Cloetta launches ‘test-and-learn’ confectionery store on China’s Alibaba

By Douglas Yu contact

- Last updated on GMT

Cloetta's Tmall store marks the company first time to enter China's e-commerce market.  Photo: Tmall
Cloetta's Tmall store marks the company first time to enter China's e-commerce market. Photo: Tmall
Swedish confectionery company Cloetta has opened its first online store in China through Alibaba’s Tmall Global platform to take advantage of the country’s growing online market for food.

Cloetta said Chinese consumers’ positive interest in some of its candy products is the primary reason why it decided to launch the online retailer.

However, Cloetta’s spokesperson, Jacob Broberg, said the new store should only be considered a “test-and-learn”​ store in China, and it was too early for the company to decide whether it might target other Chinese online channels in the future.

Asia represents less than 1% of Cloetta’s sales

“China and Asia in general are not a core market for Cloetta, and it represents less than 1% of our sales,”​ Broberg said.

“We do, however, sell some products via distributors and importers, and now we’re testing and learning to sell our products directly via Tmall Global.”

“Our core markets believe that it will be the retailers that drive e-commerce. We are therefore working closely with them to learn how we can develop e-commerce,”​ Broberg added.

The current Cloetta’s products that are available on Tmall Global include the Jelly Bean Factory, Jenkki (xylitol chewing gum), Dietorelle (sugar-free candy), and Galatine (milk powder-based candy).

Imported products with competitive prices drive domestic e-commerce growth

Euromonitor Shanghai told ConfectioneryNews that the market size of confectionery sold online reached around CNY10bn ($1.4bn) in 2016.

In Shanghai alone, 66% of consumers claim they buy sugar confectionery online for self or family consumption, which is the same proportion as the supermarket channel.

Mintel analyst
Food and Drink Analyst at Mintel China, Cheryl Ni

"The convenient online channels have enabled a selection pool of great diversity and introduced fresh ideas in better developed markets. Throughout exploration, Chinese consumers have been more exposed to niche international products with unique flavors, innovative shapes or healthy claims, thus more opportunities for premium products in the category. Furthermore, consumers have learned how to appreciate sugar confectionery from different aspects, such as artisanship, country of origin of ingredients, multi-texture, due to more overseas experience."

Internet retailing has been continuously gaining popularity among Chinese consumers, with more retailers venturing into e-commerce to reach more consumers, says Euromonitor.

“From 2015, booming cross-border e-commerce and even m-commerce, which provided a large quantity of imported products at competitive prices, catered to rising consumer purchasing power and the pursuit of international quality products, also became the main factor further driving growth in internet retailing in China,”​ Euromonitor’s research manager, Jiaqi Du, said.

Is Tmall Global a stepping stone into China?

Alibaba launched Tmall Global in 2014 in response to growing international products consumption, according to Du. It is a cross-border platform and an extension of Alibaba Group’s Tmall.com business in China.

As of August 2015, around 5,400 overseas brands from 25 countries and regions had opened stores on Tmall Global, which Du said, “is used by a growing number of brands from the US, Germany, Australia, South Korea, Japan, Taiwan, and Hong Kong as a stepping stone into China”.

Major western confectioners have tried to take on the booming e-commerce market in China in recent years, according to this site’s previous reports, with companies, including Nestlé​, Mondelēz​ and Mars​, establishing partnerships with Alibaba.

Mars, which led China’s chocolate market in 2014 with 39% value share​, sells all its six major brands on all Alibaba platforms, according to Mintel. Nestlé also claimed that e-commerce is way above 10% of its business in China.

Anticipating core market growth with new CEO and additional acquisitions

Cloetta will release its Q4 report on February 1. Its net sales decreased 0.8% in Q3 compared to the same quarter the prior year.

Cloetta’s Board of Directors appointed Henri de Sauvage Nolting as president and CEO of Cloetta AB last month. He will assume the position from February 15, 2017.

Broberg said Cloetta aspires to grow in line with confectionery sales growth in its core markets, which are set to rise between 1% and 2%.

“In addition, we have done acquisitions to drive growth and we have a strategy to continue to do acquisitions [in 2017],”​ he said.

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