China: adapt or die!

Kraft Foods had a problem—the Chinese weren’t buying Oreos. Introduced to China in 1996, the company’s most popular cookie saw only modest sales growth in China. By 2005, it controlled a mere 3% of the Chinese cookie market.

This was a shocking fall for the American King of Cookies. “When I worked in the U.S., it was the biggest mega-brand we had,” says Shawn Warren, who arrived in China in 2005 as the company’s newly assigned vice-president of snacks for Asia-Pacific. “Then, when I came over here, Oreo was just this really small brand.”

More than 25 million Oreos are eaten every day in the United States, but the company considered taking it off the shelves in the fastest-growing consumer market on earth. What could possibly be the problem in China?

It’s a question faced by many Western brands that over the past 15 years have flocked east, eager for the potential profits presented by a nation of 1.5 billion people with a ballooning middle class. But brands have often relied too heavily on the same approach that made them popular in the West. Same product, same marketing, just a different language. And it rarely works.

As Oreo learned, scoring success in China requires both exploiting the appeal that big brands have to Chinese consumers and adapting products for local tastes. This small insight led the cookie to go from a mere 3% to 15% in a few short years.

In North America, Oreo is synonymous with one flavor. But global tastes vary. While the US like the classic Oreo, in India for example, consumers think it’s not sweet enough. Conversely, Oreo discovered back in 2005 Chinese consumers thought our North American version of the Oreo was too sweet.

According to Kraft, there are 135 components to an Oreo cookie, including roastedness, burntness, bitterness and 132 other “nesses.” To create an “original” Oreo for China, Kraft tested more than 20 unique Oreo formulations.

But they didn’t stop there. More than anything else, it’s been Oreo’s willingness to alter its size, shape and flavor that led to its dominance of the Chinese cookie market. In China, the brand needed to be more innovative if it was to make an impact. The Chinese love wafer cookies, which make up a sizable proportion of the overall cookie market. So in 2006, Kraft launched the Oreo wafer stick with white crème of Oreo but in the form of a rectangle wafer and coated in chocolate. It was a home run, putting Oreo into the popular wafer category, extending its reach to consumers who before never gave it a glance. “It completely changed what an Oreo looked like,” says Warren. ”But it made the brand a lot more relevant to the Chinese market.”

It wasn’t just the cookies that needed to change. Kraft also found that its traditional package size was too big and expensive for the average Chinese consumer, who has less disposable income than North Americans.

For advertising, the company ditched the subtitled American ads in favor of a focus on kids, who are at the center of the Chinese family, and homegrown spokespeople like former NBA star Yao Ming.

All these strategies helped Oreo grow its market share by 10 times over the past five years.

Have you adapted your products for the Chinese market? Please share the details…