Mon­delez to in­vest $100m in China

China Daily (USA) - - BUSINESS - ByWANG ZHUOQIONG wangzhuo­qiong@ chi­nadaily.com.cn

Global snack lead­erMon­delez In­ter­na­tional Inc is in­vest­ing more than $100 mil­lion in the next three years in China to man­u­fac­ture and launch its new choco­late brand to cash in on the coun­try’s grow­ing $2.8 bil­lion mar­ket.

Europe’s much-loved Milka brand will hit shelves in China in Septem­ber as Mon­delez’s first choco­late brand in the coun­try, with taste and fla­vor adapted to lo­cal cus­tomers.

Mon­delez has spent four years pre­par­ing its Chi­nese prod­ucts to stand out from Mon­delez’s global choco­late brands port­fo­lio, which in­clude Cad­bury Dairy Milk, Lacta and Toblerone, said Manu Anand, pres­i­dent of choco­latesAsi­aPa­cific atMon­delez.

He added mar­ket re­search has shownChi­nese con­sumers pre­fer Milka’s char­ac­ter­is­tics of quick-melt­ing, rich choco­late qual­ity and an Alpine milk taste.

“The in­vest­ment is on­go­ing and the first three years will be more than $100 mil­lion,” said Anand.

The in­vest­ment also in­cludes cap­i­tal to cre­ate jobs, man­u­fac­tur­ing, mar­ket­ing and up­grad­ing its new dis­tri­bu­tion sys­tem of cold chains, said Ce­sar Melo, pres­i­dent, global choco­late team atMon­delez.

“Al­most all Milka choco­late sold in China will be made in China with Alpine milk im­ported from Europe,” said Anand.

Ac­cord­ing to Euromon­i­tor In­ter­na­tional, Mars Inc’s Dove brand tops choco­late mar­ket shares in China in 2016 at 26.2 per­cent, fol­lowed by Fer­rero Group’s at 13.4 per­cent and Nes­tle SA at 8.7 per­cent.

Du Ji­aqi, re­search man­ager of Euromon­i­tor, said the choco­late cat­e­gory has had soft growth in China in the past year, fall­ing 3 per­cent year-onyear.

“Choco­late is an im­pulse pur­chase,” said Du. “The weak­ened gift­ing be­hav­ior com­bined with im­pact of e-com­merce, where con­sumers don’t no­tice choco­late like in a store dis­play, has low­ered con­sump­tion in the cat­e­gory.”

How­ever, China still has huge po­ten­tial to grow the de­mand to match the level of Europe in terms of con­sump­tion per capita.

Ja­son Yu, gen­eral man­ager of Kan­tar World­panel China, said: “Through smart de­mand seg­men­ta­tion, Milka can find some unique space in con­sumers’ minds. Of course, it can­not be a ‘me too’ brand.”

Hav­ing op­er­ated in China for more than 30 years, Mon­delez has had to deal with the is­sue of its ag­ing brands by in­tro­duc­ing fresh cat­e­gories in the past sev­eral years.

“With Mon­delez’s bis­cuit busi­ness ex­pe­ri­enc­ing sat­u­ra­tion, it is crit­i­cal for the com­pany to look for new busi­ness driv­ers,” saidYu. “The ad­di­tion of Milka is ex­pected to im­prove its profit mar­gin.”

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