I’m happy I listen to people when they strongly suggest titles to read. In the case of Lawrence L. Allen’s Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China’s Consumers, this was a particularly sweet suggestion and many thanks to Dan Harris of Harris & Moure Law, the perennial award-winning blogmeister and commentator at China Law Blog, or as we Generation Xers like to call it, CLB.

Fortunes tells the tale of the three-decades long battle for the hearts and, moreover, palates of the Chinese chocolate consumer presently being slugged out between the Big Five chocolate and FMCG confectioners who entered the Chinese market since 1978’s Reform and Opening Up. In order of success, Mars, Ferrero-Rocher, Nestlé, Cadbury, and Hershey; these five mega-players have been slinging caramel, nougat, peanuts, wafers, cocoa butter, and condensed milk powder at each other across the battlefield of the PRC’s 22 provinces in a bid to introduce their pre-eminent confection brands to the Chinese chocolate-chomping market. And what a battle royale it has been!

It was also a problematic read. My mouth got to salivating far too often for my liking and so my usually swift page flow was often marred by uncontrollable urges to check the pantry in order to wrap my sweethooks on whatever chocolate stocks were lying on the shelves; namely, Kinder and several stray Raffaello 5-packs. Walking wounded — and heavily sugar-buzzed – back to my office chair, I can successfully declare that I somehow managed to reach the end of Allen’s excellent work. In fact, in terms of style, I was doubly surprised given how most independently-published works are generally of a sub-par quality and usually riddled with spelling errors and punctuation typos, but AMACOM Books came through on this one big time.

Let’s Review the Salient Sugary Points, Shall We?

• it took almost 20 years –- beginning in Deng’s visionary year of 1978 — to get the 300 million or so Chinese consumers who could afford Western products from viewing chocolate as merely an expensive foreign gift item, rather than a daily or regular confectionary consumable during work or play.
• given the strong belief in Chinese cuisine that certain foods are connected to the body’s production of hot or cold sensations, and how sweet foods are believed to cause inner chills, chocolate was often prescribed by obstetricians to pregnant women to quell their systems which have run amok. Chocolate occupied a strange head space in the mind of the average Chinese consumer which the Big Five set out to change for all time.
• the thought of scarfing an entire chocolate bar in a single sitting is repulsive to most Chinese. They prefer to nibble like rabbits and consume their chocolate bar over the course of several days, a prospect most Westerners hardly consider when breathing in eating theirs. 80g (2.8 oz.) bars sell poorly in Chinese hypermarkets and retail shops. But bite-sized morsels like the 15g Mars popper, the Hershey’s Kiss, or similarly-sized trial quantities packaged in larger party bags or buckets sell well across all Chinese cities.

• Ferrero-Rocher – a privately-held Italian film — was the first large Western chocolatier to make their products available to the Chinese market in the early ‘90s. It retains its luxury position to this day, and still exports product to China, as opposed to producing locally. Chinese gift-givers normally include a 16-piece Ferrero box (pictured above) during major Chinese seasonal holidays (egs. the Moon and Spring Festivals). Ferrero in China still equals luxury despite the stiff competition offered by the (shamelessly?) more moderately-priced Jinsha (pictured below) knock-off that does rather brisk sales of its own in all Chinese retail shops where Ferrero is sold, given how Jinsha is normally placed directly alongside the Ferrero product. The company still leads the Big Five pack in China’s consumer mind space in terms of Western exclusivity, quality, and brand recognition.

• While Nestlé (a Swiss concern) does more business in China from its non-chocolate, non-confectionary businesses (egs. Coffee Mate coffee whitener and Nescafé instant coffee brands), its  Nestlé Wafer and Kit-Kat bars hold their own admirably in the space and maintain a third place position in the Chinese market.
• Hershey began well with its Kisses, whose rounded shape reminded the Chinese of a baby’s bottom and was a very popular seller at the outset, exited the Chinese market around 2004 due to supply troubles and lagging sales. The company has only recently made its Chinese comeback, but brings up the rear, currently stuck in fourth place.
• British Cadbury suffered from a chronic supply troubles around the turn of the millennium with a foul cheesy-smelling locally-supplied milk ingredient that went into its flagship Dairy Milk bar, and had to yank its product from Chinese retail shelves after consumers complained about the persistent odor. The melamine scare from recent years has also compounded Cadbury’s problem. The company’s local staffing troubles – versus importing expensive expat hired guns to run the China show — only made things worse. Something Cadbury didn’t consider: most Chinese don’t drink milk, so the company’s “a glass and a half of milk in every bar” didn’t translate well, culturally.
• the privately-held Mars company remains the strongest player in the Chinese chocolate market, in terms of sales. Its popular Mars Bar (all sizes) and Milky Way products are the two most popular bars in the PRC market and enjoy strongest brand recognition. Of the Big Five, Mars leads the pack.

Why You Should Read/Buy This Book?

• Chocolate Fortunes is a well-written HBS-caliber cross-cultural case study that costs under $20. Why go to school when I can give myself an MBA-level education for heaps less?
• For those seeking a bit of authentic cross-cultural sensitivity training, Fortunes contains lessons in droves.
• Allen writes convincingly and flawlessly. As business books go, his premise is strongly made, not to mention quickly. The author – highly qualified to tell this story given his own in-China experiences with Nestle, and later, Hershey – gets to the point and holds the line. Fantastic, as business books go, if you ask me. Allen doesn’t soar over your head with useless jargon, new-age phraseology, or insider lingo. He relegates the “$50 words” to their proper place: the ivory tower of (also-ran) academe. Fortunes is definitely a pageturner.
• if you’re a lover of chocolate, this book will get you thinking differently about your favorite sweet nosh. In fact, I learned a ton about the chocolate industry, about the various mergers and acquisitions in the industry during the late-‘90s, and all about how a new chocolate brand is introduced into a highly-competitive, distribution-compromised, and highly-volatile Chinese consumer market.
• choco-addicts will appreciate the gentle distraction the book provides over the course of several hours from their chronic all-consuming chocolate affliction. They’ll lay off their cocoa addiction for a little while, at least.
• those who toil aimlessly for similarly-large MNCs or other FMCG (Fast-Moving Consumer Goods) corporations or who are planning their own Chinese punch-up might apply a relevant lesson or two from the Thirty Years Chocolate War.

Again, thanks to Dan for the referral. Still batting 1.000, Cap.

UPDATE: How could we forget Mars’ Dove Bar in the same premium category as Ferrero-Rocher’s? Silly me.

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