Cadbury In China Case Study

Introduction
Chocolate has been considered as an exotic product to Chinese consumers until 1970’s. Segregated for decades from the global market and brands, China shaped up to be the pivotal market for the global chocolate companies with its limitless market potential. Mars Foods was the first major confectionary to make its entry into the open Chinese market in the early 1980’s. At the present day, all 20 global chocolate giants have made their presence in the world’s largest consumer group.

Market Scenario: The Big Five
The big five dominate the chocolate market in China. Multinational heavyweights Mars Foods, Ferrero Rocher, Nestle control 65 % of the chocolate confectionary market. According to Euro monitor International, Ferrero Rocher

They made the mistake of lowering the prices of Kit Kat bars and other localised version of their confectionaries below that of rivals. Nestle value based ideology backfired with the Chinese consumers, who once had the image of chocolate as an exotic, luxury foreign product, made their purchasing decisions largely on the basis of brand and luxury packaging. Cadbury, owned by Kraft Foods have a market share of 3.8%, had their initial presence during the colonial era under the British.
Leading domestic brands LeConte, owned by COFCO, a massive Chinese food conglomerate holds 6.7% market share and Golden Monkey with 1.5% market. In spite of their aggressive effort to compete with their international competitors, they have been out- spent and out-marketed. Hershey’s, an American major made its entry into the Chinese market with an acquisition of 80% stake in Golden Monkey. The acquisition of the local Chinese firm will provide the necessary expertise on flavours that appeal to the local market for the American chocolate giant.
What Consumers

Over 40 years, with impact of internet and overseas travel, the Chinese consumers have unlimited exposure to high-end trends in the global market and demand a better lifestyle quality. Today, China’s chocolate market demands variety of product portfolio at different ranges and complex distribution strategies in the multitier retail market to cater the needs of different income groups, tastes and expectations across hundreds of millions of consumers.
Global companies like Mars Foods and Ferrero Roacher are best positioned to strive across the Chinese multitier market as they offer wide range of products, across different price ranges. For instance, Mars Foods can sell their leading brand of Dove chocolate bars, smaller in size at an introductory price for emerging consumers in second tier cities and higher priced Dove chocolate boxes in major cities, with more high-end consumers. These sort of competitive advantage as resulted in about 90% of the market share to the global chocolate