Hershey has launched a new brand in China that will operate in what it has called the country’s fastest growing confectionery segment.
New brand Lancaster is a premium milk candy that marks Hershey first brand launched outside the US.
Jeff Beckman, head of corporate communications at Hershey told ConfectioneryNews: “The premium milk candy segment where Lancaster will compete is the fastest growing segment of confectionery in China, which indicates strong opportunities for the new Lancaster brand with its unique taste experience for the market.”
According to Hershey, ‘milk candy’ in China is a $1.2bn segment that accounts for a quarter of the total candy market.
Lancaster, or Yo-man in Chinese, will be manufactured in the Hunan province by local firm Zhongyi using a proprietary Nai Bei candy-making process that uses high-quality imported milk and slow cooking to create a rich, creamy flavor.
The brand will come in three flavors – Original Pure Nai Bei, Pure Nai Bei filled with Rich Nai Bei, and Pure Nai Bei filled with Strawberry.
Each product also has three size options: 40-gram bags with suggested retail price of 6 RMB ($0,98); 108-gram bag for 12.9 RMB ($2.10); and 228-gram bags for 24.9 RMB ($4.06).
The Lancaster range will be launched in Wuhan, Hangzhou and Chengdu in June with wider distribution in 2014.
China: Hershey’s #1 international market
Hershey this week opened its new Asia Innovation Center located in Shanghai, China. The two-floor, 22,000 square-foot R&D facility will spot market trends. It features R&D laboratories, a pilot plant for the chocolate and sweets & refreshment categories and a development center. It will start by employing a team of 12 scientists and product developers led by Qingbin Yuan, Hershey’s director of Asia Research & Development. There is also office space for 32 engineers and innovation staff.
Steven Schiller, Senior Vice President of the Global Sweets & Refreshment business unit for Hershey said: “It’s significant that Hershey chose to launch its first new brand in three decades here in China.”
This demonstrates the company’s deep commitment to China, as well as the importance of this market in Hershey’s global growth plans.”
Hershey anticipates that China will become its number two market behind only the US over the coming five years.
It has seen a compound annual growth rate (CAGR) of 84% in China over the last five years driven by its Kisses brand.
The firm hopes sales will rise 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.
Factory planned in Asia
Hershey has reached capacity at its current plant in China that it holds in a joint venture with Korean firm Lotte and is planning a new facility somewhere in Asia.
The location is as yet undecided, but it has hinted that China is likely location.