(Corrects type of chocolate in sixth paragraph in story that originally ran June 11.)
June 11 (Bloomberg) -- Godiva, a maker of luxury Belgian chocolate, plans to double its boutique network in China in 2012 as consumers there develop a taste for fine cocoa.
The 86-year-old chocolatier is set to open about 15 shops in the country, bringing the total to about 30 in the three years since it expanded into China, Chief Executive Officer Jim Goldman said in an interview at the Chocovision conference in Davos, Switzerland. Godiva may have 100 Chinese stores in three to four years, he said.
“China is less than 5 percent of our revenue, but it’s the fastest-growing piece of the puzzle,” Goldman said. “Over time, we’ll be in the hundreds of stores in China, but we also know that the Chinese use the Internet and the commercial aspect of the Internet is becoming more of a factor.”
Consumers in China spent about $1.1 billion on chocolate last year, and the market is set to have annual growth of 11 percent from 2010 to 2014, according to market researcher Mintel. Godiva, which Turkey’s Yildiz Holding AS bought for $850 million, will have sites in 10 Chinese cities by the end of 2012, according to Goldman.
Godiva is expanding to deliver online orders of chocolate and other confectionery products by van in Shanghai, where the company also operates a cafe that sells baked goods and wine in addition to chocolate, according to Goldman. Unlike Western countries where milk chocolate is more popular, Chinese consumers are opting for dark chocolate, partly due to its healthier image, he said.
Mars Inc.’s Dove chocolate is the biggest brand in China with a 43 percent share of the market in 2010, according to Mintel. Closely held Ferrero SpA, maker of Nutella chocolate spread, had an 8 percent share, followed by local Chinese brand Le Conte at 6 percent.
Chinese shoppers are buying both for their own consumption and also for gift-giving, particularly around key holidays such as the Chinese New Year, Goldman said. Godiva has sought to cater to local tastes, introducing dragon-themed chocolates for the current Chinese zodiac year and also its own twist on moon cakes traditionally given during the Mid-Autumn Festival.
“Godiva has always been a premium brand and it’s something very appealing given Chinese sensibility about gift-giving and appearance,” said Marcia Mogelonsky, an analyst at Mintel in New York.
Godiva sells gourmet coffees, truffles and fancy chocolates in more than 70 countries. In China, a box containing a selection of chocolate goes for 1,350 yuan ($210), while a 24-piece box of truffles costs 660 yuan, according to the chocolatier’s Chinese Website.
Global sales of premium chocolate are growing faster than the total market and may be worth about $8 billion a year, according to Mintel. Godiva’s 2012 revenue is set to rise at a similar pace to the 15 percent achieved each of the past two years, Goldman said.
“This year we’re on a good pace as well despite the challenges in the world,” he said. The company’s duty-free business is “particularly dynamic.”
Godiva gets about half of its revenue in North America, with the U.S. its biggest market. Japan is its second-largest.
Godiva has “rather modest” exposure in western Europe, where the market is difficult, he said. The company’s business in Belgium and the U.K., where it gets most of its European revenue, is doing “fine,” Goldman said.
The company, named after the legend of Lady Godiva, was set up in 1926 in Brussels by Joseph Draps. The brand was introduced in the U.S. in 1966, the same year Campbell Soup Co. acquired a 33 percent stake. The soup maker bought Godiva outright in 1974.
Godiva’s boutique expansion in China will help it stay ahead of competition even as more western chocolate companies start to move into the market, he said. Most makers of mass chocolate are selling through grocery outlets, he said.
“You don’t see a lot of boutiques,” he said. “We’re starting to see some of the more well-known European brands with one or two stores. We’re leading the way and just need to stay ahead.”
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