China and chocolate. These are not two words you naturally associate with each other. Not yet at least.
The wildest predictions about the Chinese chocolate market have been made in the past decade. Just as coffee successfully challenged the untouchable bastion of tea consumption in China, chocolate would conquer the hearts of the Chinese forever! Or so we were told.
Five years ago I read that the average chocolate consumption per capita of the Chinese population was 60 grams per year, and would grow at least 30% per year. This would mean that every Chinese consumer should now grab at least 220 grams of chocolate per year.
However, according to the Association of Chinese Chocolate Manufacturers, consumers eat 70g of chocolate per capita right now. The Chinese are starting to appreciate chocolate more and more, but this is at a much slower pace than many previously led us to believe. Why is this? What is holding the Chinese back?
RECORD CACAO PRICE OF 1977
But before we explore further, let’s ask ourselves whether it’s really bad that the Chinese haven’t become chocolate junkies yet? Worldwide cacao production is steadily growing; mainly thanks to an unhealthy and certainly not sustainable expansion in Ivory Coast; but an exploding chocolate consumption in China would be dangerous to the present precarious relationship between cacao supply and demand.
As much as the ‘big boys’ like Callebaut, Mars, Ferrero, and Néstle would like it, they can count themselves lucky that consumption growth in China is slow. They would otherwise completely lose control of the world cacao price, and the record price of $4.66 in 1977 would have long been shattered.
But if there is one thing that the Chinese are good at, it is to look further into the future. They don’t want to wait for cacao production to lag behind demand but prefer to take matters into their own hands. This is one of the drivers to grow cacao within China’s borders. And there is one particular area over others, that seems appropriate for this initiative: an island, Hainan.
The driving force behind the cacao initiative is the Hainan Wanning Xinlong cocoa company. The company started in 2012 by building a demonstration hub, and now support a group of farmers with a total of 1,000 acres (around 400 hectares). This should translate into a minimum of 800 metric tonnes of cacao per year.
Not an astonishing number compared to African or Ecuadorian production but it would surpass already the production of countries like Thailand.
KISSES AND GOLD
The chocolate market in China is still dominated by foreign brands. Dove (Mars) has taken one-third of the market; the golden luxury of Ferrero Rocher has close to 20%, while Néstle and Hershey’s Kisses each count for almost 10%. Leconte is the only local player to have secured a solid market position.
The Chinese often have more confidence in the quality of foreign products. They prefer to keep reaching for the red Kisses from Hershey during Valentine’s Day and the golden Ferrero gifts during Lunar New Year, and mostly ignore the local chocolate options.
Not surprisingly, when you consider that international standards require chocolate to contain at least 35 per cent cacao butter, while China has lower standards of 20 per cent, and allows additives such as cornstarch, vegetable oil, and cacao substitutes to enhance the flavour. (ed – a number of food scares such as contaminated milk powder have also jaded consumer opinions).
But why then is the consumption growth still so disappointing. Is it perhaps because the dominant foreign brands are still not able to nail the Chinese consumer mindset?
Godiva, the original Belgian bonbon maker, had a modest number of 100 retail outlets spread across China in 2018. In 2019, they tripled their number of stores, and each one is characterized by a luxurious appearance that makes it look more like a jeweller than a chocolate shop.
Godiva has grown 100 to 200 per cent per year for the past years, far outstripping their rivals. Especially during Lunar New Year, sales skyrocket, and the most popular is the box on which a colourful koi fish adorns, a carp that represents luck among Chinese. By adding such an illustration, Godiva manages to hit the Chinese right in their cultural heart.
CHOCOLATE STICKY RICE
But isn’t it true that local brands would understand the Chinese consumer mentality even better than foreign brands like Godiva? Yet most Chinese companies hardly dared to market original chocolate products based on Chinese taste and culture. They relied mostly on imitation products and rip-offs. Mylikes milk chocolates, for example, are based on Mars’ Maltesers.
But the tide is turning, especially on the taste front, progressive initiatives are starting to emerge.
In an interview with Food navigator-Asia, George Zhang, managing director for Callebaut China, states that chocolate is increasingly used as an ingredient in local foods, such as steam buns or chocolate-flavoured sticky rice.
He foresees a huge trend in this symbiosis of chocolate with local delicacies. If local Chinese brands pick up on this trend, they will have a golden opportunity for market dominance. And this could well be the final breakthrough in average Chinese acceptance of chocolate as a daily consumable item.
Written by Stefan Struik, the founders of Kamkav Farm, the first cacao farm in the kingdom of Cambodia. They have a very active Instagram @kamkavfarm account as well where they share a lot of information on their farm and cacao in general.