“Before, we tried to figure out how our products fit into global markets,” he said. “Now, we try to figure out what consumers want and make products that fit local markets. Innovation is so important in the biscuit and confectionary category.”
His enthusiasm for the role cannot disguise the underlying need for change, however. The second-largest food company in the world, Kraft was one of the first international food and beverage manufacturers to enter China, establishing two joint ventures in 1984. In the last 20 years, it has not grown as quickly as competitors such as Nestle, so it appointed Mr. Clouse to rejuvenate the company’s role from bit player to formidable rival.
Need for change
It’s a lofty goal, and one that some executives at the ad agencies working with Kraft brands in China, such as Ogilvy & Mather, JWT and FCB, fear will not succeed, because the company’s conservative roots will prevent him from taking steps large enough to keep pace with China’s and scale and evolution.
He is “smart and aggressive,” said one director, but “Kraft is an American company that just does not have an international culture. The whole product line really needs to be revamped from the top down. Mark is good and he gets that, but in the U.S. boardroom, they are very gun shy.”
Even so, U.S. companies are increasingly attuned to the intricacies Chinese market and Mr. Clouse has a formidable presence that dates back in part to his first foray into Asia. A former Captain and helicopter pilot in the U.S. Army, he served in a variety of locations during his six years of service, including a command in South Korea. Before that, he earned a degree in Economics at the U.S. Military Academy at West Point, where he was class president and played on the varsity basketball team.
He joined Kraft 10 years ago, at the company’s North American headquarters in Chicago. He held several marketing positions there, including the management of brands as Minute Rice, Stove Top Stuffing and Kraft American Singles. He relocated to the company’s Asia/Pacific headquarters in Singapore two years ago, where he oversaw the development of the cheese and grocery segments across the region, as well as Kraft's marketing services throughout the region.
Understanding Chinese palates
His experiences expanding product platforms and improving consumer-research capabilities in this region are the tools Kraft needs to help the company move forward in China. Even so, progress in China presents a dilemma for many multinational marketers, including Kraft.
Its brands such as Oreo, Ritz, Tang, Maxwell House, Toblerone, Philadelphia and Kraft Cheese are icons in the U.S. and many are well-established in European countries, but consumers raised in developing Asian markets, did not grow up with these brands. Also, their cultures have developed different palates that seldom match Western tastes.
Mr. Clouse acknowledged there is a “risk” in changing these brands: “We can’t depart from the brand equity too much.”
Another challenge is keeping pace with the fast pace of change in China’s food industry, something many U.S. marketers have struggled with, including Kraft, Heinz and even Pepsi, which is widely admired for its ability to bond with Chinese teens but less skilled at developing new flavors and products.
China’s coffee market, for example, is only 10 years old, “so it’s not easy to figure out the leading trends and get there faster with value-added products,” Mr. Clouse said.
Kraft’s solution was a three-in-one powder. Sold in tall, thin paper sticks, the product offers a richer aroma than previous individually packed instant coffees, based on the observation that new coffee drinkers are drawn as much to the smell and sensation of coffee as the taste.
It has also introduced Oreo as a dark-chocolate wafer stick to capitalize on the popularity of similar products across Asia and reduced the sweetness of the cream filling in Oreo cookies, compared to its western formula. The Oreo Wafer Stick has already become a key driver for the brand and has helped sales for the Oreo brand grow 25% over the past year. And since cheese is not a great fit for Chinese taste buds, Kraft is also playing around with flavors for Ritz crackers, now available in red bean, seaweed and spicy-chicken versions.
For one of Kraft’s strongest brands in the mainland, Tang, the company formed a strategic alliance with the Taiwanese packaged food producer UniPresident to roll out the brand in ready-to-drink bottles, an exploding category in China overall.
“We’re working with UniPresident for bottling and manufacturing expertise, their extensive distribution network in China and because they are good at understanding local tastes,” said Mr. Clouse. “We bring the marketing and branding for a major brand in China.”
Founded in 1903, it also has a respectable history in a market hindered by food scandals, so Kraft has teamed up with the government, through organizations like China’s National Sports Training Center and the China Women’s Federation, to promote health and nutrition, as well as the safety of its products.
Other appointment news in Greater China
[hong kong] Aegis Group has promoted K.F. Lee to CEO, Greater China, including mainland China, Taiwan and Hong Kong from CEO, Taiwan. She will remain based in Taipei. Bangkok-based Regional Director Roger Winter will take on additional responsibility for operations in Japan, South Korea and India, and Patrick Stahle, Stockholm-based CEO, Nordics, has been appointed as acting CEO for the Asia/Pacific, based in Hong Kong. All three promotions follow the recent resignation of Shanghai-based Thomas Wong, Aegis Media’s CEO, North Asia.
[hong kong] Jeani Rodgers has joined Leo Burnett Worldwide as regional corporate communications director, Asia/Pacific, based in Hong Kong, from PR & corporate communications director, Lowe Worldwide, London. She succeeds Singapore-based Jane Fraser, who left Leo Burnett earlier this year to join Ogilvy & Mather as group communications director.