Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China's Consumers

Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China's Consumers

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By (author) Lawrence L. Allen

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  • Publisher: Amacom
  • Format: Hardback | 256 pages
  • Dimensions: 157mm x 231mm x 28mm | 522g
  • Publication date: 1 October 2009
  • Publication City/Country: New York
  • ISBN 10: 081441432X
  • ISBN 13: 9780814414323
  • Edition: 1
  • Sales rank: 476,337

Product description

As China comes into its own as a world economic power, a new, huge consumer class is emerging, hungry for all things Western. In this land where twenty-five years ago most of the population had never tasted chocolate, five icons of Western business are now slugging it out in a battle royal to see which will become the Emperor of Chocolate in China. Chocolate Fortunes offers the first inside look at the battle for China's newfound chocolate addiction. The book devotes individual chapters to each of the five major players Hershey, Nestle, Cadbury, Mars, and Ferrero and the trials they face as they attempt to dominate their market in an enigmatic and still-developing economy. More broadly, Chocolate Fortunes examines the unique opportunities and challenges inherent in the Chinese business universe. Probing not only the economic, political, and cultural conditions that have given rise to a seemingly insatiable new market, the book delves into the mystique of chocolate itself and how it captivates not just the Chinese, but people all over the world.

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Author information

Lawrence Allen is a former senior executive for both Hershey and Nestle in China. He has spent more than 20 years building consumer brands for multinational companies in China.

Review quote

"In "Chocolate Fortunes," Allen describes these strategies in detail, offering a fair, informed and often fascinating assessment of where they succeeded and where they failed.... "Chocolate Fortunes" is a case study that delivers broad, transferable advice to Western corporations looking to move into one of the world's largest and most potentially lucrative markets. Offering unusual insight into the complexities of manufacturing and selling Western goods in China for Chinese consumers, the stories of the Big Five combine the emotional power of the cautionary tale with the practical precision of the how-to book. Far more elementally, "Chocolate Fortunes" is a helpful primer on basic business practice." --Knowledge@Wharton

Back cover copy

Chocolate. Sensuous and decadent, irresistible and just a little bit naughty. A natural match for . . . China? They say opposites attract, so perhaps it was only a matter of time before chocolate--which has held so much of the world in thrall for so long--would finally find its way to the legendarily severe cultural landscape of China. But introducing such a singular symbol of the hedonistic West to China is no small feat, as the chocolate-industry giants have found out over the last thirty years. Not only were these companies the conduit to, and self-appointed arbiters of, China's newfound taste for chocolate, they were among the pioneers whose first attempts in the evolving Chinese economy and marketplace resulted in any number of triumphs and failures. Advance Praise for "Chocolate Fortunes" "No consumer goods company can call itself 'Global' without having a meaningful presence in China: a must-win market for long-term survival! Lawrence Allen has the inside scoop on how our iconic chocolate brands fared within the rapid development of China's retail industry over the past thirty years. "Chocolate Fortunes" reveals lessons that aren't taught in business schools and that could apply to any consumer goods company that ever struggled with, or dreamed of, success in the world's biggest market!"-- Michael Wong, Regional Vice President-Asia Pacific, Wm. Wrigley Jr. Co. (retired) "With a balanced focus on business, culture, and history, Lawrence Allen explains successes and failures in adapting global strategies in China's complex market in a way that redefines 'think global, act local.' "Chocolate Fortunes" is a must-read for today's international executive seeking to understand China." -- William Tung, Vice President of International Sales and Operations, Columbia Sportswear ""Chocolate Fortunes" provides a fascinating and entertaining account of chocolate companies' ventures into China and how they faced the opportunities and challenges there. With a clear understanding of the vital human element required to succeed in China, Lawrence Allen offers critical observations for any company engaged in or about to explore the China market. It is required reading for our global team of professional consultants." -- Joanne and Scott Ulnick, Managing Partners, Ducker Worldwide, Strategic Market Research and Consulting

Flap copy

"This book is the story of the five global titans of chocolate--Ferrero, Cadbury, Hershey, Nestle, and Mars--that battled to capture a once-in-a-lifetime opportunity to establish their brands with one-fifth of the world's population. It is also the inside story of East meeting West through the introduction into China, a xenophobic land of austerity and deprivation, of an icon of the Western world's decadence and self-indulgence: chocolate." Is it really possible that until thirty years ago a billion people had never even tasted . . . chocolate? When we come to grips with the ramifications of this fact, we begin to see not just the size of the opportunity that awaited the five chocolate giants in China, but also the awesomeness of the challenge. And not every competitor met that challenge. Although still ongoing, the chocolate war in China has already seen some very clear winners and losers. "Chocolate Fortunes" takes you inside one of global business's most intense, complex, and fascinating market assaults. At its heart, the campaign to turn the Chinese people into chocoholics is really about globalizing the last great frontier. If there is an easy part, seeding an insatiable desire for chocolate may be it. (After all, "who doesn't like chocolate?") But what about building a business from scratch with virtually no precedent? What about navigating a boundless (and ever-shifting) sea of local, provincial, and national laws and regulations before executing even the most pedestrian business activities? How do you run a business when the economy in which you are operating is still in its infancy, still an inscrutable mass of conflicting realities and amorphous indicators? There is no one answer, no "right or wrong way," but for starters, step behind the scenes to witness how: - Ferrero gained the first industry foothold and continues to dominate the high end of the Chinese chocolate market--while keeping local "copycat" chocolatiers at bay - Cadbury's decision to use local fresh milk in its Dairy Milk bars changed the taste of--and shaped market reaction to--its flagship product - Hershey built up its China business before committing to major infrastructure investments in-country - Nestle found out if, like with its hundreds of other food products, selling chocolate as an economical snack food was ultimately the way to go in China - Mars, first to plant its company's manufacturing flag in China, led an endurance race that tested its commitment to consumers and determination to win the chocolate war While each of the Big Five purveyors profiled in "Chocolate Fortunes" brought its own identity and strategic vision to the battle theatre, their varying degrees of success or failure hinged on combinations of savvy and circumstance, of perseverance and flexibility, and of textbook business excellence and sheer luck. The lessons learned are at once practically instructive for all internationally minded businesses and fascinating reading in the classic East-meets-West mold. Lawrence L. Allen is a former senior executive for both Hershey and Nestle and was deeply involved in both companies' efforts in China. He has spent more than twenty years building consumer brands for multinational companies in China. Mr. Allen lives in Beijing.

Table of contents

CONTENTS Foreword by Dr. A'ngel Cabrera and Dr. Mary Teagarden of Thunderbird School of Global Management ix Acknowledgments xii Introduction: One Country, Three Centuries 1 Chapter 1: China and Chocolate: East Meets West 9 China's Road from Communism to Market Socialism 12 The Evolution of the Global Chocolate Industry 20 Chinese and Chocolate: A Foreign and Exotic Curiosity 22 The Size of China's Chocolate Prize 28 Selling Chocolate 31 Selling Chocolate in China 33 Chapter 2: Ferrero Rocher: Accidental Hero 40 Ferrero's Journey Along the Modern-Day Silk Road to China 44 China's Emancipated Consumers 46 Establishing a Route-to-Market in China 49 Ferrero's Struggle with Local Copycats 56 Did Ferrero Succeed in China? 62 Chapter 3: Cadbury: One Billion Consumers 70 A Brief History of Cadbury Chocolate 71 Cadbury China 73 Cadbury's China Morass 76 Attempting to Turn the Tide 85 The Battle for Chocolate Bars 88 The Final Blow: A Breakdown of Leadership 91 Chapter 4: Hershey: Back to Basics 95 The Hershey Company 96 Hershey's International Business 98 Hershey China 103 The First Season: 1995-1996 113 The Second Season: 1996-1997 120 The Third, Fourth, and Fifth Seasons: 1997-2000 126 The Sixth Season: 2000-2001 134 Under New Management 138 Epitaph 140 Chapter 5: Nestle': China's Chocolate War Sideshow 141 A Brief History of Nestle' 143 Nestle"s Arrival in China 145 The Birth of Nestle' China 151 Sweating the Assets and Reducing KitKat's Cost 156 The Launch of Nestle' Wafer 159 In the Shadow of Nestle' Wafer 165 Nestle' Could Have Been a Contender 171 The Last Word on Nestle', Chocolate, and China 174 Chapter 6: Mars: A Well-Regulated Militia 176 A Brief History of the Mars Candy Company 179 Mars's International Expansion 182 Mars's China Market Entry 183 Mars Versus Its Big Five Chocolate Competitors 190 Mars's Commitment to Market Leadership 193 Chapter 7: Going the Distance: China's 10K Chocolate Race 201 The State of the Chocolate Market: 2008 203 The Threat from Local Competitors 213 Managing China's Multitier Market Going Forward 220 Notes 225 Index 238