China chocolate brand Le Conte sold to Hollygee for $33m
The announcement came nearly year after China Foods sold Le Conte to Topps Properties.
According to the Hong Kong Stock Exchange, COFCO is the controlling shareholder of China Foods while Topps Properties is a wholly-owned subsidiary of COFCO property, and it is 45.67% owned by COFCO.
General Manager of Hollygee, Zhiteng Cheng, said in a statement that, even though Le Conte's sales had declined over the past several years, chocolate is still an important sector of the wedding candy market in China.
“Le Conte is still widely known among the Chinese consumers, and it remains its competitive edges in both domestic and international markets,” Zhiteng said.
Market analysts Mintel said the acquisition gives the brand a chance to target different purchase occasions to expand its business, as the new owner has established itself in the Chinese wedding gifting market.
Why Le Conte was sold?
According to Mintel, 52% of consumers in China purchased Le Conte in the six months to March, 2013. However, it dropped significantly to 2% in January, 2015.
In 2016, what was once the most popular brand in the country only accounts for 0.9% of total value share in the chocolate market.
“The main difficulties the company has been facing is to catch up with the consumer trend of going premium and to tackle the issues of the rising cost of production,” Shanghai-based Mintel food and drink research director, Laurel Gu, told ConfectioneryNews. “Cocoa prices have been increasing significantly over the past four years.”
“It is also difficult for Le Conte to go premium with an established mass-market brand proposition,” she added.
“As chocolate is a purely Western product, COFCO may also find it hard to compete with leading companies as well as the emerging new foreign players and therefore decide to strip off its chocolate confectionery business.”
Shanghai Euromonitor’s research manager, Jiaqi Du, added that, Le Conte also witnessed “strong competition” from other regional chocolate brands in lower tier cities in China.
“Le Conte does not have advantage in first and second tier cities,” she said.
Facing operational deviations
Du cited from various trade resources, saying that Le Conte also has experienced some deviations at the operational level, which hindered continuous development of the brand over the past few years.
Zhiteng claimed that the product development and operations of the brand also fell behind most international companies, like Hershey and Mars, since it has been around for a long time.
“Hollygee is a dynamic and entrepreneurial company,” he said. “We are able to develop innovative products with Le Conte’s knowledge and techniques of chocolate.”
Le Conte is expected to operate under a separate team under Hollygee, according to Zhiteng, as it targets different audience through different distribution channels.
Hollygee hopes the acquisition will help Chinese chocolate manufacturers compete with their Western counterparts in the domestic market.
COFCO is currently in discussion with Hollygee about the transaction, and is hoping Le Conte can resume its production before the Lunar New Year in late January 2017.