Hershey takes a bite out of China's huge candy market

CBS

(CBS News) Hershey has been making and selling chocolate for more than a century, but in places like China the company is just getting started. Interestingly, this classic American brand is changing to appeal to customers on the other side of the world.

Sales of chocolate, candies and gum have jumped nearly 50 percent in China over the last five years. The country's craving for chocolate, nearly $2 billion's worth a year, is too sweet for Hershey to ignore.

Far from its Pennsylvania roots, Hershey has just built its first research and development center in Asia, on the outskirts of Shanghai.

Qingbin Yuan heads Hershey's "innovation center," and said that its mission is to "try to develop product that is tailored to the taste of the consumer, the local consumer."

Hershey's research shows the Chinese prefer salty flavors, nuts and chocolate that is not as sweet as what is sold in America. So based on local consumers taste and preferences, they create products that are unique to China and not sold in the United States.

Hershey even fine-tunes the amount of chocolate needed to coat a wafer to fit what the Chinese like most.

The "Lancaster" candy that Hershey launched this June in three Chinese cities was actually created in the U.S. before the new center in China existed. It's a bite-sized, milk-based caramel.

"We started Lancaster with a more western mentality around caramels, and that's quickly evolved to really a milk candy that has the functional eating experience that is reminiscent of what the Chinese consumer likes and is excited about," explained Steve Schiller, who runs the "Global Sweets and Refreshments" center in Pennsylvania.

Perhaps innovator and founder Milton Hershey had an inkling that this country would be important --- he first shipped caramels to China in the late 1800s.