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Chocolate Confectionery - China - June 2016

“Geographical expansion will be the big issue for foreign companies to achieve sales growth. The lessons from Hershey’s acquisition of Shanghai Golden Monkey will lead foreign players to be cautious when acquiring Chinese companies for their local distribution power. Enhancing the health image of chocolate is critical for the category’s growth.“

Karen Liu, Senior Research Analyst

This report looks at the following areas:

  • Lessons from Hershey – The risk of expansion
  • Is healthy chocolate an opportunity?
  • Seek growth by product extension

Chocolate confectionery is defined as chocolate made from cocoa butter and cocoa butter substitutes. The chocolate confectionery market includes the following segments:

  • Tablets – slab or block chocolate where pieces can be broken off. Chocolate tablets are moulded/ segmented chocolate in a wide range of sizes from bite-size to “family bars”. Some are filled or contain nuts or raisins and are made of different types of chocolate, eg white, milk and dark.
  • Countlines – full-size individual chocolate bars. These cannot be broken into same-size pieces (except KitKat and similar, which are classified as countlines). They can also be sold in different formats including multipacks, single large pieces or mini sizes.
  • Individually wrapped chocolates – boxed, individually wrapped chocolates, and bite-size wrapped chocolates. The chocolates may be solid or filled. However, multipacks of tablets and countlines are still categorised under tablets and individual bars respectively.
  • Non-individually wrapped chocolates – assortments such as M&M’s, boxed and unwrapped chocolates, and bite-size unwrapped chocolates. The chocolates tend to be small, either solid or filled.
  • Other forms of chocolates – artisanal chocolates and other forms of gifting or wedding chocolates.
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    Table of contents

    1. Overview

      • What you need to know
        • Products covered in this report
        • Executive Summary

            • The market
              • Figure 1: Total China chocolate market retail value, 2011-21
            • Key players
              • Figure 2: Value share of top 10 companies, 2014-15
            • The consumer
              • Chocolate gains high penetration but low depth of usage
                • Figure 3: Usage frequency of chocolate, January 2016
              • Dark chocolate is not outstanding for health benefits
                • Figure 4: Perceptions of chocolate, January 2016
              • Weight gain is the biggest concern
                • Figure 5: Barriers to having more chocolate, January 2016
              • Chocolate origin and health benefits are premium selling points
                • Figure 6: Opportunity for premiumisation, January 2016
              • Chocolates have opportunity to tap into other categories
                • Figure 7: Attitudes towards product extension, January 2016
              • Price is not the key consideration factor for online purchases – brand is
                • Figure 8: Online purchase behaviour, January 2016
              • What we think
              • Issues and Insights

                • Lessons from Hershey – The risk of expansion
                  • The facts
                    • The implications
                      • Is healthy chocolate an opportunity?
                        • The facts
                          • The implications
                            • Seek growth by product extension
                              • The facts
                                • The implications
                                  • Figure 9: Food with chocolate flavour, China and global, 2011-15*
                              • The Market – What You Need to Know

                                • Chocolate market volume sales fall in 2015
                                  • Increasing price of chocolate drives consumers away
                                    • Gifting market decreases, while opportunity exists in daily consumption
                                    • Market Size and Forecast

                                      • Chocolate market volume sales fall in 2015
                                        • Figure 10: Retail market size of chocolate in China, 2011-16
                                      • Market is forecast to grow at a CAGR of 3.3%
                                        • Figure 11: Total China chocolate market retail value, 2011-21
                                        • Figure 12: Total China chocolate market retail volume, 2011-21
                                    • Market Drivers and Challenges

                                      • Increasing disposable income assists growth
                                        • Figure 13: Per capita disposable income, China, 2010-14
                                      • Increasing cocoa price
                                        • Figure 14: Average price of cocoa, 2005-16
                                        • Figure 15: Average price of chocolate and sugar confectionery (RMB/kg), China, 2009-14
                                      • High calorie levels drive consumers away from chocolate
                                        • Festivals influence chocolate consumption
                                        • Market Segmentation

                                          • Gifting market decreases
                                            • Figure 16: Retail value of other forms of chocolates, 2011-21*
                                          • Growth opportunity exists in encouraging daily consumption
                                            • Figure 17: Retail value of tablet chocolate, 2011-21
                                            • Figure 18: Retail value of countlines, 2011-21
                                        • Key Players – What You Need to Know

                                          • Chocolate market is quite consolidated
                                            • Hershey loses 1.1% market share and Ferrero opens first plant in China
                                              • Manufacturers want to enhance health image of chocolate
                                                • Chocolate brands tap into adjacent categories in other countries
                                                • Market Share

                                                  • Chocolate market in China is quite consolidated
                                                    • Figure 19: Value share of top 10 companies, 2014-15
                                                  • Le Conte exits the market
                                                    • Hershey loses 1.1% market share
                                                    • Competitive Strategies

                                                      • Mars promotes impressive advertisements
                                                        • Ferrero opens first plant in China
                                                          • Fruit-filled chocolate enhances healthy image
                                                            • Figure 20: Hershey fruit-filled chocolate, China, 2015
                                                            • Figure 21: Dove fruit-filled chocolate, China, 2015
                                                        • Who’s Innovating?

                                                          • The market is lacking in product innovation
                                                            • Figure 22: Newly launched chocolate, by launch type, 2013-15
                                                          • Healthy chocolates
                                                            • Chocolate with ‘minus’ claim
                                                              • Figure 23: Chocolate with low/no/reduced sugar, global, 2015
                                                              • Figure 24: Chocolate with low/no/reduced fat, global, 2015
                                                            • Chocolate with additional health benefits
                                                              • Figure 25: Chocolate with low/no/reduced fat, global, 2015
                                                            • Chocolate leveraging other healthy food ingredients
                                                              • Figure 26: Chocolate with healthy food, global, 2015
                                                            • Chocolate married with other categories
                                                              • Figure 27: Chocolate flavoured food (new launches), China and global, 2011-15
                                                              • Figure 28: Examples of Mars brand extension, UK, 2015
                                                            • Snickers launches ‘Hungerithm’ campaign in Australia
                                                            • The Consumer – What You Need to Know

                                                              • Dark chocolate, milk chocolate and chocolate with fruit bits/nuts are most popular types
                                                                • High calorie content is the biggest concern hindering growth
                                                                  • Chocolates have opportunity to tap into other categories
                                                                    • Consumers are conservative when purchasing chocolate online
                                                                      • Brand is a key consideration factor for online purchasing
                                                                      • The Consumer – Usage Frequency of Chocolate

                                                                        • Chocolate gains high penetration but low depth of usage
                                                                          • Figure 29: Usage frequency of chocolate, January 2016
                                                                        • Dark chocolate, milk chocolate and chocolate with fruit bits/nuts are most popular types
                                                                          • Figure 30: Usage frequency of chocolate (continued), January 2016
                                                                        • White chocolate is gaining popularity
                                                                          • Figure 31: Rank of popular chocolate types, 2015-16
                                                                        • 25-39-year-olds and high earners are core consumers
                                                                            • Figure 32: % of those eat chocolate once a week or more, by age and income, January 2016
                                                                        • The Consumer – Perceptions of Chocolate

                                                                          • Plain chocolate for energy boost, chocolate with added ingredients for snacking
                                                                            • Figure 33: Perceptions towards chocolate, January 2016
                                                                          • Milk chocolate is widely available
                                                                            • The health benefits of dark chocolate are not well appreciated
                                                                              • Chocolate with bits and fillings are premium for gifting
                                                                              • The Consumer – Barriers to Having More Chocolate

                                                                                • Weight gain is the biggest concern
                                                                                  • Figure 34: Barriers to have more chocolate, January 2016
                                                                                  • Figure 35: Top 5 ‘minus’ claim among newly launched chocolate, global, 2011-15
                                                                                  • Figure 36: Kit Kat on-pack low-calorie claim, Australia, 2016
                                                                                • Consumers are satisfied with the flavour of chocolate
                                                                                  • High price hinders growth
                                                                                  • The Consumer – Opportunity for Premiumisation

                                                                                    • Origin is key for premiumisation
                                                                                      • Figure 37: Opportunities for premiumisation, January 2016
                                                                                    • Health is another selling point
                                                                                      • Interest in ‘handmade’ is increasing
                                                                                        • Flavour innovation stays niche
                                                                                        • The Consumer – Attitudes towards Chocolate

                                                                                          • Imported chocolates do not offer superior health benefits
                                                                                              • Figure 38: Attitudes towards imported chocolate, January 2016
                                                                                              • Figure 39: Usage frequency of chocolate, by souvenir purchase behaviour, January 2016
                                                                                            • Chocolates from boutiques are premium
                                                                                              • Figure 40: Attitudes towards chocolate from boutiques, by boutique purchase behaviour, January 2016
                                                                                            • Chocolates have opportunity to tap into other categories
                                                                                              • Figure 41: Attitudes towards product extension, January 2016
                                                                                          • The Consumer – Online Purchase Behaviour

                                                                                            • Price is not the key consideration factor for online purchases
                                                                                              • Figure 42: Purchasing chocolate from online, by demographics, January 2016
                                                                                              • Figure 43: Online purchase behaviour, January 2016
                                                                                            • Old and low-income consumers are conservative, young and high earners are willing to explore
                                                                                              • Figure 44: Online purchase behaviour (continued), January 2016
                                                                                              • Figure 45: Online purchase behaviour (continued), by gender, age and income, January 2016
                                                                                            • Brand is an important consideration factor
                                                                                                • Figure 46: Online purchase behaviour (continued), January 2016
                                                                                              • New brands still have opportunity to attract consumers on shopping websites
                                                                                                  • Figure 47: Online purchase behaviour (continued), January 2016
                                                                                              • The Consumer – Meet the Mintropolitans

                                                                                                • Mintropolitans eat chocolate as treats
                                                                                                  • Figure 48: Perceptions towards chocolate, by consumer classification, January 2016
                                                                                                • Exquisitely-made chocolates generate premium perceptions amongst Mintropolitans
                                                                                                  • Figure 49: Opportunity for premiumisation, by consumer classification, January 2016
                                                                                                • Mintropolitans buy premium chocolate online
                                                                                                  • Figure 50: Online purchase behaviour, by consumer classification, January 2016
                                                                                              • Appendix – Market Size and Forecast

                                                                                                  • Figure 51: China chocolate market, value and volume, 2011-21
                                                                                              • Appendix – Market Segmentation

                                                                                                  • Figure 52: Retail value of chocolate tablets, 2011-21
                                                                                                  • Figure 53: Retail value of other chocolate, 2011-21
                                                                                                  • Figure 54: Retail value of chocolate countlines, 2011-21
                                                                                                  • Figure 55: Retail value of individually wrapped chocolates, 2011-21
                                                                                                  • Figure 56: Retail value of non-individually wrapped chocolates, 2011-21
                                                                                                  • Figure 57: Retail volume of chocolate tablets, 2011-21
                                                                                                  • Figure 58: Retail volume of other chocolate, 2011-21
                                                                                                  • Figure 59: Retail volume of chocolate countlines, 2011-21
                                                                                                  • Figure 60: Retail volume of individually wrapped chocolates, 2011-21
                                                                                                  • Figure 61: Retail volume of non-individually wrapped chocolates, 2011-21
                                                                                              • Appendix – Methodology and Abbreviations

                                                                                                • Methodology
                                                                                                  • Fan chart forecast
                                                                                                    • Mintropolitans
                                                                                                      • Why Mintropolitans?
                                                                                                        • Who are they?
                                                                                                          • Figure 62: Demographic profile of Mintropolitans vs Non-Mintropolitans, by gender, age and personal income
                                                                                                          • Figure 63: Demographic profile of Mintropolitans vs Non-Mintropolitans, by marital status, city tier and education level
                                                                                                        • Abbreviations

                                                                                                        Companies Covered

                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                        Chocolate Confectionery - China - June 2016

                                                                                                        £3,273.18 (Excl.Tax)