Almond Roca rocks it in China

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When most candy companies are ramping up for the Valentine’s Day and Easter crushes, Brown & Haley is also concentrating on New Year’s Day. In China.

Tacoma-based Brown & Haley, a century-old candy maker with 275 employees and an estimated $50 million in sales, has found unexpected fortune in the world’s fastest-growing market—greater China—which includes mainland China, Hong Kong and Taiwan, and now accounts for 20 percent of the company’s revenues. The company sells up to 1.6 million pounds of its buttery, crunchy, chocolate-covered Almond Roca candy during the Chinese New Year, which can fall anywhere between January 21 and February 20 on the Gregorian calendar. This makes it China’s second-most-popular gift candy behind Ferrero Rocher, and ahead of such global giants as Cadbury and Nestlé.

Breaking into the lucrative Chinese market can be tricky. Mattel shuttered its flagship Barbie store in Shanghai this year because of poor sales. Best Buy stores also withdrew. But consultants say the Chinese market remains a huge opportunity.

“China has 700 million people who are not really part of the modern market, but are just coming in,” says Sidney Rittenberg Sr., founder and president of Rittenberg and Associates, which advises U.S. companies operating in China. “It’s an enormous, undeveloped market.”

Brown & Haley’s story is a case of how one small company made it big in China. To be sure, the success involved more than a little luck. Roca happens to mean “happy family” in Cantonese, the gold foil in which the candy is wrapped represents wealth to many Chinese, and the red on Almond Roca’s packaging symbolizes good fortune. That happy coincidence makes the candy an appropriate purchase for New Year’s observances. Still, sales didn’t come without some smart strategic positioning.

While Almond Roca was made popular worldwide by American GIs during World War II, Brown & Haley officially moved into China in 1988, when it began offering its candy at the government-run Guangzhou Friendship Department Store. Despite modest success, as recently as 2003 the company sold only about $1 million worth of candy in the country. But then sales suddenly took off. The company won’t disclose precise figures, but its revenue from the China market is now estimated to be as high as $10 million a year.

What happened?

Working with a Chinese distribution partner, Brown & Haley made the decision to establish Almond Roca as a premium Western brand. The familiar candy in a can was packed inside a box to be more cost competitive. Elegant models promoted the product on jumbo electronic billboards, in elevators and on subway trains. This past year, the company wrapped Guangzhou’s busiest subway station in Roca pink for the Chinese New Year.

Buyers of Roca candy receive the kind of “gifts with purchase” normally associated in the United States with costly cosmetics. A Chinese consumer who buys $60 worth of Roca candy, for example, might receive a Roca-branded tea set or a glass candy dish decorated in pink and gold.

The decision to establish Roca as a premium brand occurred just as a huge market was developing in China for luxury Western products. “There has never been a time when people’s brand and taste preferences have been formed in such a compact time period,” says Brown & Haley COO John Melin. “You’ve got all these people who are educated, hardworking, aggressive and very entrepreneurial, and who aspire to the same kinds of standards of living and luxuries that we aspire to.”

This year, Brown & Haley started working with the leading TV shopping channel in Shanghai, offering half-hour segments devoted to Almond Roca. These high-end infomercials center on Roca’s history in the context of contemporary scenes that might show friends in a café discussing—you guessed it—Almond Roca.

Brown & Haley also sponsors what Melin describes as “red carpet events” that offer candy tastings accompanied by rock or classical music, depending on the venue. A huge hit at these events are the Roca Angels, young women dressed in sophisticated pink gowns. This past year, the company gave out samples to more than 600,000 Chinese citizens.

Last fall, Brown & Haley executives accompanied Governor Chris Gregoire on a trade mission to China with other Washington manufacturers, helping to boost Roca sales by 25 percent. “In China,” says Melin, “the people have a great respect for the government.”

The Tacoma candy maker has navigated the complex Chinese distribution system, focusing on its strongest market, Guangdong province, in southern China, and on its second-strongest (and fastest-growing) market in the east, Shanghai. Its distribution partner helps adapt the company’s strategy based on local buying norms. For instance, in Dongguan, a city of 7 million in Guangdong province, consumers prefer to give small gift baskets during the New Year, so the company works with gift store owners to co-brand the stores, using external signs and pink Roca wallpaper.

The partner assists in understanding cultural subtleties, such as developing the idea for the Roca Angels, an image of purity and virtue that Melin says would be hard to appreciate “unless you’re Chinese and in between the ages of 20 and 40.”

In 2008, when melamine in Chinese dairy products killed at least six children and made nearly 300,000 others sick, many products containing milk were taken off the shelves. Brown & Haley’s partner pushed the company to play up Almond Roca’s “Made in the United States” branding and advised it to use Western models.

The market demands nimbleness, but Brown & Haley sees its China sales increasing by 20 percent a year well into the future. “It’s almost as if the speed of the market is turning at five times the speed of the U.S.,” says Melin. “The opportunity is there. We just need to keep up.”

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