The Swiss food giant acquired a majority stake of Hsu Fu Chi (60%) in 2011 for $1.7bn. The brand primarily manufactures candies, sweet cakes and nationally known cereal bar, Sachima (沙琪玛).
Villela Alex, Nestlé’s marketing officer, believes the new retailer opens a “new era of consumption experience” in China.
“Taste workshop inherits the traditional confectionery and adheres to the spirit of craftsmanship. The professional baking masters produce fresh pastries and candy like short cakes, handmade biscuits and crispy candies,” he said.
However, the idea of opening an experience retailer is not entirely new, Alex mentioned.
“Our local organization was inspired by the success of our KitKat initiatives in Japan… there is more into building brands today than simply advertising [them],” he said. “Our current confectionery CMO is in charge of our chocolate business in Japan, and he is making sure to transfer the knowledge and competency to our local market in China.”
Nestlé Japan currently runs a KitKat Chocolatory Ginza store in Tokyo.
However, unlike KitKat which resonates with Japanese consumers because it sounds similar to “lucky” in Japanese, Hsu Fu Chi has “a strong connection with Chinese New Year,” said Alex. “We make traditional confectionery products for that occasion and our goal as a company is to help perpetrate those simple but extremely rich traditions.”
‘Contemporary sense’ space
Nestlé said the Hsu Fu Chi store is a “contemporary sense” space using warm-colored wooden material to build the counter, and beige-colored paint for the wall.
Additionally, the light display on the ceiling was intentionally designed in a way to mimic the falling crumbs when someone tears a pineapple pie apart, the company said.
Hsu Fu Chi’s brand manager, Li Yanbin (李延斌), previously told confectionery trade body China Candy that young Chinese consumers care more about shopping experience.
“They want to taste and ‘see’ the flavor at the same time,” he said. “The taste workshop offers handcrafted tea to go along with our baked goods. We are also going to launch more confectionery products and other in-store services in the future to meet various consumer demands.”
Synergizing e-commerce and brick-and-mortar
Li said the Hsu Fu Chi store could also help increase the brand’s online sales, as some of the products are available on Tmall (天猫), owned by Alibaba. These items, however, are only delivered to seven cities in Guangdong Province, including Guangzhou, Shenzhen, Foshan, Dongguan, due to their short shelf life.
Nestlé said Hsu Fu Chi would soon open an online taste workshop to service national consumers.
“Only by synergizing e-commerce and brick-and-mortar stores can we increase our overall sales as a brand,” Li said.
Hsu Fu Chi has been holding a flat 0.9% share of China’s total chocolate confectionery market over the past three years, according to Euromonitor. Its owner Nestlé’s chocolate brands account for 8.1% share of the market.