When in 1980s chocolate was introduced in the Chinese market, enterprises had to face multiple challenges: the deficiency of proper distribution channels that guaranteed the right temperature during transportation, the lack of retail stores equipped with air-conditioning, and most importantly, how to gain consumers’ trust. Chocolate was a foreign oddity – and as much as an exotic product had picked inhabitants’ interest, its high price and low availability did not encourage its consumption. It is not until the mid-1990s, following the Chinese economic growth, that the market finally offered proper distribution chains and retail channels, such as supermarkets and grocery stores – which, even now, are the most popular places where chocolate is being bought. From that time onward, the chocolate market in China has slowly but steadily grown.
The growth of the chocolate market over the years
Nowadays, in the Chinese market of sweets, chocolate is the third most consumed product after cookies and chewing gums. Its consumption is higher in first- and second-tier cities than in third- and fourth-tier ones. From 2010 to 2023, the market has seen an 83% growth in revenue. It is thought that in 2023 the Chinese chocolate market will be worth USD 3.8 billion, a remarkable achievement compared to 2010 revenue of $2.1 billion.
Changes in consumers’ choices
In the last couple of years, the general trend in consumers’ choice of chocolate variety is facing a change. Although milk chocolate is still the most consumed kind, netizens – especially young people – are giving increasing importance to health and weight, thus choosing low-sugar options like dark chocolate over the traditional ones. This portion of the population represents almost one-third of chocolate consumers in China, leaving plenty of room in this sector of the market for growth opportunities.
The foreign taste of Chinese chocolate
Most of the leading companies in China’s chocolate market are foreign. Imported goods are perceived as of better quality than local ones. This is one of the reasons why Chinese consumers like foreign brands better, hence making the chocolate demand be fulfilled primarily by international companies.
According to a 2021 Statista survey on a sample of 1,037 respondents, the most popular chocolate brands among Chinese consumers are Dove, Snickers, Hershey’s and Ferrero.
Let us have a look at the companies that are behind them:
Mars
The American company Mars is by far the dominant manufacturer in Chinese chocolate market. Its most popular brands include Dove, Snickers and M&Ms. Mars was one of the first chocolate companies to enter China in the late 1980s, yet it was not until the launch of the Dove Chocolate bar that it became the number one in sales.
Dove’s popularity is owed to a combination of product quality and marketing strategy. Its ambition is to position itself as the ambassador of love and, in order to do that, it chose as target consumers couples and girls from 16 to 28 years old. As a consequence, its advertising campaign and packaging design all aim at maintaining a romantic image of the product.
Hershey
Hershey’s story in Chinese chocolate market is full of ups and downs. The American company first entered the Chinese market in 1995, then had to withdraw in 2004, just to come back in 2006 in a joint venture with the South Korean Lotte. Since 2014, the China’s market had become Hershey’s second largest revenue source after the US one. Then, in the very same year, it acquired the Golden Monkey, a factory of local chocolate production, which was supposed to be the starting point for a stronger presence in the territory. Unfortunately, the 3 billion USD investment had proved itself to be a miscalculation: Hershey’s sales started to sink, probably due to a lack of innovation, and they had to sell the Golden Monkey in 2018.
Recently, there have been rumours about a definite withdrawal of the brand from the Chinese market, but the company refuted the speculation and justified the lower presence on the e-commerce platforms by saying it was due to a supply problem. However, a withdrawal from the Chinese market would not be a surprise considering that, according to their annual report, their sales in China fell by 46% in 2020. Will Hershey’s join the other many enterprises that, following the COVID-19 epidemic, left the Chinese market?
Daily Heiqiao (每日黑巧)
Daily Heiqiao is a new Chinese company, especially popular among young people. Its products are known for being healthy, nutritious and specially planned for the new generation’s palates. With the brand vision “dreamed in China, made in Switzerland”, it proposes to satisfy new consumers with a product made up with a high percentage of cocoa content, developed in China but made in Swiss factories.
Ferrero
Another strong competitor in the market of chocolate is the Italian Ferrero. In spite of the accessible prices of its products – with an average cost of 3 RMB per 10 grams – Ferrero is known as an elite brand. The golden colour of the packaging makes this chocolate the perfect gift for special occasions, especially for weddings. The reason why it is so popular is that in the Chinese culture the golden colour symbolises richness and fortune.
Chocolate consumption in China is lower than in the West
Chocolate consumption per capita in China is much lower than the world average. Throughout the year 2021, a total of 253 thousand tons of chocolate were consumed in China, which, given the large population, equals to a consumption of 0.18 kg per capita, way lower than the world average of 0.9 kg and definitely not comparable to the top chocolate consuming countries Germany (11kg per capita in 2021), Switzerland (10.06 kg), the US (over 9kg) and the UK (8.10).
Chinese consumers do not enjoy sugary food
Chinese people do not consume chocolate on a daily basis, as in the West. It is too sweet compared to what they are used to. In Chinese cuisine, the sweet taste is usually combined with other tastes, like sour or spicy. They find chocolate to be too sugary, other than unhealthy. This is the reason why it is sold in small quantities: Chinese people would not eat more of it anyways.
Instead of private consumption, chocolate in China is mostly gifted for special occasions, like New Year’s Eve, St. Valentine’s Day and Qixi Festival. This explains partly why the most sold product in the chocolate market are boxed chocolates.
How to find a spot in the chocolate market in China
Propose something new
Chinese people’s tastes are different from Western’s, and different tastes require different products. Proposing unconventional kinds of chocolate might be the way for the chocolate market to grow.
When Daily Heiqiao’s Oatmeal Milk dark chocolate was released, the product was considered to be a revolution in the confectionary world and entered “Tmall little black box super new product day”. This, combined with other marketing strategies, might be a winning card to earn consumers’ hearts.
Have a clear idea of the product’s positioning
To have success in the Chinese market, it is necessary for companies to have a clear idea of their products’ positioning.
Instances of good product positioning are Dove, Ferrero and Daily Heiqiao: Dove’s target consumers are couples and young girls, Ferrero is mainly gifted as a present, Daily Heiqiao proposes new ideas to fulfil young people’s demands. On the other hand, Hershey’s does not have a clear product positioning. It has had problems in the last couple of years and has seen its sales sink.
Choose a brand ambassador as a guarantor of quality
In a saturated market like the Chinese one, it is essential, when launching a new product, to build an impactful brand image, that has the potential to win people’s trust at first glance. In many cases, the brand image is represented by a brand ambassador – like an actor, a singer, or an influencer – who specifically impersonates the perceptions and ideas that the brand wants to convey to the consumer.
Choosing a brand ambassador is then an important step to take in the launching of a new product, and it requires attentive research.
Growing opportunities for the China’s chocolate market
- Following the economic development of 1980s and 1990s, the chocolate market in China has steadily grown over the years, and it is expected to reach USD 3.8 billion revenue in 2023.
- Chinese people’s tastes are changing: people pay greater attention to health and weight issues, thus choosing low-sugar options over milk chocolate. This phenomenon involves especially young people.
- Foreign companies dominate the chocolate market in China. Among these, Mars – with its popular brands Dove, Snickers, and M&Ms – has the biggest share of the market, followed by Ferrero. Hershey’s was also one of the largest players in China’s chocolate market, but in recent years its position has become unstable and there have been rumours of a withdrawal from the market. A new promising non-foreign chocolate company is Daily Heiqiao, founded in China but that produces in Switzerland.
- In 2021, chocolate consumption per capita in China was 0.18%, way below the world average of 0.9% and Western countries. This is likely due to the difference between Westerners’ and Chinese people’s tastes.
- Chinese consumers buy chocolate in small quantities. It is usually sold in boxes and gifted for special occasions, like St. Valentine’s Day, New Year’s Eve, and the Qixi festival.
- In order to have success in China’s chocolate market, it is essential to have a clear idea of the product’s positioning, since the marketing strategy should depend on it. It would be a good idea to launch unique – even unconventional – products and to choose a brand ambassador that fits the brand image.
