Hershey has reached capacity at its current plant in China that it holds in a joint venture with Korean firm Lotte.
The company announced in June that it would construct a new plant somewhere in Asia, but gave no indication where the plant would be based.
China or Southeast Asia?
In the company’s Q3 conference call yesterday, Hershey CEO John P Bilbrey said that China was the likeliest location.
“There’s several options that we're looking at there that could include additional manufacturing in China for China or in Southeast Asia.”
“The joint venture project that we have with Lotte and our factory outside of Shanghai is essentially fully utilized.”
He said that Hershey needed more capacity to meet demand in the Chinese market.
The existing plant is supplying markets outside of China, but it is likely to become a domestic-only factory when Hershey establishes a new site, said Bilbrey.
‘Invest mode’ in China
Hershey chief financial officer Humberto P Alfonso said that Hershey would also expand it sales force in growing international markets such as China.
Bilbrey said: “We’re still very much in an invest mode in China on several fronts. Certainly in China the expansion of our portfolio is very important.”
Hershey plans to open an R&D center in Shanghai to develop China and Asia-Pacific products as announced last year.
Bilbrey said that Hershey Kisses was the company’s primary brand in China, but the portfiolo would be expanded at the start of 2013.
An analyst from Euromonitor International previously told this site that the chocolate market in China was “highly consolidated” with the top 3 players Mars, Nestlé and Ferrero, commanding almost 70% of the market.
Going solo in India
Elsewhere in Asia, Hershey ended its joint venture in India with domestic firm Godrej last month and set-up its own Indian subsidiary.
“We simply feel good about being in control of our own destiny there,” said Bilbrey during yesterday’s conference call.