Source: ForbesKraft finds a way to sell Oreos and other old favorites to new Chinese customers.
For years Oreo cookies were a hard sell in China. Consumers found the traditional U.S. version of the Kraft Foods cookie too sweet and, at the equivalent of 73 cents for 14 cookies, too expensive. The package was too big for small Chinese families.
Like many global companies, Kraft had to dress a signature product differently to gain acceptance in the world's most populous market. Kraft International President Sanjay Khosla can boast of success. The snack-size (and less sugary) Oreo accounted for 7.3% of the Chinese cookie market for the 12 months through September. That was one-third higher than in 2008. ACNielsen says Kraft's 22% slice of the $1.6 billion that the Chinese spend on cookies is nearly three times that of runner-up Tingyi of Taiwan. International rival Nestlé has a ninth of Kraft's share.
Cookies might seem a nutritional nightmare to American parents, but in China, beset by food-safety worries and still short on calories for its poorer folk, they can be a godsend at the convenience counter. Kraft has made another offering: Jai-Gai (translation: "good calcium"), a favorite because it promises the calcium equivalent of three glasses of milk in each 1.5-yuan (25-cent) pack.
"We view China as a market that has taught us how to focus, how to differentiate and how to innovate," says Khosla, who joined Kraft in 2007 from Fonterra Co-operative Group, a multinational dairy in New Zealand. Before joining Fonterra in 2004, Khosla spent 27 years with Unilever overseas. A new cookie r&d center at Suzhou Industrial Park, near Shanghai, will plot future treats.
China is the most important country in Kraft's developing-markets division, and Khosla has built up a product development and distribution operation managed by Chinese. The division is anchored by the Oreo brand (which has been extended into wafers, soft cakes and a strawberry creme flavor) and by Tang, the usually powdered orange drink that was hot in the U.S. sometime before the first moon landing.
Like many global companies, Kraft had to dress a signature product differently to gain acceptance in the world's most populous market. Kraft International President Sanjay Khosla can boast of success. The snack-size (and less sugary) Oreo accounted for 7.3% of the Chinese cookie market for the 12 months through September. That was one-third higher than in 2008. ACNielsen says Kraft's 22% slice of the $1.6 billion that the Chinese spend on cookies is nearly three times that of runner-up Tingyi of Taiwan. International rival Nestlé has a ninth of Kraft's share.
Cookies might seem a nutritional nightmare to American parents, but in China, beset by food-safety worries and still short on calories for its poorer folk, they can be a godsend at the convenience counter. Kraft has made another offering: Jai-Gai (translation: "good calcium"), a favorite because it promises the calcium equivalent of three glasses of milk in each 1.5-yuan (25-cent) pack.
"We view China as a market that has taught us how to focus, how to differentiate and how to innovate," says Khosla, who joined Kraft in 2007 from Fonterra Co-operative Group, a multinational dairy in New Zealand. Before joining Fonterra in 2004, Khosla spent 27 years with Unilever overseas. A new cookie r&d center at Suzhou Industrial Park, near Shanghai, will plot future treats.
China is the most important country in Kraft's developing-markets division, and Khosla has built up a product development and distribution operation managed by Chinese. The division is anchored by the Oreo brand (which has been extended into wafers, soft cakes and a strawberry creme flavor) and by Tang, the usually powdered orange drink that was hot in the U.S. sometime before the first moon landing.
Tang's tipping point came after Kraft gained a clearer understanding of Chinese consumers' needs. Says Khosla: "The local business team found that children in China think water is boring, while at the same time mothers were concerned about getting their children to drink enough water. There was clearly an opportunity here."
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