China will become Hershey’s number two market behind the US in the next five years and will get there through advertising, expanding distribution and new launches, according to the company’s CEO.
Speaking at the CAGE investors conference in London yesterday, J.P. Bilbrey, said: “China and the contiguous North America are win now markets”
He called China “our number one international priority”.
“We’re placing a big bet on China and anticipate it will be Hershey number two market behind only the US over the coming five years.”
Hershey has seen a compound annual growth rate (CAGR) of 84% in China over the last five years driven by its Kisses brand.
It plans to up sales by six to seven times in the next five years to $10bn by saturating distribution in the market to reach beyond Eastern China to the West, where its presence is limited.
The leading US chocolate firm also plans increased media support to improve brand awareness in China.
It plans to broaden its product portfolio with products tailored to the Chinese consumer.
Bilbrey said the firm will launch the Ice breakers brand, a new indulgent Kisses Deluxe product and its share bags, which it calls the ‘hand to mouth platform’ to the Chinese market.
Saturated chocolate market
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.
Ice Breakers may help Hershey make gains outside the saturated Chinese chocolate market.
Hsu-Fu-Chi, 60% owned by Nestlé, led the Chinese sugar confectionery market in 2011 with a 7% share, according to Euromonitor.
New plant in China
Hershey has reached capacity at its current plant in China that it holds in a joint venture with Korean firm Lotte and plans another factory somewhere in Asia.
It said during its third quarter results that it was it was eyeing China or Southeast Asia.
A new R&D center is also planned in Shanghai to develop China and Asia-Pacific products as announced in 2011.
International expansion beyond China
Hershey is also eyeing international growth in the longer-term outside China.
“In the Middle East, Brazil and South East Asia we’ll continue to expand our presence,” said Bilbrey.
“While India, Africa and the Eastern European markets offer opportunities for us, these will be over the longer term horizon given there are less develop infrastructures or our existing limited presence,” he continued.
Hershey’s international plans differ from those of Mondelez International, which is focussing on the BRIC markets, the Middle East, Africa and Indonesia as Next Wave markets and Australia, Japan, Mexico and Central Europe as Scale Markets. See HERE.