大同)... are easily tied up with mooncake. Nowadays even Purple Cane (紫藤), Lo Hong Ka (老行家), Baskin Robbins, Haagen Dazs also joint in the mooncake market warfare, and yet to mention those high-class restaurant in hotels such as Shangri-La, Equatorial, Ritz-Calton, Concorde, Hilton, Dynasty, Park Royal, Renaissance, etc.

Mooncake has a very short shelf life and need to be consumed within 1-2 weeks. Frankly speaking, it is not a healthy food as well, as it comes with high sugar, high cholesterol and high calorie. You might wonder why there are so many players so keen in this festive product? It is simply because the profit margin is very high. They can easily make at least 400% profit by selling mooncake within that 1 month period, which the net profit figure is probably equivalent to their one year normal restaurant business.

Mooncake is expensive. The normal one can easily cost above RM10 per cake. Its price is determined by factors such as taste, ingredient, packaging, and brand name. Normally the Chinese people buy mooncake as gift to friends, co-workers, relatives, neighbours, business partners during this Mid-Autumn Festival, more than buying for own consumption. The product has been so closely related to the season until nowadays Mid-Autumn Festival is also known as Mooncake Festival too.

The mooncake economy is an interesting business model which shows high risk (short period, short shelf life), high return (more than 400% profit). Perhaps for the businessmen, this product is even better than the Chinese mandarin sold during Chinese New Year.