Top confectionery brands look to China

25 July 2011

BEIJING: Global confectionery and beverage firms including Nestlé, Kraft, Mars and Starbucks are targeting China as a key area of future growth.

Most recently, Nestlé, the world's biggest food company, announced its intention to invest €1.19 billion to buy a 60% stake in China's top sweet manufacturer Hsu Fu Chi International Ltd.

Meanwhile, in January Starbucks removed "coffee" from its logo as part of its bid to capitalise on the perceived potential for drinks and cakes.

Building on the company's existing 450 stores in 35 Chinese cities, Wang Jinlong, senior VP of Starbucks and chairman of its Chinese division, has outlined plans to triple the number of stores to more than 1,500 by 2015.

Chinese confectionery sales reached €12.9 billion between January and November 2010, making up 11.7% of the nation's food sales, according to figures from CIConsulting.

Zhou Siran, a food industry consultant with CIConsulting, said: "The average annual sales in the confectionery industry recorded a 10% growth in the past few years, and there are remarkable improvements in product types and quality."

But confectionery consumption rates in China still lag far behind those of the west.

Euromonitor figures put 2009 sweet consumption in China at just 4.1 kilos per person. Figures for the same year for the UK stood at 36.4 kilos, and also reached 25.4 kilos for the US.

Shu Guohua, a visiting professor at Peking University, added that much of the appeal for Nestlé lies in the "over 30% of gross margin of sugar confectionery".

With revenues quadrupling over the last four years, Kraft is also bullish about the Chinese confectionery market, outlining plans to distribute Cadbury products in more than 40 cities in China. 

In an interview with China Daily, Lorna Davis, president of Kraft's China operations, explained that "if I had unlimited resources and unlimited people, I would bring in everything Kraft has".

Meanwhile, Mars China already operates two chocolate factories in China, and envisages opening a third in the next five to ten years.

Data sourced from China Daily; additional content by Warc staff