Hershey goes global with green tea Kisses, almond Reese's cups
Published: Tuesday, May 1, 2007 at 6:01 a.m.
Last Modified: Monday, April 30, 2007 at 10:47 p.m.
Wrigley, Cadbury, Mars and Nestle: It's hard to mistake the dominant presence of Western candies, gum and chocolates over Asian, and even traditional Chinese herbal candies, on display at the 7-Eleven store in downtown Beijing.
"Sales of Western candies and chocolates are much better,'' store manager Wang Peng said. "Dove and Nestle are the most popular here.''
Most people in China prefer fruit as a dessert. But tastes are changing - driven partly by the desire of young people to adopt some Western customs - so many corner stores in bigger cities such as Beijing and Shanghai now carry chocolate bars.
Now, America's leading candymaker, The Hershey Co., is seeking to join its top competitors on more candy shelves in places like India and China as it makes a bid to expand globally. In India, it already sells Hershey's chocolate syrup. In China, it also sells the syrup and a few of its chocolate products, but barely registers any market share.
Hershey has the largest stake in the world's largest candy market, the United States. But the fastest growth in the $137 billion global confectionery market is occurring in countries where people don't eat as much chocolate as Europeans or Americans. Confectionery sales are projected to grow more than 5 percent annually in the next five years in India and more than 6 percent in China, with growth in chocolate sales alone in China approaching 10 percent annually over that period.
For Hershey, that means looking for ways to cater to different tastes, such as offering its Reese's cups with almonds and hazelnut. It also means playing catch-up: With a head start of a decade or more, Hershey's top competitors have accumulated solid market shares while learning important lessons in areas ranging from distribution to pricing.
The century-old Hershey, synonymous with chocolate in the United States but relatively unknown abroad, must learn how to get products to shelves in countries where most shoppers buy from small family-owned grocers and street vendors.
Hershey is promising to quickly capitalize on cheaper labor and materials by making products in China and India for the first time. But because the company will be unable to trade on its iconic status, analysts say it shouldn't expect to reap much profit any time soon.
Major competitors - Wm. Wrigley Jr. Co., Nestle SA, Mars Inc. and Cadbury Schweppes PLC - have been heavily involved in the developing world since the 1990s, if not for decades longer.
London-based Cadbury Schweppes is the world's largest candy company by retail market share, according to Euromonitor International Inc. After nearly six decades of selling chocolate in India, it has five factories there and is India's leading candymaker.
America's second-biggest candy company, Mars, rushed into Eastern Europe when the Iron Curtain fell. Amid the economic chaos, the Snickers bar became one of Russia's top brands.
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