Kraft gives Oreo and Tang more local appeal

New flavors products appeal to young consumers

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BEIJING--Kraft Foods has turned Greater China into a dynamic R&D center for brands like Oreo and Tang to avoid the pitfalls facing many Western food marketers in the region, where locals lean towards the savory flavors of local cuisines compared to pricey and generally sweeter foreign foods.

Kellogg Co., for example, has struggled for years to coax Chinese into consuming cold cereal, without success, as locals prefer hot breakfast meals like rice porridge.

"We are investing in building brands for Chinese consumers, not to introduce western brands to Chinese people," said Mark Clouse, the U.S. company's chairman-president for China in Beijing. "If this is your goal then you must first start with Chinese consumers and build brands and products that meet their needs, while using our global scale where it provides a competitive advantage."

By creating products and flavors that better appeal to young Chinese, Kraft has turned the mainland into the second-largest Oreo market in the world after the U.S., as well as a fast-growing market for its Tang instant beverage brand.

With new products like Oreo flute wafers and white chocolate-coated wafer sticks, which were introduced this summer, Kraft is moving Oreo, its most heavily advertised brand in China, "from cookie to sweet snacking," said Mr. Clouse. The new products reflect local food customs as well, since Chinese do not have a tradition of eating western-style cookies.

"We're still protecting core equity but in China, it's not just a cookie brand, it's a confection and snack brand now too," he said. "We're also building Oreo as a food brand on an emotional-benefit platform, especially in China, where brands tend to be functional in nature."

Alongside the launch of the new products, Kraft is running two TV spots in China by Draftfcb for traditional Oreo cookies. One is a global spot, "Triple Play," featuring three young ballet students dipping the cookies into a glass of milk. The second, "Magic," was created specifically for the mainland by Draftfcb's office in Beijing, and depicts a Chinese mother and son enjoying Oreos. With the iconic image of twisting an Oreo open and eating the creme filling first, the young boy pretends that he is performing a magic trick. Ads are also running in outdoor media and in-store point-of-sales materials.

The flute wafer was created in Taiwan, where it is also sold, but Kraft developed it with the mainland in mind, and it was launched in China last month. The coated wafer sticks were developed in Beijing specifically for China, but both products could be introduced in other Asian markets.

Kraft also put its development team to work on Tang. After discovering there were no major strawberry-flavored drinks in China, "but kids really wanted it," the company created a strawberry-flavored version of Tang in China. "We soon realized why it's never come to market before though; it's a very difficult flavor to create," said Mr. Clouse ruefully.

Kraft has developed two other new products for the Tang line this summer, including Tang Sport, China's first major sports drink aimed at kids.

"There are a lot of sports drinks in the market, but they are targeting adults with their flavors, quantities and nutritional benefits. We've taken Tang's strong equity in fruit and orange flavors and brought those flavor profiles to a sports drink with the right amount of electrolytes to put back what the kids need," said Mr. Clouse.

While its flavors "appeal to kids," he added, "Moms are fearful of other sports drinks because they show big athletes on the packaging, and think maybe giving those other products to kids isn't the right answer."

Kraft also created a portable one-serving version of Tang that has been in limited distribution in China since May and will go national next month with retailers such as Carrefour.

"The idea has been that Tang has been sold as a large pouch of powder used to make a glass of orange drink at home or perhaps a pitcher," said Mr. Clouse.

"We realized more and more beverage consumption is happening outside the home." At the same time, one of the fastest-growing beverage segments in China is bottled water and getting kids to drink enough water is a challenge. Kids like shaking it up, parents like it because their kids are drinking more and the product lets kids control their own flavor profile," said Mr. Clouse.

Sachets of Tang on the go contain one serving of Tang powder, sold in orange and strawberry flavors, for a 450-500 ml bottle of plain water. The product is relatively cheap. One sachet retails for 1 RMB (13 cents US), and a bottle of water sells for about the same, so the total price for a bottle of Tang--about 26 cents--falls far below the price of most bottled fruit juice drinks, which retail for 40 to 92 cents.

The Tang on the go concept is only sold in China so far, but it is based on Kraft's Crystal Light brand in the U.S., sold in a similar single-serving product.
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