Kraft celebrated the 100th birthday of its Oreo biscuit in Shanghai on Tuesday by turning the waterfront into a vast Oreo advertisement, painting the landmark Oriental Pearl Tower Oreo blue, plastering skyscrapers with multi-storey neon Oreo adverts and staging fireworks over the Huangpu river.
It was a celebration of one of history’s most successful global brands – and of how that brand has reinvented itself in China, where Oreo is the mainland’s best-selling biscuit.
The way Kraft has transformed this most quintessentially American cookie is a model for how successful multinational brands are approaching the China market, retail analysts say.
For what passes for an Oreo in China these days often bears only a glancing resemblance to the black and white sandwich biscuit first sold in Hoboken, New Jersey in 1912. Since then, Kraft has sold 452 billion Oreos, global revenues for the brand last year topped $2 billion and the cookie has a Facebook community of 23 million.
But in a bid to please Chinese taste buds, Kraft has made an Oreo with Chinese characteristics.
Some changes are subtle. The original Oreo is less sweet on the Chinese mainland than in the US. Other changes are nothing short of revolutionary, at least for Oreo aficionados.
Some Oreos in China are shaped like a straw, or like a wafer, and even the traditional round ones come in flavors such as green tea ice cream, grape-peach, mango-orange and raspberry-strawberry. Kraft says some of these flavors, developed first in China, have since become hits globally. Kraft calls it “reverse innovation”.
Even the “birthday cake” Oreo introduced to celebrate the cookie’s centenary is specially engineered to taste like a Chinese birthday cake – not an American one, says Kraft Foods China president, Shawn Warren.
Oreo, introduced into China in 1996, largely languished until Kraft made changes in distribution and advertising to boost sales – and created new flavors and tastes suited to the local market.
“Any foreign company that comes to China and says, ‘there’s 1.5 billion people here, goody goody, and I only need 1 percent of that … (is) going to get into trouble. You have to understand how the consumer operates at a really detailed level,” says Lorna Davis, head of global biscuits for Kraft and former head of Kraft Foods in China.
She says non-traditional Oreo shapes – long and thin, or rectangular wafers – are only a small percentage of the China market, with the bulk still taken by round Oreos. But introducing new flavored fillings for the round biscuit was crucial to boosting its success, along with new Oreo adverts that “struck a chord with one-child families”, she says, creating an emotional attachment to the brand, in a country where big displays of emotion are rare.
Kraft is not alone in turning local adaptations into profit in China. Torsten Stocker, partner in the China practice of Monitor Group, points out that PepsiCo’s Lays potato chips come in flavors including cucumber and blueberry in China.
Mary Bergstrom, author of the upcoming book All Eyes East: Lessons from the Front Lines of Marketing to China’s Youth, says potato chips are viewed as a “hot” food in China – where foods are classed traditionally as “hot” or “cold”, irrespective of actual temperature. So Lays added cooling flavors like cucumber to counteract that.
Yum! Brands’ KFC has become the market leader in fast food in China by selling foods such as rice gruel with preserved, or “thousand-year-old” egg along with their chicken buckets. Coca-Cola developed its popular Minute Maid “Pulpy” juice drink first to appeal to Chinese tastes, but it has since gone on to become a $1 billion global brand.
Starbucks and Häagen-Dazs have reinvented their entire business model in China, retail analysts say, eschewing the takeaway or home consumption model they use in the West to become dine-in venues in China.
Additional reporting by Shirley Chen in Shanghai