--- title: "Where Is the Way Out for Domestic Chocolate?" description: "With Valentine's Day approaching, chocolate sales peak, yet China's per capita consumption is only about 0.1 kg annually, far below leading countries. Foreign brands dominate the mid-to-high-end market, while domestic firms should focus on the low-to-mid-end segment to build capabilities before competing at the top." author: "丁忠卫" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-01-04" language: "en" canonical: "https://xinjignxiao.com/en/articles/where-is-the-way-out-for-domestic-chocolate-b0358b22/" markdown: "https://xinjignxiao.com/en/articles/where-is-the-way-out-for-domestic-chocolate-b0358b22.md" original_source: "https://mp.weixin.qq.com/s/5zwJ-xX53iqgl4himcMzxA" translation: "https://xinjignxiao.com/zh/articles/%E5%9B%BD%E4%BA%A7%E5%B7%A7%E5%85%8B%E5%8A%9B%E7%9A%84%E5%87%BA%E8%B7%AF%E5%9C%A8%E5%93%AA%E9%87%8C-b0358b22.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/where-is-the-way-out-for-domestic-chocolate-b0358b22/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Where Is the Way Out for Domestic Chocolate? > With Valentine's Day approaching, chocolate sales peak, yet China's per capita consumption is only about 0.1 kg annually, far below leading countries. Foreign brands dominate the mid-to-high-end market, while domestic firms should focus on the low-to-mid-end segment to build capabilities before competing at the top. The Western holiday "Valentine's Day" is approaching again. When it comes to this day, merchants naturally think of chocolate, as it is considered the best gift for the occasion. Consequently, chocolate sales reach their peak on Valentine's Day each year. Chocolate is an imported product. Currently, the top five countries in per capita chocolate consumption are Switzerland (6 kg per person per year), Belgium (5.7 kg), Germany (4.03 kg), France (3.43 kg), and the United States (2.45 kg). In China, the average per capita consumption is about 100 grams (0.1 kg) per year, which is still far behind other countries. This indicates a huge potential for chocolate consumption in China, a trend supported by the fact that chocolate sales in the Chinese market have been growing by over 20% annually in recent years. **Mid-to-High-End Chocolate Market** Currently, foreign chocolate brands hold a significant market share in China, especially in the mid-to-high-end segment, particularly pure chocolate products. Brands like Dove, Ferrero, Hershey, and Meiji essentially monopolize this market, leaving domestic chocolate companies with little opportunity to compete. A few years ago, Jindee Chocolate, under the state-owned COFCO, was seen as a potential contender that could rival foreign brands, but due to internal issues, it has been largely marginalized. Similarly, the private enterprise Golden Monkey once focused on promoting mid-to-high-end chocolate, especially pure chocolate, but ultimately failed. Given the current situation, domestic companies are unlikely to make significant inroads into the mid-to-high-end chocolate market, especially high-end pure chocolate, within the next three to five years, as they still lag behind foreign competitors in production technology and marketing. However, with the growth of the middle class, the number of mid-to-high-end chocolate consumers is increasing, and market demand remains strong. Since brands like Dove have long dominated and lack innovation, some foreign brands that have not yet entered China see a huge opportunity and are turning their attention to the Chinese market. After Nestlé introduced its high-end chocolate brand Cailler, it also brought KitKat back to China for the third time. Belgian premium chocolate brand Godiva has opened at least 50 stores in high-end shopping malls across China. Additionally, some imported chocolates brought in by trading companies, though not yet large in volume, are well received by consumers. Since Nestlé acquired Hsu Fu Chi in 2012, four years have passed, and it is now clear that Nestlé's strategy is to dominate the Chinese chocolate market. Nestlé, a respectable company, spent three years smoothly transitioning the Taiwanese company Hsu Fu Chi and perfectly integrated its mid-to-high-end chocolate brands with Hsu Fu Chi's low-end Qibei brand, achieving full coverage of the high, mid, and low-end chocolate market in China. This is undoubtedly a move to compete for the top position in the Chinese chocolate market. Looking at Hershey's acquisition of Golden Monkey, it seems to have a similar intention, but Hershey's approach is not as sophisticated as Nestlé's. Although the transformation has not yet succeeded, it is clear that Hershey aims to strengthen its position in the Chinese chocolate market and compete with other giants. Ferrero is reportedly planning to invest 5 billion yuan in China this year, with obvious goals. These signs indicate that competition in the mid-to-high-end chocolate market is becoming intense, which is a further blow to domestic chocolate companies. This situation resembles the Chinese home appliance market in the 1990s, when foreign brands dominated and suppressed domestic brands. Domestic chocolate companies need to use wisdom to overcome these challenges. **Low-End Chocolate Market** In recent years, the low-end chocolate market in China has been primarily occupied by domestic brands such as Jindee, Golden Monkey, Qibei, and Haolinyin, with newcomers like Yinong and Heijingang also emerging. Jindee, backed by the state-owned COFCO, may have suffered from institutional issues, leading to its quiet exit after a promising start. In the past two years, Golden Monkey has shifted its focus to dried tofu products after failing to successfully promote its mid-to-high-end space chocolate, thereby neglecting the low-end chocolate category. Hsu Fu Chi's Qibei brand has remained relatively stable in the market, but mainly in bulk sales. Brands like Haolinyin, Yinong, and Heijingang, despite having decent sales figures, are still regional brands. Haolinyin dominates the wedding candy market in East China, while Yinong and Heijingang are limited to the northern market, and none have become national chocolate brands. Additionally, confectionery companies like Yake, Ma Dajie, and Jinguan also produce chocolate products, but they primarily sell in bulk and do not treat chocolate as a key product, so their chocolate sales only supplement their overall revenue. Currently, the low-end chocolate market is crowded with many domestic brands competing, some only operating in specific regions or even just the wedding candy segment, which is enough to sustain a company. This indicates that the demand for low-end chocolate in China is still substantial. Since foreign companies are either unwilling or disdain to enter this segment, shouldn't domestic chocolate companies pay more attention to it? After analysis, I believe that since foreign companies strongly control the mid-to-high-end market and domestic companies lack the production technology and marketing capabilities to compete, domestic chocolate companies should focus on the low-to-mid-end market. Why low-to-mid-end rather than just low-end? Products that are too low-end have very thin profit margins, and producing mid-end products also prepares companies for future competition in the high-end market. Currently, brands like Haolinyin, Chundong, and Miyu are making significant moves, and I think they are on the right track. By building teams, improving production technology, and upgrading packaging design, flavor blending, and packaging formats, they can at least reclaim the vast market left vacant by Jindee and Golden Monkey. As for low-end chocolate, besides focusing on bulk sales, domestic companies should fill the gap left by Hershey and Golden Monkey in traditional block chocolate, which is still popular in China. In other words, only after two to three years of deep cultivation in the low-to-mid-end market, acquiring certain production technology, standardized operating teams, professional chocolate sales channels, nationwide chocolate logistics conditions, and dealers' professional warehousing and logistics, can domestic chocolate companies compete with foreign companies in the high-end market. That means these domestic companies need to at least reach the scale of the former Jindee and Golden Monkey. This is a huge challenge for domestic chocolate companies, but also an unprecedented opportunity, as there is no leading domestic chocolate company now. Actions like Ma Dajie launching Zhiai chocolate, Heijingang spinning off Miyu, and Dinisi transitioning from jelly to chocolate show that these companies have already seen the opportunity. However, for domestic chocolate companies, although an unprecedented historical opportunity exists, doing well in business and the market is not just about having the right direction. Product development, team building, dealer development, market expansion and maintenance—all these aspects need to be done step by step, which tests the company's internal strength. About the author: Ding Zhongwei, food marketing expert, has served in several well-known food companies including Hsu Fu Chi, Golden Monkey, Yake, and Jinguan. He is currently CEO of Beijing Lianzhong Suda Technology Co., Ltd. and General Manager of the Marketing Center of Shanghai Zeyun Biotechnology Co., Ltd. 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