Soy-Sauce-Flavored Kit Kats? In Japan, They're No. 1

TOKYO (AdAge.com) -- Western marketers are adept at catering to the tastes of Japanese consumers, with quirky products such as McDonald's Filet-O-Shrimp burgers and a cucumber-flavored soft drink by Pepsi. Besides the regular chocolate variety, which must seem mundane to Japanese by now, Nestle has come up with variations that reflect the local produce and palate of each region. There are some staple flavors like miso, soy sauce and green tea, but the list doesn't end there. Kit Kat varieties now range from yubari melon and baked corn from Hokkaido island to green beans and cherries from Tohoku in northeastern Japan to yuzu fruit and red potatoes from Kyushu island at the southern-most tip of the country. The Kanto region, including Tokyo, contributed the sweet potato, blueberry and kinako (soybean) flavors. The strategy started three years ago with a handful of flavors but has escalated into a national phenomenon. It's also unique to Japan, so Kit Kat lovers in other countries shouldn't expect to see exotic local flavors. (Kit Kat is owned by Nestle, but is produced in the U.S. under license by The Hershey Company). Nestle won't say how much it spends on Kit Kat marketing in Japan, or what new flavors will be introduced this fall, but "there is a very low cost [and the campaign is] totally operated below the line," said Yuji Takeuchi, head of Nestle's Kit Kat marketing department in Tokyo. His top pick, soy sauce, is also the most popular flavor nationwide. "Nestle really understands how to build unique value into the relationship their brands enjoy with their customer," said Tokyo-based Michael McLaren, McCann Worldgroup's regional director, Asia/Pacific, and CEO, Japan, which works on Nestle brands such as Nescafe in that market. "From the unique and fanciful local flavors on Kit Kat to the powerful functional benefits of [plant-based chemical] polyphenol in Nescafe Excella, they are always working to find a way to change the consumer value equation and drive deeper brand loyalty," said Mr. McLaren, a fan of the latest flavor introduced by Nestle, wasabi-flavored white chocolate Kit Kats. "They are truly delicious." Each flavor is only sold in the region for which it was created, a distribution strategy that has turned limited edition Kit Kat packages into coveted souvenirs for domestic travelers. They are also a "popular present in a country where gift-giving remains an important ritual," said Wataru Kageyama, president-CEO of JWT, Tokyo, which handles Kit Kat advertising in Japan. Nestle was struck by the discovery that the Japanese translation of Kit Kat -- Kitto Katsu means "surely win" -- and realized it could be paired with the tradition of sending students good luck wishes before they take tough higher-education entrance exams. So it partnered with Japan's postal service to create "Kit Kat Mail," a postcard-like product sold only at the post office that could be mailed to students as an edible good-luck charm. Nestle decorates post offices with a cherry blossom theme that coincides with Japan's annual exam period. It also stocks a sales point in each post office, a move that became possible when Japan's postal service was privatized in 2007. "If it were still government-owned, probably it cannot support a private brand like this. The post office is a great distribution channel for Kit Kat, because there is no competition, unlike in convenience stores or supermarkets," said Mr. Kageyama, whose sweet tooth favors the strawberry-cheesecake flavor Kit Kat. Kit Kat's success with initiatives such as making the post office a major sales channel has also led to a major promotion for the Nestle exec behind the campaign, Kohzoh Takaoka, to exec VP and representative director, Japan from president of Nestle's confectionery division. Many of the special flavors are only introduced for a limited time to entice consumers to try something new while they can, then quickly taken off the market. Excess inventory is collected and used to create "Happy Bags" sold during major gift-giving periods in Japan, such as New Year. "This allows them to create mixed bags of consumer favorites and exciting new flavors as high- value gift bags. Consumers love it and all the product is consumed," Mr. McLaren said. ~ ~ ~Contributing: Laurel Wentz

Soy-Sauce-Flavored Kit Kats? In Japan, They're No. 1

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