Table of Contents

CONTENTS

Foreword by Dr. A'ngel Cabrera and Dr. Mary Teagarden of Thunderbird School of Global Management ix

Acknowledgments xii

Introduction: One Country, Three Centuries 1

Chapter 1: China and Chocolate: East Meets West 9

China’s Road from Communism to Market Socialism 12

The Evolution of the Global Chocolate Industry 20

Chinese and Chocolate: A Foreign and Exotic Curiosity 22

The Size of China’s Chocolate Prize 28

Selling Chocolate 31

Selling Chocolate in China 33

Chapter 2: Ferrero Rocher: Accidental Hero 40

Ferrero’s Journey Along the Modern-Day Silk Road to China 44

China’s Emancipated Consumers 46

Establishing a Route-to-Market in China 49

Ferrero’s Struggle with Local Copycats 56

Did Ferrero Succeed in China? 62

Chapter 3: Cadbury: One Billion Consumers 70

A Brief History of Cadbury Chocolate 71

Cadbury China 73

Cadbury’s China Morass 76

Attempting to Turn the Tide 85

The Battle for Chocolate Bars 88

The Final Blow: A Breakdown of Leadership 91

Chapter 4: Hershey: Back to Basics 95

The Hershey Company 96

Hershey’s International Business 98

Hershey China 103

The First Season: 1995–1996 113

The Second Season: 1996–1997 120

The Third, Fourth, and Fifth Seasons: 1997–2000 126

The Sixth Season: 2000–2001 134

Under New Management 138

Epitaph 140

Chapter 5: Nestle': China’s Chocolate War Sideshow 141

A Brief History of Nestle' 143

Nestle'’s Arrival in China 145

The Birth of Nestle' China 151

Sweating the Assets and Reducing KitKat’s Cost 156

The Launch of Nestle' Wafer 159

In the Shadow of Nestle' Wafer 165

Nestle' Could Have Been a Contender 171

The Last Word on Nestle', Chocolate, and China 174

Chapter 6: Mars: A Well-Regulated Militia 176

A Brief History of the Mars Candy Company 179

Mars’s International Expansion 182

Mars’s China Market Entry 183

Mars Versus Its Big Five Chocolate Competitors 190

Mars’s Commitment to Market Leadership 193

Chapter 7: Going the Distance: China’s 10K Chocolate Race 201

The State of the Chocolate Market: 2008 203

The Threat from Local Competitors 213

Managing China’s Multitier Market Going Forward 220

Notes 225

Index 238

About the Author

Lawrence Allen is a former senior executive for both Hershey and Nestlé in China. He has spent more than 20 years building consumer brands for multinational companies in China.

Reviews

"Chocolate Fortunes captures the essence of China's fast-moving consumer market. It tells the story of the global chocolate industry's entry into China in a style which is captivating and informative. Allen presents a compelling story with personal anecdotes, historical perspective and some clear lessons for the future. Chocolate Fortunes is a delightful book to read that is strongly recommended for those seeking to understand this most dynamic of markets." --Lorna Davis, President and Chairman, Kraft Foods China

"a fascinating look at the process of establishing business connections in [China]" --Women's LifeStyle

"a scintillating glimpse inside one of the most hard-fought cross-cultural indulgence battles since the Opium Wars" --Global Times

"Allen focuses exclusively on China's nascent chocolate market, but he makes sure to write his book so the lessons learned by the five companies can be applied to other industries looking to break into an emerging economy." --Houston Business Journal

"For anyone thinking of bringing their product to the Chinese consumer market, or even simply interested in the cultural characteristics of the Chinese consumer, Chocolate Fortunes offers valuable, hard-won insight from a true industry expert. The branding and marketing case studies alone make this book a worthwhile read, but Allen's skillful prose -- which at times is as smooth and enjoyable as the chocolate he describes -- and deep understanding of Chinese culture and history make Chocolate Fortunes much more than just another business-in-China book." --Jing Daily (www.jingdaily.com)

"For anyone who is thinking of going into consumer products or food or retail in China (and who out there is willing to ignore 1.3 billion customers?) this book is a must read." --China Law Blog (www.chinalawblog.com)

"In Chocolate Fortunes, Allen describes these strategies in detail, offering a fair, informed and often fascinating assessment of where they succeeded and where they failed.... Chocolate Fortunes is a case study that delivers broad, transferable advice to Western corporations looking to move into one of the world's largest and most potentially lucrative markets. Offering unusual insight into the complexities of manufacturing and selling Western goods in China for Chinese consumers, the stories of the Big Five combine the emotional power of the cautionary tale with the practical precision of the how-to book. Far more elementally, Chocolate Fortunes is a helpful primer on basic business practice." --Knowledge@Wharton

"Informative, cautionary and essential, this book is a must-read for executives currently doing business, or planning to, in this most volatile and critical market." --Publishers Weekly