Whilst I believe the Chinese chocolate market is a worthwhile & growing opportunity for the right brands, I wanted to write this blog post more as a case study to demonstrate how you need to adapt your products for overseas markets.
The average Chinese person consumes relatively little chocolate compared to people in many other countries. According to Euromonitor International, the per capita consumption of chocolate in China was around 0.2 kilograms in 2020. This is considerably lower than the average per capita consumption in many other countries such as Switzerland, Germany, and the United States, where the consumption ranges from 8 to 12 kilograms per person per year. This varies slightly to the data from Radical stat below.
However, the Chinese chocolate market is growing rapidly, with a projected compound annual growth rate of 3.85% – 6.9% (depends who you ask) from 2021 to 2025, indicating that there is potential for growth in the future.
You can see from this that it’s really hard to get reliable market data for most countries, even in Western Europe. eg Die Welt just published that German consumption in 2022 increased to 9.56kg/person in 2022
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Challenges of Chocolate in Asian food market
Up until the 1990’s it would have been difficult to develop a chocolate brand in China. Firstly, there was no strong tradition of eating chocolate as a snack and the distribution & retail channels were simply not available. Chocolate is a sensitive product that reacts badly to temperature changes (especially heat) making it a logistical challenge as temperature controlled vehicles are needed for reliability.
These issues still exist to a certain extent if thinking about chocolate in South East Asia today, and probably also in some more remote parts of China, but for the most part, China now can manage the supply chain far better than in the past.
Secondly, the retailers and convenience stores are now mostly temperature controlled, so whilst that may not always be the case in Mom & Pop stores in remoter regions, chocolate consumption is mostly concentrated in higher tier cities where the infrastructure is good.
Who are the Players in the Chinese Chocolate Market?
International companies such as Mondelez, Mars and Ferrero are all present in China as well as a few local players. Local production had a hard time in the past due to a lack of raw materials and technology, combined with the consumers preferences, but as in many other segments this is slowly changing.
Many of the larger local players have either stopped producing (eg Leconte) or been sold to international companies (eg Xu Fuji to Mars and Golden Monkey to Hershey’s). One brand stands out recently though and that’s the brand Daily Heiqiao (daily dark chocolate). Whilst this is a Chinese brand, the production takes place in Switzerland and sales are driven by strong KOL marketing campaigns.
The international brands which are most popular are Dove, Snickers and M&Ms as well as Ferrero (the gold packaging is a hit!), whilst Hershey is struggling and I’ve been hearing for the past couple of years that they might even leave the market (but are still somehow hanging in there).
Amongst the more expensive players, brands such as Lindt and Godiva are popular.
Is Chocolate popular in China today?
According to Baogao, the chocolate market in China is the 3rd largest segment of sweets after biscuits and chewing gum, and is forecast to be worth $3.8 billion in 2023. With consumption per capita at less than 2% of German levels, you can see that there’s definitely room for growth here.
If I were analysing the consumer tastes for a client though, I’d have to say that in many cases, Chinese consumers find chocolate simply too sugary. Whilst the average consumer (if said person exists) likes their sweets to be a little sweet – I once watched a group of girls add a truly scary amount of sugar to a bowl of yoghurt in a Tajik restaurant – most Chinese desserts have a more complex flavour profile with spicy or sour to balance out the sweet.
The combination of sugar and dairy is probably less popular than flavours such as fruits or tea.
Many people like the creamy haptic of chocolate, but don’t necessarily tolerate milk very well meaning that a milk chocolate is also not always an ideal solution. Chocolate has an unhealthy reputation generally in Asia and especially post-Covid many consumers are looking for healthier variants, without compromising on great taste.
Don’t underestimate the local sensitivity to the taste and smell of certain types of products either. Cadbury tried local production in China but consumers didn’t like the product as they felt it smelt cheesy. Remember that even if you think something smells perfectly normal, it can smell horrible to someone who doesn’t tolerate one of the ingredients well. (As an aside, this point is also valid for products containing rice – Chinese consumers are extremely sensitive to the smell of rice & small variations can lead to it being described as musty…& yes I’ve delivered rice to China before now ????).
What characterises the chocolate market in China?
To truly understand how potentially to build a chocolate brand in the Central Kingdom, you need to understand how and when consumers buy chocolate.
Firstly, chocolate isn’t a product that is eaten every day as a snack. As I mentioned above it’s perceived as too sugary for that and only consumed in mini portions. Climate contributes to this as well – if you think about the typical Snickers ads in Europe with the bar being eaten as a post workout snack, you wouldn’t want to just push a chocolate bar in your bag in a hot climate… Same goes for those other consumption opportunities of lunchboxes or out with friends – no fun if your chocolate is melting faster than you can eat it. Consequently, chocolate needs to come in small packages.
So if chocolate isn’t eaten as an every snack, when is it purchased?
Well, the Chinese chocolate market, as with other Asian chocolate markets, is heavily influenced by special occasion purchases. We’re familiar in Europe with Christmas and Valentines Day as well as Easter being chocolate purchasing occasions – in China the equivalents are for Chinese New Year, Qixi, Valentines Day or weddings. In fact any time that you need a gift, then chocolate could be an appropriate choice.
Even if the person you are gifting too doesn’t particularly enjoy chocolate, it shows the esteem you hold them in (like with expensive alcohol too) and gives face to both giver and recipient.
Imported Chocolate is Expensive
Indeed, imported chocolate is usually pretty expensive – I once needed a gift when I received an unexpected dinner invite from the wife of my importer. A box of Mirabell Mozartkugeln that 12 years later would cost me less than €6 in Austria, set me back around €30.
So you can see bringing chocolates as a gift when you’re a guest somewhere shows that you value the relationship.
Don’t forget though, that as with other products that you might choose to gift, the packaging plays a far higher role in the decision making process than it would in Europe. To go back to my example with the Mozartkugeln…if I were buying for my family, I’d go for the cellophane bag probably as you get more chocolate for your money, but if it’s for a business partner or friend in China then the violin shaped carton with a plastic inlay (& the carton also sealed in plastic) is definitely the way to go.
In the run up to Chinese New Year 2018, 36 Godiva chocolates in a special festive season package were retailing for €150! I couldn’t imagine paying that for essentially special packaging, but for the chocolate market in China it worked.
What should you consider before trying to launch your chocolate in Asia, especially China?
Make sure that you are really clear about how your brand will be positioned in relation to the key competitors and which motivators you will be addressing with your product. The market isn’t large so you need to be super clear about your niche.
eg. Dove is targeted at couples and teenage girls
Hershey’s doesn’t have a transparent position and like I mentioned, is really struggling on the market.
For the size of the segment, the chocolate market in China is pretty saturated with foreign brands so you need to think really carefully what your brand can uniquely offer.
Taste – what are the chocolate trends in China?
Sweet but not too sweet is the route to the more “mass” market in China, although appreciation for dark chocolate is growing as consumers learn more about the health benefits. Younger consumers especially like lower sugar options.
Liqueur chocolates are not really popular at present.
Some more exotic flavours such as with fruits, green tea or chilli can be well received by consumers if the marketing is right. Diabetes is also on the rise in China, so products with some additional health or functional benefits are a key part of the chocolate trends in China (eg ingredients commonly found in traditional Chinese medicine such as goji berries or ginger).
Chinese consumers like to have something new and innovative, this was one of the reasons that Daily Heiqiao gained ground with their oatmilk dark chocolate when it was introduced in 2021.
This is perhaps just as important as taste, if not even more so (if your packaging is bad, consumers won’t even get as far as trying your product).
Firstly chocolates need to be sold in smaller unit sizes than would be the case in Europe. A lot of the “family” sized chocolate bars sold in supermarkets in Austria contain more chocolate than most Chinese consumers eat in a whole year! Also, when the product is expensive, it’s easier to convince consumers to purchase smaller packages. I believe that “small” also adds to that sense of exclusivity and as with many products in China that helps to sell.
Secondly, think about the occasions when chocolate will be given as a gift. Imported chocolate is expensive so the packaging should also look and feel luxurious. Often Ferrero Rocher are given as gifts at Chinese new year as they are round (auspicious) and the packaging is gold coloured which should bring good fortune.
The sustainability of your packaging is increasingly an issue but it should still feel luxurious.
As with any other food or consumer products, chocolate can be sold on or offline in China. What is perhaps more exclusive are the flagship stores that can be found in expensive locations in tier 1 cities for brands such as Godiva or Guy Lian.
Marketing Strategy for the Chocolate Market in China
For any consumer brand these days you need to have a solid digital marketing strategy, taking into account the fact that Chinese consumers do waaay more research up front of purchases than Europeans and need around double the touchpoints before they buy.
In the past years many brands such as Dove or Daily Heiqiao have been successful in appealing to consumers by working with influencers. Here it’s important to make sure you find a KOL who fits to your brand and try to diminish the likelihood of them being involved in some kind of scandal.
Importing Chocolate to China
This is relatively straightforward to do, although involves quite a few steps. I prepared a doc with some of the main steps that you can download below.
A bitter sweet business opportunity?
Whilst chocolate consumption in Asia isn’t high, China certainly has potential for strong growth if you are prepared to put the work in to meet consumers taste and expectations.
The Chinese chocolate market like other food and beverage categories is complex but rewarding if you work with the right partners to slowly grow your brand.
The points I’ve mentioned here can be applied to many other categories of food for China and should be seen as an example of what you need to be considering prior to taking a final decision to go ahead and enter the market. It’s not just chocolate which is expensive in China, it’s also digital marketing so if you are not prepared to invest, then this probably isn’t the market for you.
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