Hershey seeks sweet spots in China market expansion

US confectionery company Hershey is seeking to boost sales by expanding its online business in the China market.

According to Rohit Grover, CEO of Hershey’s China operation, the company has taken over the brand’s all-online flagship operations in China market, and will allocate more resources to expand business through e-commerce channels in the next few years.

“We believe that consumption of chocolate in China will grow fast amid steady and stable economic growth. Chocolate, which used to be (a) luxury decades ago ... has become (an item of) day-today consumption, and the potential (for) growth is great”, he said.

Despite the fact that the confectionery business in China has experienced difficulties in the past few years, Mintel data indicate that China’s 18.4-billion-yuan ($2.8 billion) chocolate market is likely to expand amid China’s consumption upgrade.

Demand for premium chocolate will grow particularly fast, the report said.

In 2016, China’s consumption of chocolate per capita was 0.16 kilogram, versus 8.61 kilograms in the UK, the world’s largest chocolate consumer by volume per capita.

“Hershey, positioned as mass-premium, would think that growth from 0.16 kilogram to 1.6 kilograms would be significant enough for confectionery business. The room for growth is great, and potential is vast,” Grover said.

According to a report by Euromonitor, China’s chocolate market, after a 3 percent decline in 2015 and a 1 percent drop in 2016, is likely to recover in 2017.

Besides Hershey and Hershey Kisses, the two most widely known products in China, the company also has its eyes on the food service sector, which may require chocolate syrup in the China market, according to Grover.

China has become one of the top three international markets (outside the US) for Hershey, and is one of the most important markets for the company, Grover said.

According to its latest quarterly report, New York-listed Hershey’s sales in North America continued to grow in the third quarter of this year with 1.6 percent growth in volume. Net sales in China remained on par with the year-ago level.