Moon cakes cost an arm and a leg, unjustifiably

Wednesday, Sep 16, 2015 14:43

Moon cakes are a traditional dessert of the Mid-Autumn Festival in Viet Nam. — Photo

HA NOI (Biz Hub) — The high cost of moon cakes is tantamount to "pickpocketing" consumers, a former deputy head of the Hanoi Department of Trade told Viet Nam News.

Vu Vinh Phu said he has kept a close watch on input costs for many years, and moon cake prices are now unreasonably high, with customers now paying for marketing and other costs.

Every year in the run up to the Mid-Autumn Festival confectionary firms run elaborate marketing campaigns, with major players like Kinh Do and Bibica splurging on TV advertising, which is expensive.

Khanh Pham, a producer at Film Ninja Productions, told that making a 30-second commercial costs at least VNĐ300 million (US$13,300) while advertising a 30-second prime time slot for it costs VND120 million ($5,330).

Thus, the marketing costs could run into billions of dong.

Packaging has also contributed to the rise in cake prices. According to Tuổi Trẻ (Youth) newspaper, in a VND1 million ($44) moon-cake box, the cost of packaging accounts for 30-40 per cent of the retail price.

Before the cakes reach the final buyer, there are also expenses like putting up temporary kiosks at busy locations, printing banners, making sales kits, hiring salespeople.

Distributors usually rent places outsides popular malls like Vincom Ba Trieu and Hang Da Galeria and busy streets like Ba Trieu, Phan Dinh Phung, Kim Ma, and Le Van Luong.

Online newspaper Nguoiduatin (the Courier) estimated the rent of a 9-15sq.m stall on Ba Trieu Street to costs VND15-25 million ($666.67-1,111) a month after rising by around 5 per cent since last year.

The competition for good locations is fierce, with prime one needing to be booked at the beginning of the year. Some locations require a deposit to be made two months in advance.

Low production costs

Stuffed with traditional ingredients like lotus seeds, green bean, salted egg, pork fat, and watermelon seeds, a moon cake does not cost much to make.

Nguyen Thi Hue, who has run a bakery at home for four years, said a cake using the best quality materials costs around VND10,000 (US$ 0.44).

It contains 20 grammes of wheat flour (VND15,000 or $0.66 per kilogramme) and 50 grams of filling (VND70,000 or $3.11 per kilogramme).

Sticky rice cakes require 50 grammes of sticky powder (VND55,000 or $2.44) and 50 grams of filling.

Plastic packaging and desiccant bags increase the final cost to VND10,000-15,000.

Hue said for big companies, with their scale, the costs are much lower.

But mid-end companies sell a five-ingredient moon cake for VND36,000 -94,000 ($1.6 – 4.17) and a box of four cakes for VND300,000 to nearly VND1 million.

Authorities do not regulate prices, leaving manufacturers to their devices.

Phu said every year six market supervision teams are formed to check the production and quality of moon cake manufacturers and can penalise them if the quality is not as advertised.

"The traditional values attached to moon cakes have become greatly skewed", folk culture researcher Nguyen Hung Vy said.

"[The cakes] are no longer a traditional custom but have become gifts instead."

Moon cakes are one of the traditional aspects of the Mid-Autumn Festival together with dragon dances, fairytales and folk toys.

This year it falls on September 27. — VNS

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