July 6, 2008 / 12:15 AM / 12 years ago
Confectionery firms profit from Chinese chocoholics
SHANGHAI (Reuters) - Award-winning French dessert chef Hugues Pouget has his work cut out for him as he tries to turn the Chinese into chocoholics.
Replicas of Terracotta warriors made of chocolate are seen on sale in a chocolate shop in downtown Shanghai July 1, 2008. Although China's 6.46 billion yuan a year ($922 million) chocolate market is less than 1 percent of the world's total, rising wealth and the increasing influence of Western tastes are fuelling annual market growth of more than 10 percent, compared with 1 to 2 percent in Europe, according to market intelligence company Euromonitor International. REUTERS/Nir Elias
"In Europe, we have centuries of history about chocolate. Here, there's none," said Pouget, a 31-year-old champion of the France Des Desserts competition who started teaching Chinese chefs how to make gourmet chocolate in May.
"But Chinese people like to learn Western styles. They especially love chocolate with peanuts, mangoes and strawberries."
Lured by a huge potential market, Barry Callebaut, the world's biggest chocolate maker, moved its Asia headquarters to China from Singapore in January and brought Pouget to its Chocolate Academy in Suzhou, a city of quaint ancient pavilions and acres of new factories about 90 minutes' drive from Shanghai.
The Swiss company hopes that chocolate recipes cooked up at the academy, its second in Asia after a Singapore centre, can tempt Chinese consumers to gobble up the 25,000 metric tons of chocolate a year it will be churning out at a nearby factory.
Major global chocolate brands such as the Hershey Company and Cadbury Plc, already Barry Callebaut clients in other parts of the world, have swarmed to China.
China's 6.46 billion yuan a year ($922 million) chocolate market is less than 1 percent of the world's total.
Yet rising wealth and the increasing influence of Western tastes are fuelling annual market growth of more than 10 percent, compared with 1 to 2 percent in Europe, according to market intelligence company Euromonitor International.
AFFLUENT TASTES
Today, an average Chinese eats only 100 grams of chocolate a year, with consumption concentrated in affluent coastal cities such as Shanghai, Beijing and Guangzhou.
"I don't think that the Chinese will ever eat 10 kilograms per head like the Swiss, but they may eat 2 kilograms per head like the Japanese and the Koreans," Barry Callebaut Asia Pacific Vice-President Maurizio Decio said.
China's chocolate nibblers today are mostly young people aged 15 to 24, according to a survey by Sinomonitor. Young affluent Chinese might be developing a sweet tooth, but the taste buds of most Chinese favor salty foods.
Salted pork, fish, crab and beans are a common feature on Chinese breakfast tables, while youngsters often snack on salted dried fruit and drink salty soda pop.
Beijingers consume 12 to 15 grams of salt a day on average, compared with 6 grams suggested by the World Health Organization.
And it's not just taste that poses a challenge.
"There's a misconception that chocolate is fattening and associated with diabetes and heart disease. That's why many health-conscious Chinese avoid it," said Xiao Mingchao, head of research at Sinomonitor.
Still, a survey by the company showed that 42.3 percent of urban Chinese consumed chocolate at least once during 2007, up from 37.9 percent in 2006 and 34.9 percent in 2005, spurred by billions of dollars in marketing and branding by foreign chocolate makers.
"Deep-pocketed multinationals like Mars have been building their brands in the Chinese market for many years," said Zhao Yanping, secretary general of the China Association of Bakery and Confectionery Industry.
"Chocolate is not a necessity. It's more about branding and emotional attachment."
Mars Inc has spent heavily to make M&M's classic slogan, "Melts in your mouth, not in your hands," familiar to large numbers of Chinese, while its Dove chocolate has cultivated an image of silky elegance.
PLEASING THE PALATE
Hershey, which last year created green tea-flavored "kisses" for the Asian market, will open a Chocolate World flagship store in Shanghai in the next couple of months.
The store will offer thematic activities, chocolate-making demonstrations, chocolate desserts, beverages and plenty of sweets, as it aims to promote its brand and become China's No.2 chocolate seller by 2010.
A handful of western brands, which began entering China in the 1980s, now account for more than half of China's chocolate market.
Local competitors such as Golden Monkey have found it hard to link their brands to an image of Western luxury and have mostly stuck to cheaper compounds using little cocoa butter.
Four players, Mars, Cadbury, Nestle and the Ferrero Group, controlled a combined 41.3 percent of the China market in 2006, according to Euromonitor.
Many Chinese buy chocolate only for gifts, not for personal consumption, as sweets occupy a special place in the country's tradition of gift-giving for special occasions.
Young people in Chinese cities, drawn by marketing campaign images of romance and western lifestyles, buy chocolates for Valentine's Day and Christmas.
Chocolate also competes with hard candies and hard-boiled "happiness eggs" as gifts for wedding guests.
Pleasing the Chinese palate remains the key to long-term success, providing chocolate makers with a culinary challenge as Chinese taste buds range from favoring hot and spicy food in the Sichuan region of central China to a preference for sour food in the northeastern provinces.
"Koreans like a sour taste, but Chinese are very different," said Lee Kwang-Hoon, president of the Chinese unit of South Korea's Lotte, which started selling chocolate in China last year.
"The challenge is not to make quality chocolates, but to understand what Chinese really like," he said.
Chocolate makers will not thrive on confectionery alone.
Chocolate is increasingly being used as a dessert ingredient in China's fast-growing bakery market, according to Barry Callebaut.
"Most chocolate in China is not consumed as such, but is consumed as an ingredient in cakes, biscuits and coatings for ice creams," Decio said.
Editing by Edmund Klamann and Megan Goldin