Chinese chocolate market hit by price hikes and health concerns

12-Jul-2016 - Last updated on 13-Jul-2016 at 14:21 GMT

Taste and texture are important to Chinese consumers

Health concerns and price hikes are taking their toll on the Chinese chocolate market – with value and volumes sales in decline according to analysts.

Almost 60% of chocolate eaters in China limit their consumption as they believe it will cause weight gain, a study of 2,907 Chinese internet users aged from 20 to 49 has revealed.

The new Mintel report states that 47% of chocolate eaters perceive dark chocolate to be “high in calories,” while 44% perceive dark chocolate as being “good for health.”

“This indicates [Chinese] consumers do not understand the health benefits of dark chocolate,” said Mintel senior research analyst Karen Liu.

Mintel suggests confectionery businesses could help mitigate concerns over the sugar content of chocolate by replacing refined sugar with natural sweeteners. Companies may also benefit from promoting the quality of their ingredients, said Mintel analyst Marcia Mogelonsky.

Gifting potential

“They should pay attention to flavor and texture, both of which are important to Chinese consumers, and be sure to explore the potential of the gifting segment, which is a large part of the Chinese market,” she added.

But Mintel warned chocolate had lost some of its attractiveness as a gift because consumers were looking for healthier gifting options.

“Companies should encourage chocolate consumption in casual occasions in daily life to seek growth opportunities,” Liu said.

Price increases

Price increases were also impacting Chinese chocolate consumption, according to the Mintel report, which said volume and value sales in China have declined since last year.

In a worst-case scenario, Liu suggested total China chocolate market retail value might only be worth 26.4bn RMB ($3.9bn) in total by 2021, compared to 27.5bn RMB ($4.1bn) this year.

Foreign brands dominate Chinese market

China’s chocolate market is dominated by foreign brands, with Mars accounting for 44.4% of market share, according to Mintel.

Among the top 10 companies that account for 81% of value share of the Chinese chocolate confectionery market, Jiangsu Liangfeng Food Group is the only domestic company, and its market share was just 0.9% last year [Mintel].

“Foreign chocolate brands have a greater advantage to compete in this category,” Liu said.

The Mintel report shows that 66% of Chinese consumers prefer buying chocolate online from established brands. And 48% of chocolate eaters said they are willing to pay a premium price for chocolate from well-known origins such as Belgium and Switzerland.

“Consumers are not just looking for low price when buying chocolate online,” Liu added. “Chinese consumers take brand as an important consideration factor.”