INDIVIDUAL PROPOSAL

Koko Black in Chinese market

Qingyan LI
Student ID:28334922
1.0 Executive Summary
Chocolate originated in Europe, with the continuously improvement of Chinese people, as
a nutrition, health, high-end consumer goods, more and more domestic consumers love and
accept the growing market demand, the chocolate industry has become China Food
industry in the rapid development of the industry. This paper aim to bring Koko Black,
which is an Australian chocolate brand, entering to Chinese market, and also analyze
Chinese chocolate market nowadays situation through internal and external environment.
Table of contents

1.0 Executive Summary................................................................................................................... 2

Table of contents ............................................................................................................................. 3
2.0 Company name and details........................................................................................................ 4
3.0 Industry Background ................................................................................................................. 4
3.1 Chocolate Industry Overview ................................................................................................ 4
3.1.1 Bargaining Power of Suppliers ....................................................................................... 4
3.1.2 Bargaining Power of Buyers .......................................................................................... 4
3.1.3 Threat of Substitutes ....................................................................................................... 4
3.1.4 Industry Rivalry .............................................................................................................. 5
3.1.5 Threat of New Entrants .................................................................................................. 5
4.0 Internal Analysis........................................................................................................................ 5
4.1 SWOT Analysis of Koko Black ............................................................................................ 5
4.1.1 Strength .......................................................................................................................... 5
4.1.2 Weakness ........................................................................................................................ 6
4.1.3 Opportunity..................................................................................................................... 6
4.1.4 Threat.............................................................................................................................. 6
5.0 External Analysis ...................................................................................................................... 6
5.1 PEST Analysis of Chinese chocolate market ........................................................................ 6
5.1.1 Politics ............................................................................................................................ 6
5.1.2 Economics ...................................................................................................................... 7
5.1.3 Social .............................................................................................................................. 7
5.1.4 Technology ..................................................................................................................... 7
6.0 Conclusion ................................................................................................................................. 8
7.0 Appendix ................................................................................................................................... 9
7.1 Group Members ..................................................................................................................... 9
Reference:...................................................................................................................................... 10
2.0 Company name and details

Koko Black is an Australian chocolate brand which known for its high quality and delicious
chocolate and luxurious desserts. In order to achieve the highest standards of quality, Koko
Black uses freshest cream, butter and fruit mud to maximize the taste of chocolate (Koko
Black Career, 2017).

3.0 Industry Background

3.1 Chocolate Industry Overview

3.1.1 Bargaining Power of Suppliers
Low. As the huge number of potential consumer in Chinese chocolate market, the world's
leading chocolate manufacturers will focus on China (Allen, 2008). From the "market
share" and "consumer loyalty" two indicators can basically determine the basic situation of
China's chocolate market which means domestic brands is difficult to compete with (Buffy,
2011).

3.1.2 Bargaining Power of Buyers

Medium. Chinese chocolate's main consumer group is 20-25 year old unmarried youth that
have low purchasing power (Li & Mo, 2016). Chocolate products are containing fat and
sugar, most of young people are worried about their weight. Therefore, a low-fat, low-
sugar chocolate can meet the needs of young consumers’ concerns, which could increase
consumer purchases frequently and improve the overall product sales rate (Luo, 2009).

3.1.3 Threat of Substitutes

High. Faced with strong competition from other international brands such as lowney,
Cadbury, and Rowntree (Doherty & Tranchell, 2005). In addition, there are many low-end
markets facing competition from small businesses (Jury, 1999). In the face of China's
domestic chocolate industry pattern will be with the international environment and
domestic microclimate changes, such as increasingly competition fierce, brand
concentration and monopoly market share (Squicciarini & Swinnen, 2016).

3.1.4 Industry Rivalry

Medium. At present, the competition of chocolate category enterprises in China can
roughly divided into four camps: high-end chocolate foreign brands, high-end chocolate
market that can easily change the current brand structure, local brand, and import, joint
venture brand (Cui & Liu, 2000)

3.1.5 Threat of New Entrants

Medium. Due to the high pricing, compared with the local chocolate products, Koko Black
may have its disadvantage. There are too many brands in Chocolate market, but small
number of new products, which cause a fierce competition (Wood & Grosvenor, 1997).
Koko need to maintain the original market share, internet advertising could be an easy way
to broad brand (Kazemi & Esmaeili, 2010).

4.0 Internal Analysis

4.1 SWOT Analysis of Koko Black

4.1.1 Strength
Koko Black is a small Australian company, the capital chain is short, funds run lively, and
investment is small.

Using hand made process and the international advanced research and development, small
test production.
Their products do not use preservatives, man-made additives, vegetable oils or palm oils
(Koko Black Ingredient, 2017).

4.1.2 Weakness
Advertising costs are high, small number of different style production.

Chocolate is a high-calorie food, which may not suitable for health.

Due to the high price positioning and product costs, consumer groups may limited.

4.1.3 Opportunity
Chinese young people account for a large proportion of the total population and have great
market potential (Li & Brown, 2012). Foreign-funded enterprises have the capital
advantage. Foreign-funded enterprises have a more advanced management system and
management model. Foreign investors enjoy certain political benefits (Zhang etc., 2000).

4.1.4 Threat
Consumption time is limited and not continuous. Chocolate culture in the East is not long
enough (Grivetti & Shapiro, 2011). Increasingly competitive among domestic chocolate
market brands.

5.0 External Analysis

5.1 PEST Analysis of Chinese chocolate market

5.1.1 Politics
Government and policy are stable. China is an important member of the WTO that enjoy
the multilateral unconditional MFN treatment (Bown, 2010), and also have a stable tariff.
Chinese management system and competition system are clear. Reform and opening up
policy, the support of Chinese multinational companies (Mazumdar, 1998).
5.1.2 Economics
China has a continuously growing GDP, which is conducive to the promotion of increased
consumption of chocolate. With the increase in overall income, consumers would prefer to
improve the quality of life, chocolate, nutrition and leisure consumption of this category is
increasing, the consumer area is widening (Li & Mo, 2016).

2010-2015 Chocolate Sales in China

16.00% 200

14.00% 180
160
12.00%
140
10.00% 120
8.00% 100

6.00% 80
60
4.00%
40
2.00% 20
0.00% 0
2010 2011 2012 2013 2014 2015

Sales (100 million RMB) Year-on-year GDP growth

(2016-2022 Chinese chocolate market investment strategy research report)

5.1.3 Social
The number of traditional Chinese families is decreasing, and the family gradually
developed to small-scale (Logan & Bian, 2003), so that chocolate business concerns shift
from price competition to product quality improvement and packaging design.

5.1.4 Technology
The chocolate market is currently facing three major problems: high prices, differences in
taste, and supply chain shortages (Sondhi & Chawla, 2017).
Koko Black has a mature supply chain, the product of the production technology continues
to improve.

6.0 Conclusion

Compared with other countries’ chocolate market, China's chocolate industry is a

latecomer. Chocolate market increasingly standardized and improved to speed up the
industry reshuffle. Although there are many international chocolate companies that entered
Chinese market already, as a handmade chocolate brand, Koko Black would still has its
special position in Chinese market.

Word account: 800

7.0 Appendix

7.1 Group Members

Student Name Student ID/email
Qingyan LI 28334922
Yanyue YANG 27594963
Steven Dellosa Sdel0001@student.monash.edu
Jingwen ZHENG 27514056
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