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Younger generation in east to adopt western customs { May 4 2007 } Original Source Link: (May no longer be active)
http://www.kentucky.com/101/story/60602.htmlhttp://www.kentucky.com/101/story/60602.html
Posted on Fri, May. 04, 2007
Candy rises in the east
Hershey set to make push in growing Asian market
By Marc Levy
ASSOCIATED PRESS
Wrigley, Cadbury, Mars and Nestlé: It's hard to mistake the dominant presence of Western candies, gum and chocolates on display at a 7-Eleven store in downtown Beijing.
Although most people in China prefer fruit as a dessert, tastes are changing -- driven partly by the desire of young people to adopt some Western customs. As a result, 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 competitors on more shelves in places such as India and China as it plans to expand its global presence.
In India, it sells Hershey's chocolate syrup. In China, it sells the syrup and a few of its chocolate products, but it 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. By comparison, the U.S. retail market for candy, chocolate, gum and mints is projected to grow at less than 2 percent a year.
For Pennsylvania-based 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 and learned the market's quirks.
The century-old Hershey, synonymous with chocolate domestically 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.
The company sees the establishment of local manufacturing and distribution presences as its biggest hurdle in places like China and India, having already worked to adapt flavors to match cultures, said Hershey's chairman and chief executive, Richard H. Lenny.
For instance, it introduced green-tea Kisses in China last year.
And the market for the product is there. Even though China, India and other developing countries have much lower consumption rates of candy, they have a higher proportion of some of the biggest candy consumers -- children and teenagers.
Chen Jingo's son is one of them, she said as she picked up a Ferrero Rocher chocolate from the 7-Eleven in Beijing.
"He loves it," she said. "But I like Dove more."
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