Luxury brands cash in on growth potential

A customer looks at the mooncakes at a Godiva shop in New York, Sept 19, 2013. [Photo/China Daily]

China's growing appetite for luxury brands has enticed the world's boutique chocolatiers into the marketplace.

Godiva, the prestigious chocolate maker from Belgium, opened a flagship store in the affluent district of Xintiandi in Shanghai in June. The privately owned company now has 15 stores in the city and 40 outlets in the rest of the China, including Beijing, Guangzhou and Shenzhen, as well as Qingdao, Wuhan, Chongqing, Chengdu and Ningbo.

While the luxury brand does not have to release sales figures here, Andy Farrow, managing director of Godiva China and Pacific Rim, was happy to talk about expansion plans.

The chocolatier is already looking to move into key third-tier cities, as well as some parts of western China. "We hope to have at least 100 stores in China," he said.

Online sales will also play a major role in the company's business. Customers will be able buy products on e-commerce sites such as Tmall.com, part of the Alibaba Group Holding Ltd, and JD.com.

"We are also looking at other platforms," Farrow said. "China is a vast country and we cannot open a boutique in every city. We have already reached more than 300 cities with our e-commerce plan.

"The growth of e-commerce in China is a lesson to the whole world on how it should be done. I expect the sector to grow exponentially over the next five to 10 years," he added.

Other major luxury brands have also moved into the sector. Lindt & Sprungli, which is based in Switzerland, opened a store in China in 2012.

Sales have grown by 50 percent annually in the past few years, although the company has yet to release detailed financial figures for China.

Debauve & Gallais, which was founded in 1800 and was the official chocolatier to Emperor Napoleon and of King Louis XVIII in France, is another key player.

The family-owned company, which is based in France, entered the Chinese market in 2005 when it opened an outlet in Nanjing. A year later, it invested $336,000 on a boutique store in Beijing. Since then, Debauve & Gallais has moved into Chengdu and Qingdao.

Just 400 grams of Debauve & Gallais chocolate can cost as much as 3,500 yuan ($546).

"Usually we do not study the population or the consumption habits of ordinary consumers in a certain market. It is only the tip of the pyramid we care about," Hong Lu, president of Debauve & Gallais China, said. "We believe that the places which have Hermes should see Debauve & Gallais."