This is the first time Yan Ming has looked bitter when facing a bottle of sugary soda. Recently, news that aspartame will be labeled as a "possible carcinogen" has put sugar-free Coca-Cola in the spotlight. Compared to sour and spicy, "sweet" as an essential taste demand is always bittersweet—loving sugar but fearing weight gain. Moreover, according to a 2013 survey by authoritative departments, the prevalence of diabetes among Chinese adults is 11.6%, and 50.1% of the population is in the pre-diabetic stage. That is, 1 in 10 adults is diabetic. Public education about diabetes from medical institutions and other parties has updated public perceptions, leading to a consumption shift toward "no sugar." In this context, New Distribution has noticed that classic brands like White Rabbit and Jin Sihou, as well as emerging candy brands, have seemingly made little splash in the food and beverage industry over the past two years. "Honestly, it's been a long time since I bought candy at a supermarket. In daily life, I order less sugar in milk tea, use less sugar in cooking, and eat fewer sweet foods. The sweetest things I consume are probably breath mints and cola," Yan Ming said about his sugar habits. In contrast, during Christmas 2022, near Google's office, Jiajia (pseudonym) saw a food roadshow hosted by Hsu Fu Chi, where many people were tasting candy. Recalling seeing domestic candy abroad, Jiajia still couldn't hide her surprise: "In 2015, while studying in India, I saw White Rabbit candy in a store in a small town." Hsu Fu Chi roadshow event, image source: Hsu Fu Chi Amid the wave of Chinese products going overseas—3C electronics, footwear, apparel, beauty products—small Chinese candies seem to be doing well. Going Overseas: A Must-Fight Battle Chinese candy going overseas is both unexpected and reasonable. In the "2023 Global Candy Top 100" list released by foreign publication Candy Industry, no Chinese candy brand made the top 20. Moreover, according to Huajing Industry Research Institute data, in 2018, the top 5 candy brands by market share in China were all foreign, with Mars Wrigley holding 22%. Unlike milk tea, which is a blue ocean overseas, foreign candy brands are already strong, making the challenge of going overseas daunting. Why do domestic candy brands still choose to go out? Let's look at some data: The global candy market size exceeds $230 billion, with the U.S. market being the largest. Europe and the U.S. are the world's major candy markets with sufficient consumer numbers. A domestic candy brand started its overseas business as early as 2004. According to its founder, the European and American markets are high-potential zones for candy business, and establishing a foothold there facilitates radiating coverage to lower-potential regions. Additionally, the domestic "sugar reduction" and "sugar-free" trends have dealt a significant blow to the industry. According to Mintel's "Candy in China" report, China's candy industry hit a turning point in 2014, after which the entire industry turned downward, entering a multi-year decline. Facing sluggish domestic growth, overseas naturally became the second growth curve. Want Want's 2020-2021 financial report showed that its candy subcategory achieved double-digit revenue growth in overseas business in the second half of the fiscal year, exceeding the average growth rate for the entire candy subcategory. Chinese candy companies' collective overseas expansion also benefits from the historical development of sugar trade. Historical records show that Europe and the U.S. initially had no sugar; it was produced from sugarcane in Asia and then spread to Europe and the Americas via ancient trade routes. Because Europe and the U.S. lacked sugar, being able to eat sugar became a symbol of status, and eating sugar became a trend. It is recorded that "in high society, everyone prided themselves on eating sweets so sweet they could choke." This custom deeply influenced overseas consumers' eating habits. Sugarfina offline store, image source: "Visit New York" WeChat official account "European and American consumers consider No Fat, but most don't consider No Sugar, because in their perception, 0 sugar equals not tasty," said Max (pseudonym), a senior researcher at Kantar Consulting, about factors influencing overseas consumers' food and beverage choices. In China, when experts pointed out the relationship between sugar consumption and rising diabetes rates, it influenced public dietary choices. But in the U.S., official media once exposed that candy manufacturers, to leverage authority to guide public sugar intake, not only funded research institutes in the food industry to fabricate results but also manipulated the U.S. federal government to issue the Dietary Guidelines. "When we try sugar substitutes and 0 sugar, Brits completely think we're wrong," said Lily, who settled in the UK with her foreign husband and has been most influenced by sugar in her diet. "Two years ago, I was mostly low-sugar in China. Now living with my foreign in-laws, we basically eat some candy after every meal. I also consume more sugar daily." Overseas markets, where eating habits cannot be changed in the short term, are definitely an excellent place for domestic candy brands to find competitive outlets. Overseas Battle Escalates With a late-night chat screenshot, the caption reads: "During the day, we buy toys at the market; at night, they still 'deduct' us for candy orders." On Douyin, foreign trade merchants with shops in Yiwu can't help but marvel at foreigners' love for candy. Similarly, in March this year, Shanxi Jinli Candy Company mentioned on its official account that its new plum pulp lollipop has a daily processing capacity of over 30,000 pieces, with export orders scheduled until around May. In fact, according to a Ministry of Commerce report, China's spring 2023 foreign trade orders overall dropped 40%, putting pressure on the export sector. However, the candy business has maintained a good growth trend. How have Chinese candy companies gradually gone global amid competition? In an interview, Huang Yi, International Trade Director of Hsu Fu Chi, mentioned that the first stage of early candy brand going overseas was competing with small OEM factories. Zhang You, head of Ningbo Gubo Candy Co., Ltd., deeply understands this. Ningbo Gubo was established in 2010. In media reports, Zhang You said he initially found various domestic suppliers for candy OEM processing, but gradually, suppliers raised prices. Data shows that in 2006, market sugar prices were around 4,500 yuan per ton, nearly double the same period in 2005. Sugar raw materials account for 20%-30% of candy production costs, while labor and site rental costs also increased. At the candy forum that year, many candy manufacturers clamored for price increases. In 2010, the price of white sugar raw materials rose by 100%, putting cost pressure on the industry, and many OEM factories transformed into candy exporters. Additionally, early domestic sugar production technology was backward, and quality couldn't meet the procurement requirements of European and American countries. When first entering overseas markets, most candy companies could only sell to the Middle East and Africa, targeting the mid-to-low-end market. At this stage, price and channel advantages were the main competitive points for sugar companies. Since most domestic sugar companies and OEM factories could enter, the increasingly crowded mid-to-low-end overseas market made exporting candy companies realize that price wars and homogenization were not a healthy future. Enhancing product competitiveness and broadening markets became the main tasks for the next stage. Based on this, some candy companies shifted direction, from OEM processing by third-party factories to ODM models, controlling the supply chain through self-production. Image source: Hsu Fu Chi Huang Yi introduced that in the second stage, Hsu Fu Chi's overseas strategy focused on channel construction. "We began to emphasize channel construction, cooperating with local distributors and actively developing mainstream and e-commerce channels to further increase sales and market share." Hsu Fu Chi is very thoughtful in channel layout and product planning. Xiaoshidai once reported that for the Asian supermarket channel in North America, where Chinese people gather, Hsu Fu Chi chose its top-selling series in the domestic market, such as Sachima, Pineapple Cake, and Migima. For mainstream channels like Costco and Walmart, it led with classic and uniquely Chinese products like Crispy Heart Candy, Sachima, and Pineapple Cake. At the same time, Hsu Fu Chi also emphasizes dual online and offline channel construction, with products listed on multiple online e-commerce sites in the U.S. From price supremacy to channel supremacy and product supremacy, candy companies' overseas battles are deepening. Future Candy Business "The domestic and overseas markets are almost monopolized by international big brands. Chinese candy brands going overseas is destined to be an unconventional and asymmetric battle," an industry insider pointed out. Facing the impact of overseas big names, Chinese candy still needs to further cultivate its internal strengths. Currently, overseas markets pay more attention to the personalized experience and organic, healthy ingredients of candy. According to Quince Market Insights, the global functional candy market was approximately $13.4234 billion in 2020, and it is expected to reach about $8.5 billion in 2022. In White Rabbit's 2022 financial report, "functionalization and health" are also seen as future development trends. For the U.S. market, where functional food penetration exceeds 73%, functional transformation of candy is essential. Products with added vitamin C, probiotics, and functions like stomach protection, digestion promotion, and eye protection are increasingly common. Various functional candies, image source: Taobao "If candy is only considered from a functional value perspective, it's easy to have homogeneous competition and same-type competition. Therefore, starting from the emotional expression of candy, choosing more channels and scenarios to display the brand can better win consumer resonance," added a co-founder of a domestic exporting candy company at the FBIC2023 Food & Beverage Innovation Forum. For them, whether launching assemblable building block gummies or music lollipops based on bone conduction principles that play songs while eating, they are breaking the boundary between "eating" and "playing" to bring consumers more joyful experiences, aiming to bind consumer minds more deeply. Regarding future development paths, Lou Zhenyu, partner of brand export consulting firm Ace Innovation, said: "From a taste perspective, Chinese candy tastes differ from foreign candy. Generally, Chinese candy companies going overseas first follow the approach of covering overseas Chinese and Chinese descendants, then entering local consumers." Taking Hsu Fu Chi as an example, after completing full coverage of Asian channels in the North American market, it uses products with strong Chinese characteristics like Crispy Heart Candy as the main force to develop mainstream channels in North America. In the Southeast Asian market, it adjusts product formulas according to local tastes, striving to meet the needs and trends of the local mainstream market. Huatai Securities' "Food & Beverage Export Research Report: Three Dimensions of Chinese Food & Beverage Companies Going Overseas" proposes that the development paths and opportunities for Chinese food & beverage companies going overseas mainly include manufacturing going overseas, taste going overseas, and culture going overseas. Overall, apart from polishing the freshness of candy flavors and the richness of functions, the future candy export business requires companies to not only bear the pressure of manufacturing and channels but also stimulate consumers' emotional value, striking a resonant chord in overseas markets.