Selling Chocolate and Coffee to China

Introduction

In his 2010 book, Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China’s Consumers, Lawrence L. Allen describes China’s economic rise in the late 20th century and the battle to sell chocolate there that ensued. We’ll use the former Hershey and Nestlé executive’s book to compare and contrast with the rise of coffee that has occurred at the same time. Chocolate and coffee have many things in common: they’re both cash crops, grown in similar areas, they’re both acquired tastes, and they are both luxury goods, offering more of an experience or treat than actual nutrition. While in China the coffee shop market is growing (with US, UK, Taiwanese and Korean shops), we will focus on the largest, Starbucks, with a 31% market share and Nestlé, which has cornered the at-home coffee market (Patti) Through the lens of the adoption of chocolate and how cultures incorporate new tastes, we can examine how coffee makes inroads in China. In both cases we see how understanding both cultural history and current aspirations is essential to selling products and how food is inherently tied up in a global cultural context.

Chocolate in China

To provide context for selling Chocolate in China, Allen provides a brief history of China’s transformation from a communist “command to a market-socialist economy” (1). Allen begins in the 1950’s, outlining Mao’s great leap forward in 1958, the famine that ensued and the Great Cultural Revolution (12-13). Then, in the 1970’s, “China emerged in the world scene a broken country”, led by Deng Xiaoping through the Four Modernizations.

This short-sighted history of the country, beginning less than 60 years previously, makes it easy to ignore the millennia long culture that shapes consumer tastes for coffee and chocolate. While Allen mentions how China’s population was seen as a market for English textiles in the 1800’s (9), but otherwise fails to mention China’s history as a global trade powerhouse for millennia before. China contained the silk road, provided Britain with tea, and acted as an regional political powerhouse as other governments paid tribute to the emperor (Griswald). While Allen makes it sound as though China discovered the outside world for the first time, it’s opening in the late 20th century was a return to the country’s former status after a 50 year hiatus. Seeing this culture as extremely “new” obscures many opportunities and challenges.

The changes in China’s economic structure that Allen outlines highlights how critiques of capitalism and globalization ignore China.In Robert Albritton’s essay, “Between Obesity and Hunger: the Capitalist Food System” he argues that capitalism creates a situation in which people are either obese or starving. “One quarter of it’s people suffer from frequent hunger and ill health generated by a diet that is poor in quantity or quantity or both” Albritton laments, while another ¼ of the population suffers from obesity (342). Albritton draws on examples of how United States subsidies negatively affected Mexican corn farmers and other American neighbors. It ignores, however, how China and other Asian countries have benefited from globalization. Before opening to the world, many people in China were starving, which can hardly be blamed on capitalism since the government was not taking part in it. Now, world poverty is at an all time low, mostly due to rising incomes in China (Economist). This story of globalization provides the setting for coffee and china to take hold among China’s new middle class.

As China has reopened to trade, Allen outlines the phases chocolate and, thus, I will argue coffee navigated. The 80’s formed an “experimental phase”, the 90’s formed a “critical-mass phase” and the “breakaway phase” leading up to the present (14). These “twenty-five years has turned some 300 million of its 1.3 billion people into ravenous consumers” (3). Describes 50 million people’s consumption as “fully modern”, 300 million as similar to what we saw in the 20th century and 100 million as the decade before.

 According to Allen, consumers thirty years ago were “‘chocolate virgins’, their taste for chocolate ready to be shaped” by chocolate companies (1). The phrase ‘chocolate virgins’ is highly problematic due to its sexual nature as well as a view that the west is more mature. It also implies that China is a entity with it’s tastes pure, untouched, and ready to be exposed to new flavors, eager to accept them. This hides the truth that, far from “virgin”, Chinese consumers have and had their own flavors. While most had not tried chocolate, they had their own deserts and desert flavors. Rather than a flavor to be discovered, Chocolate is actually an acquired taste.

Allen outlines the difficulty in selling Chocolate to Chinese consumers, limited by transportation infrastructure and retail opportunities. First, infrastructure had to develop to ship relatively fragile candy bars across a vast country. Then, big chocolate had to get consumers to actually purchase. In general, “70 percent of chocolate is purchased by consumers on impulse”, a proposition that was hard to sell in China (31). Before the reforms, all of China’s stores were state owned and even peddlers were non-existence. In the 1980’s most stores were “wet-markets” with tanks of fish, animals and open goods sold by weight (34).

As China’s retail sector developed, chocolate companies positioned it as a gift while they worked on winning over consumers to a taste they would purchase for themselves. Since chocolate was a luxury item when it first arrived in 1980’s, it could mostly be justified only as a gift. In positioning chocolate as a gift, companies leveraged gifting’s “important role as a social facilitator within the society” (25). Chocolate’s emphasis on gift-giving at the early stages boosted sales: to buy chocolate as a gift, you need not enjoy chocolate, just be willing to pay the price (Allen 25). Meanwhile, chocolate companies tried to “develop the palates” of young consumers “whose tastes were not shaped by decades of limited food choices” (27). Rather than adopt chocolate to the current tastes of Chinese consumers, the companies focused on getting consumers to enjoy the current taste.

 (Mars Chocolate 2012)

We see both the gift-giving power of chocolate and it’s appeal to youth in this Dove campaign for a Chinese couple’s holiday. Mars, the maker of Dove, got blogger Ma Jin on board to create a carriage for his girlfriend. This ad positioned the chocolate as extremely romantic, leveraging China’s love for social media and their couple’s culture, as well as the tradition of gift giving. Sales of the candy soared.

One selling point chocolate has in the US that it still lacks in China is the allure of magic. Although the west has seen chocolate as a magical item for as long as they have been eating it, that perception of magic is culturally destroyed and far from inherent in the product itself. It’s remarkable that we give such special powers to “chocolate” as a class when the items we refer to range from minimally processed drinks to industrial bars with minimal cocoa. According to David Benton in “The Biology and Psychology of Chocolate Craving,” “There is no convincing evidence that there are substances in chocolate that act directly on the brain in any convincing manner” (205). Yet, chocolate is “by far the most common food item that people report they crave” (205). Lacking the evidence of any effect of chocolate on the brain, consumers must be convinced of the effects or wooed to buy chocolate for other reasons.

Among those reasons, for both chocolate and coffee, involve the effects of sugar as well as food as a mark of status. In Sweetness and Power: The Place of Sugar in Modern History Sidney Mintz traces the path of one powerful substance in chocolate (sugar) from medicinal, to luxury, to commodity good. Sugar, he says, “embodied the social position of the wealthy and powerful,” as a means to “validate one’s social position” (166-167). We see these same effects with chocolate, especially when used for gifting, and to an even larger extent with coffee. 

Coffee

While Chocolate offered a similar product as in the US, fit within the tradition of gift giving, coffee created a  new experience through their retail outlets. As the big chocolate companies struggled with distribution chains, Starbucks sidestepped the lack of retailers by opening coffee houses and took on the logistical hurdles directly. The high price of a coffee at Starbucks in China reflects high in-country transportation costs and rent (Schiavenza).

Meanwhile, instant coffee became extremely popular among at-home drinkers, in a market that rode off of the success of coffeehouses and answered Chinese consumers needs. Chinese workers report being overworked and strapped for time. Most own a tea-kettle but not a coffee maker or other coffee-making apparatuses. For companies selling coffee retail, instant coffee takes away many of the logistical challenges related to freshness, and the total quantity to be transported is greatly reduced. Due to success in China, instant coffee has been rising at a rate of around 10% a year globally. One of the same companies, Nestlé, that battled for chocolate dominance in China is winning the coffee market. According to the Smithsonian Magazine, “In 2012, Nescafé accounted for 50 percent of the global Ready to Drink market (a mixture of coffee, milk and sugar) and 74 percent of the instant market” (Smith). 

Unlike chocolate, consumers purchase coffee for immediate consumption, so companies doctored their products more directly. Circumventing the taste of coffee meant altering it through through the addition of cream and sugar. Instant coffee comes “3-in-1”, with powdered creamer and sugar. Canned coffee drinks come flavored. At Starbucks, sweet lattes and Frappucinos predominate and green tea flavoring and red beans seem familiar to consumers (Cunningham).

As chocolate co-opted gift giving, Starbucks emphasized their alignment with Chinese cultural values. Most directly, they say their retail experience resembles that of “ the old teahouse of China—a gathering place and a community living room.” Their mission for corporate social responsibility also aligns with China’s aspiration to develop a “harmonious society” and the expectation of businesses to give back to the community. These ideological similarities are subtle but none the less important, especially given the important role government plays in commercial success in China (Starbucks). 

This connection to traditional values and customs can be taken too far, as we see in the case of the forbidden city. Starbucks moved in, replacing a traditional teahouse.

Starbucks_at_the_Forbidden_City-1

As we see in this image, the Starbucks logo seems out of place and garish on the traditional architecture; where it anywhere else, this would seem a clichéd parody of Chinese culture. Furthermore, Starbucks did not mean to replace the teahouse culture. Instead it offers a distinctly new, westernized experience. Superimposing the new on the old smacks of cultural imperialism in a way that building new stores in new shopping centers does not. Indeed, this Starbucks was met with ire from consumers and eventually reverted to a regular tea house, which proved more popular (New York Times). 

The example of the forbidden city highlights that Starbucks is an American brand and sells a “western experience” increasingly attractive to the new middle class. Rather than just a coffee company, “Starbucks is… a synonym of a universal quality life, a “modern” way of living, a positive life attitude, or an icon of a pioneering, progressing, transforming modern Chinese city.” They embody the aspirations of a changing society and a system of values, offered by America in globalization. Rather than being forced from without, consumers are eager to take part in these values, even at a cost higher than in the United States ($27 for a grande latte if adjusted for median income) (Atlantic). Starbucks describes how Its “inspirational, progressive, professional and intellectual image has been widely accepted”, perhaps more the beverages themselves, as a Forbes article reported seeing many half finished drinks abandoned by consumers “who appeared to want the cafe experience more than the coffee itself”.

aS1sHRL2-2048-1367 (1) 2

Starbucks adopted its retail stores to these different expectations of its product, both fitting Chinese values and inspiring new values. It’s first stores were located in prominent, high-traffic locations, spreading awareness. They feature additional seating, as to-go beverages are less common. Starbucks’ new flagship store in Chengdu epitomizes the values its customers aspire to: three stories tall, with a “small lot” coffee bar, ample seating and a third floor with a large space for gathering. Visually, the store could exist in America, with similar branding and ample use of glass. Certain touches reference traditional architecture: the use of terra cotta (including in the ceiling, open for stargazing) and the shape of the roof.

Starbucks further leveraged their position as a Western brand with the “Let’s Merry” campaign for Christmas 2011. While China has no history of celebrating Christmas, it’s become an increasingly popular non-religious among affluent young people. The ad features a young woman eating a cake pop at Starbucks, texting her lover on her iPhone. A soft melody dances in the background, and she tells her boyfriend, “a little rest in the afternoon”, describing what Starbucks offers it’s leisure focused middle class consumers. Another girl turns around to find her boyfriend waiting with a bear balloon and flowers, who found her via the Starbucks app. Through the coffee companies, consumers can experience a new holiday and way to take their relationship to the next level. This as leverages the power of gifts, youth culture and “exotic” Western holidays.

Coffee has less of a magical sensation in America and was thus marketed less magically. Unlike chocolate, whose “magical” ingredient of theobromine seems mysterious, and whose antioxidants are of questionable value, coffee is well known to be caffeinated and draws much of it’s power as a product from that.  Traditionally, these ads have “championing heroic office workers and their dreams of advancement in a ruthlessly competitive job market “ including one featuring the lead actress of a hit TV series, which celebrates the triumph of a poor village girl who becomes the head of an international company (Clode). Now, Nestlé looks to rebellious figures to differentiate itself from it’s rival, Maxwell House. A recent ad, “Live Out Your Boldness” features literary icon and dissident blogger Han Han. One of Time’s most influential people in 2010, they described him as “a willing participant in a process that channels the disaffected energy of youth into consumerism” (Clode).

This ad (found here) depicts Han Han on a road trip through China, encouraging youth to have a positive attitude, live authentic lives and drink coffee in scenic locals. The video depicts an upbeat excitement, fueled with indie music. Panning cameras add excitement to the images. Meanwhile, the red cups of coffee contrast lush scenery. The visual and audio elements of the ad show the zest drinking coffee can add to your life, fueling travel, revolutionary thought and other values of an aspiring middle class.

 Conclusion

The tactics of both coffee and chocolate in China highlight the importance of culture in the luxury goods we choose to consume and how companies must understand the traditions of culture and its aspirations. They both reflect a globalizing of desire, accompanying globalization of attitudes. Far more than taste itself, aspirations led to the adoption of these goods. Far from “naive” or “untouched”, Chinese consumers approach consumption with refined tastes and attitudes which companies must meet in order to succeed.

Works Cited
Albritton, Robert. “Between Obesity and Hunger: The Capitalist Food System.” Food and Culture: A Reader. Ed. Penny Van Esterik and Carole Counihan. New York: Routledge, 2013. N. pag. Print.
Allen, Lawrence L. Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China’s Consumers. New York: American Management Association, 2010. Print.
Clode, Jerry. “Brands Like Nescafe Are Tapping Rebellious Figures in China.” Advertising Age Global News RSS. N.p., 19 Jan. 2012. Web. 06 May 2015. <http://adage.com/article/global-news/brands-nescafe-tapping-rebellious-figures-china/232198/&gt;.
Clode, Jerry. “Brands Like Nescafe Are Tapping Rebellious Figures in China.” Advertising Age Global News RSS. N.p., 19 Jan. 2012. Web. 30 Apr. 2015.
Cunningham, Maura Elizabeth. “China’s Coffee Culture.” Forbes. Forbes Magazine, 28 Apr. 2010. Web. 06 May 2015.
Griswalkd, David. “Trade and the Transformation of China.” Cato Institute. N.p., 06 Nov. 2002. Web. 06 May 2015.
Mintz, Sidney Wilfred. Sweetness and Power: The Place of Sugar in Modern History. New York, NY: Viking, 1985. Print.
Nehlig, Astrid. “The Biology and Psychology of Chocolate Craving.” Coffee, Tea, Chocolate, and the Brain. Boca Raton, FL: CRC, 2004. 205-18. Print.
Schiavenza, Matt. “Why Is Starbucks So Expensive in China?” The Atlantic. Atlantic Media Company, 06 Sept. 2013. Web. 06 May 2015.
Smith, K. Annabelle. “History, Travel, Arts, Science, People, Places | Smithsonian.” Smithsonian Magazine, 24 June 2014. Web. 06 May 2015.
“Starbucks Closes Coffeehouse in Beijing’s Forbidden City.” New York Times 15 July 2007: n. pag. Print.
“Starbucks in China.” Starbucks. N.p., n.d. Web. <http%3A%2F%2Fwww.starbucks.com.cn%2Fen%2Fabout%2Finchina.html>.
“Towards the End of Poverty.” The Economist. The Economist Newspaper, 01 June 2013. Web. 06 May 2015.
Waldmeir, Patti. “Coffee Chains Brew Robust Future in China – FT.com.” Financial Times. N.p., 29 Dec. 2014. Web. 30 Apr. 2015.
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