New Hershey Brand Got Its Start in China -- But Don't Call It an Import

Lancaster Caramels Will Get Significant Ad Support In the U.S.

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The Hershey Co. announced on Thursday that it would launch a new brand of caramel candies in the U.S. in January called Lancaster, after debuting the brand in China earlier this year.

But don't call it an import. Rather, the U.S. launch is the culmination of a new global product-development process at the candy maker in which the same brand was created for two markets simultaneously. While the candies carry the same brand name and similar packaging, Hershey tweaked each one for the unique tastes in both countries.

Lancaster in the U.S.
Lancaster in the U.S.

In the past, Hershey had always launched brands in the U.S. first. The brand also represents the first time in 30 years that Hershey has launched a new product that is not a brand extension or acquisition.

"The work was done globally from the get go," Steven Schiller, Hershey's senior VP for global sweets and refreshment, said in an interview. "We have not used China as a test market. The products were developed concurrently."

In this respect, the process is different from the growing trend of "reverse innovation," in which companies create brands in the developing world before bringing them to the U.S. But Hershey's system of dual-market creation is similar in that it highlights how U.S. marketers are trying to gain efficiencies as they sell products to a global audience. Candy makers in particular have sought new growth opportunities overseas as more consumers in those markets move into the middle class, freeing up money to spend on snacking.

Lancaster in China
Lancaster in China

Pennsylvania-based Hershey began developing Lancaster more than two years ago when a strategic business unit identified global potential for a candy category that Hershey calls "comforting richness," Mr. Schiller said. "As we went further with it, we found that the biggest markets for this space exist in China and the United States," he said. The company went live in China first in part to highlight the growing emphasis it is putting on the market, he said.

Hershey development teams worked to tailor the product to fit the needs of each market, while keeping a "unified architecture and brand promise," Mr. Schiller said.

Both candies are individually wrapped. But the Chinese version -- which is made in the country's northwest region -- is made from a Hershey-trademarked process called "Nai Bei," which involves high quality milk and slow cooking. The goal is to position the candy in the Chinese "milk candy" category, which accounts for about one quarter of the nation's confectionary market.

By contrast, the U.S version – which will be manufactured in Canada -- is softer and has more buttery notes, as well as sweet and salty attributes that are traditionally associated with the caramel category. "We like to think of it as caramel being reimagined for today's modern consumer," Mr. Schiller said.

The U.S. and Chinese packaging is remarkably similar. Each version shows the same three images: A silhouette of a man (which refers to the company founder Milton Hershey); a cow (meant to signify quality ingredients); and a pot and wooden spoon (a reference to the candy's premium positioning), Mr. Schiller said. "Those messages are common across both markets," he said.

But there are differences. In China, the brand carries two brand names on the package: Lancaster (in English), and a Chinese moniker, "Yo Mon." The English name is a nod to the fact that western labels carry "a lot of cachet" in China, "particularly with the emerging class," Mr. Schiller said. Marketing plays up the "Nai Bei" candy-making process.

By contrast, U.S. advertising will allude to the story of Milton Hershey, whose original candy company was launched more than 120 years ago and called the Lancaster Caramel Co., a reference to Lancaster, Pa. The Hershey Co. originally made sweet chocolate for caramel coating before creating the Hershey bar, according to Hershey.

Lancaster's U.S. campaign is by Havas-owned Arnold Worldwide's New York office. The campaign will include TV ads and is expected to be "robust," a Hershey spokeswoman said. The Chinese advertising is handled by Arnold's Shanghai office, which worked closely with the New York team, Mr. Schiller said. "We are sharing resources across the creation of this whole proposition," he said.

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