Global confectioners aim to grab slice of market

For Chu Jing, a 28-year-old white-collar worker who is getting married on Thursday - Western Valentine's Day - chocolates are her candy of choice.

Three flat-bottomed teardrop-shaped chocolates called Kisses, made by United States confectioner Hershey, and crispy chocolate wrapped in gold foil from the Italian company Ferrero, have been chosen by Chu and carefully wrapped in a red silk pouch embossed with roses.

Explaining her choices, Chu said, "The name Kisses shows the theme of love, and Ferrero's golden packaging symbolizes fortune in China."

At nearly all Chinese weddings, guests are given candy, often in beautifully packaged boxes and personalized to match a couple's taste. These boxes not only add to the festive atmosphere at each ceremony but also represent happiness and sweetness to the newlyweds' guests.

Giving candy at weddings has long been a tradition in China. In the past, people chose hard candy or jellied fruits as gifts. But in recent decades, it has become increasingly popular among young Chinese couples to include chocolates in the candy packages.

Still, it took decades for the Chinese to develop a taste for chocolate.

In the early 1980s, when the country had just embarked on its economic reform and opening-up, a piece of chocolate was regarded more as a precious rarity than as a daily necessity.

Yu Xiaoning, CEO of the import and distribution company Vandergeeten, shipped his first container of Belgian chocolate to China in 1994.

Yu said at the time that the price of Belgian chocolate was a benchmark by which Chinese people gauged its quality, and also made chocolate from European countries a byword for luxury instead of a "kitchen cupboard essential".

"There were some domestic chocolate brands in China then, but most of them could not met the international definition of genuine chocolate, as the products used replacements rather than real cocoa butter," Yu said, adding that the introduction of European brands enabled Chinese consumers to acquire a basic knowledge of chocolate.

International standards require chocolate to contain at least 35 percent cocoa butter, while China has lower standards of 20 percent, and allows additives such as cornstarch, vegetable oil and cocoa substitutes to enhance the flavor.

In the book Chocolate Fortunes: The Battle for the Hearts, Minds and Wallets of China's Consumers, author Lawrence Allen writes: "Almost none of them (Chinese) had ever eaten a piece of chocolate. They were, to coin a phrase, 'chocolate virgins'."

Allen, a former CEO of Hershey Co and Nestle, said the business opportunities were huge in China - the country with the world's largest population, most of whom had never tried "an authentic Western chocolate".

Within decades, chocolate makers globally have made converts and are competing fiercely for the high returns in the Chinese market, spotting the potential financial rewards in the world's second-largest economy.

The chocolate market in China has boomed since the 1990s, as leading companies such as Mars, Ferrero, Nestle, Hershey and Cadbury entered the country in their quest to turn locals into chocoholics.

Allen said an important step toward making chocolate consumption part of everyday life in China was to lower prices and change the marketing strategy. To reduce costs, Mars and Hershey were among the first to open their own production plants in the country, allowing them to offer prices that were still high, but acceptable according to Chinese standards.

Mars, the US global manufacturer of confectionery and food which owns chocolate brands including Dove, Snickers and M&M's, has the largest share of the Chinese market. According to information and data company Nielsen, Mars had a 49 percent share of the market in 2017 in terms of offline value, followed by Ferrero.

Ultimate aim

Amanda Xing, marketing director of Dove, said that since the company entered China in the 1990s, it has never abandoned its mission to educate consumers about "what a quality chocolate should taste like". The ultimate aim is to make chocolate more a part of everyday life, since it is not yet the first snack that springs to people's minds.

Dove, a Mars subsidiary sold as Galaxy in the United Kingdom and some other regions, promotes its "fragrant milky taste, as smooth as silk" to Chinese consumers. Its advertising slogan "Outright enjoyment of smoothness" has convinced many Chinese that chocolate should have a silky taste.

Dove has become one of the most popular chocolate brands among Chinese, not just because it is affordable, but also because its promotion and taste is as advertised.

In China, a country that, according to an old saying, worships "food as the first necessity of man", taste is the most important factor to judge fine chocolate. But most chocolates bought in the country are for gifts or ceremonial use, such as wedding candy, rather than for daily snacks.

Chinese need gifts for numerous traditional occasions - for example at Lunar New Year, a time when people exchange greetings by offering little treats. Small gifts are also presented to teachers, parents-in-law, those who are ill, or when you visit people in their homes. Souvenirs are also bought during overseas travel, and chocolate is also the ideal gift on such trips.

For young Chinese men, chocolates, especially luxury ones that are delicately packed, have become a "must" to show their love to their girlfriends. During Chinese Valentines' Day, which fell in August last year, five of the top 10 items sold online in the country were chocolates, according to a report by Alibaba.

Western manufacturers are aware of this preference and are competing to sell their products with localized marketing strategies.

Mauro De Felip, general manager of Ferrero China, said that since his company entered the Chinese market decades ago, it has been trying to make chocolate a "must-have" in Chinese culture.

"We understand that the Italian and Chinese cultures are closely connected and share a lot in common - we both respect tradition, family values, cherish friendship and emotional bonding. These factors have been driving the evolution of our brands and are reflected in every way we communicate with our consumers," he said.

During Lunar New Year this year, the Italian brand launched a TV commercial telling the story of Chinese parents learning the language to welcome their Italian daughter-in-law. It also released a festive package called the Chinese Knot Rocher pack, a product that featured in the commercial as a "mediator" bonding two generations together from thousands of kilometers away to celebrate Spring Festival.

With China opening its doors to the West, interest in goods from other parts of the world has increased enormously in recent years, which is why giving away imported products almost automatically has become commonplace.

Golden Ferrero Rocher chocolate pralines ideally meet Chinese consumers' requirements for a good gift - a high quality, well-known brand and exquisite packaging which, on top of all this, is considered to bring good luck in Chinese culture thanks to the round shape and golden color.

Liao Mei, a Chinese living in Los Angeles, said she remembers her parents buying Ferrero Rocher for their family members every time they traveled back to China, much to the delight of their relatives.

"The packaging is simple, but it's the fact that we have an affinity toward gold," she said. "It's a sign of prosperity and wealth, which are things we always wish upon other people."

Chen Yiming, a food industry analyst, said that when it comes to giving presents, it is always important for Chinese that the recipient recognizes that they are of high quality, have a certain material value and match the occasion in terms of what they symbolize.

"For Chinese, a very original and individual gift is not so important. We prefer choosing well-known premium brands that the recipient knows, so he or she can adequately assess our generosity," Chen said.

Today, the new generation of consumers has a much deeper understanding of chocolate, including its taste, manufacturing process and culture. This knowledge will probably lead to an increase in chocolate consumption and see some consumers turning to more high-end products, Chen added.

Middle-class consumers who want high quality and are happy to pay for it are the reason luxury chocolate brands such as Godiva and smaller boutique chocolatiers have emerged in first-tier cities.

Belgian maker Godiva had about 100 retail outlets in China at the end of last year, and plans to triple that number by next year. All its stores are designed in a luxurious style reminiscent of a jeweler's shop.

Godiva's premium selection of gift-wrapped chocolates saw its revenue in China in 2017 rise by 193 percent to 308 million yuan ($46.9 million), far outstripping its rivals.

Containing 36 pieces, the Godiva 2019 Chinese New Year limited edition chocolate box cost 1,258 yuan. But despite the relatively high price, the boxes were popular among consumers, according to a saleswoman at Godiva's shop in the Sanlitun area of Beijing. She said the box was one of the store's bestsellers during the Lunar New Year holiday, as it features koi, a colored type of carp that represents luck among Chinese.

Hotel launched

Xing, the Mars China Chocolate marketing director, said the company had recognized the increasing demand among Chinese consumers for high-end chocolate as a trend in recent years.

Last year, it set up its first artisan store in Beijing's upmarket Guomao area, selling innovative handmade chocolates and gift boxes. It also launched a new pop-up, chocolate-themed hotel called Dove in Shanghai as part of a campaign to attract consumers.

The company said the hotel was designed around Dove's marketing slogan of "Pleasure makes you extraordinary", and offers guests the chance to craft chocolate products and taste desserts prepared by a Michelin-level chef.

Artisan chocolates are made from high-class ingredients. With growing concern for health and food safety, consumers are becoming more careful about chocolates' ingredients, and imported products are trusted as they contain more cocoa or milk.

Chinese do-it-yourself chocolate stores have emerged to become a trend in first-tier cities to meet consumers' requirements for healthier snacks.

Mei Zi, who opened the Cooffa Chocolate DIY store in Beijing in 2010, has just witnessed her business' busiest period of the year.

Every Spring Festival and Western Valentines' Day, her store is packed with people wanting to buy chocolates for their loved ones, and in recent years, making their own chocolates has become increasingly popular.

"More and more people like to make their own chocolates because they can choose the sugar and fat content according to their taste. And what's more important, they believe a DIY chocolate can represent more-genuine emotions. Many parents bring their children here, and by making chocolate together, they bond with each other and learn how to care for each other in the family," Mei said.

She thinks the driving force for her booming DIY chocolate business is due to the Chinese market becoming sufficiently mature.

Chocolate sales in China have more than doubled in recent decades, and are set to be the country's fastest-growing form of confectionery.

In a typical supermarket in Beijing, chocoholics can easily find more than 70 brands from all over the world, and according to market research company Ebrun, the domestic market is expected to grow in value to 40 billion yuan by next year.

According to the Association of Chinese Chocolate Manufacturers, consumers eat 70 grams of chocolate per capita every year. This figure is dwarfed by 2 kilograms in neighboring Japan and South Korea. In Europe, the average consumption of chocolate is 7 kg per person per year.

In China, which has a population of about 1.4 billion, the chocolate market is worth 35 billion yuan, offering huge potential.

More and more brands, including Milka from Germany, Meiji from Japan, and Maltesers from Australia, are still trying to tap the enormous potential in China.

Both domestic and foreign manufacturers have continued to research and develop new products geared toward Chinese tastes, such as chocolates filled with fruit, soft candy, star anise or milk flavoring. They have also experimented with replacing European-style liquor-filled chocolates with the Chinese spirit baijiu, or with green tea.

Ferrero's De Felip said, "China represents a very attractive market today and for the future, because the consumer is particularly sophisticated and has evolved."

He added that the Chinese market for chocolate is still not saturated, due to the constantly expanding middle class and urbanization, offering business opportunities for companies of different size.

panmengqi@chinadaily.com.cn