Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China's Consumers
Lawrence L. Allen
Format: PDF / Kindle (mobi) / ePub
As China comes into its own as a world economic power, a new, huge consumer class is emerging, hungry for all things Western. In this land where twenty-five years ago most of the population had never tasted chocolate, five icons of Western business are now slugging it out in a battle royal to see which will become the Emperor of Chocolate in China. Chocolate Fortunes offers the first inside look at the battle for China's newfound chocolate addiction. The book devotes individual chapters to each of the five major players Hershey, Nestle, Cadbury, Mars, and Ferrero and the trials they face as they attempt to dominate their market in an enigmatic and still-developing economy. More broadly, Chocolate Fortunes examines the unique opportunities and challenges inherent in the Chinese business universe. Probing not only the economic, political, and cultural conditions that have given rise to a seemingly insatiable new market, the book delves into the mystique of chocolate itself and how it captivates not just the Chinese, but people all over the world.
China-made Cadbury chocolate had a cheesy smell that was also detectable in the product’s taste. Cadbury Australia’s quality assurance experts determined that the milk supplied to the factory was still of substandard quality and that the taste varied widely from source to source. Cadbury had lost its gamble that it could improve Beijing Farm Bureau’s milk quality, and this had a profound adverse effect on the product’s taste. Having weaned Chinese chocolate consumers on the taste of its imported
companies with multiple multinational clients, and thus are inherently more economically stable and reliable in terms of payment, since they have well-established relationships with city distributors and retailers across the country. Mars, for example, used a master national distributor during its start-up to great effect in China. Assuming the distribution and sales functions itself, and discharging its in-country distributor, Inchcape JDH, added organizational complexity at a time when Cadbury
the highest average sales per customer in China. The downside of this ‘‘follow the air-conditioning’’ strategy was that, even on a national level, these stores numbered around 3,000 outlets at the time, with nearly half located in Shanghai.8 Although small neighborhood markets, mom-and-pop stores, and kiosks were vastly more common, the absence of airconditioning meant they were seasonal distribution opportunities at best. Further, their open-to-the-street storefronts in China’s major cities like
managers in as many years, and the decision was made to shut down Hershey International’s unpopular South Florida ofﬁce. In 2004, except for a few handpicked people who returned to the company’s home ofﬁce, Hershey International employees were downsized out of their jobs and the ofﬁce in Florida was closed. These radical changes at the Hershey International head ofﬁce meant that, with revolving-door oversight from the head ofﬁce, the new Hershey China team was in effect on its own. With the
providing free technical assistance to local coffee farmers, for example, and Yunnan is now a major source of coffee beans for Nestle´ China. Even though Nestle´ had the ability to similarly direct the development of China’s chocolate market and establish its chocolate as the preferred taste in China, it did not lead this charge since chocolate’s smaller and more narrowly focused market (owing to both price and distribution limitations) was unable to provide a near-term return on investment.