Global Processing

Lotte to take chocolate beyond China test markets

June 9, 2008
According to Reuters, South Korea''s Lotte Confectionery Co. plans to expand its chocolate sales in China this year beyond its test markets in three major cities to take advantage of surging consumer demand, a senior executive said recently.

Lotte, which last year set up a China venture with Hershey Co., will begin sales in several affluent coastal provinces, including Guangdong in the south and Jiangsu and Zhejiang in the east, mainly through supermarkets and hypermarkets such as Carrefour.

The company''s sales are now limited to Shanghai, Beijing and Tianjin.

Lotte had a 6.5 percent market share in Shanghai and 7.7 percent in Beijing as of December 2007, only two months after its first product launch, the company said, citing AC Nielsen data. It gave no sales figures or forecasts.

China''s 6.46 billion yuan (922 million) chocolate market is growing more than 10 percent each year, fuelled by rising wealth and increasing Western influence on consumer tastes, according to market intelligence company Euromonitor International.

That compares with only 1 to 2 percent annual growth in Europe, making China an attractive target for major global chocolate brands including Mars Inc, Hershey and Cadbury Plc.

Lotte is targeting its chocolate mainly at China''s sweet-toothed youth while studying a possible roll-out of higher-end products for the much smaller but more profitable gift market.

Lotte and Hershey last year created an $80 million venture in China to jointly operate a chocolate factory near Shanghai, although they sell the output separately under their respective brands in the retail market.