|M&M as Terracotta Warrior Credit: FITCH|
Chinese consumers traditionally prefer salty snacks, but the world's chocolate makers have been making converts -- and competing fiercely for market share -- in the high-stakes market that's home to 1.37 billion people. The local chocolate market has been growing 12% annually, according to Euromonitor International. China's embrace of chocolate has helped push up cocoa prices and contributed to fears of an international shortage. (Mars Inc., the maker of M&Ms. has warned the industry will need 1 million more metric tons by 2020 and is working on sustainable farming to boost yield.)
Meanwhile, Western brands have upped the ante in China by building factories and innovation centers, launching flashy campaigns, buying local chocolate makers and creating retail experiences like the M&M's store, which opened in August.
Mars, which also makes Snickers, has come out ahead, with a projected 39% of the Chinese market in 2014, according to Euromonitor. Its biggest hit is the Dove brand, which accounts for a whopping 34% of national chocolate consumption.
After the era of Chairman Mao Zedong, "when China's doors opened in 1979, you really had a billion people who had never tasted chocolate," said Lawrence Allen, a former Hershey and Nestlé executive in China. "It was a virgin market."
There were cultural differences too. China traditionally classifies foods as "heating" and "cooling," concepts not about temperature but about the effect on the body. Chocolate is a heating food, so it's ill-advised for summer.
Read more at Adage.