China Food

What can we learn from “old consumer” 𞓜 Kraft, a biscuit giant that has sold well for 100 years

the global snack Kingdom behind Oreo.
Speaking of kraft, what was your first reaction?
Many people may have a vague sense of familiarity. If they know its name, they may not know its products. However, when it comes to Oreo, fun, Prince, Youguan, Taiping, these snack brands that accompany many people from small to large, you will not be unfamiliar. Yes, these are Kraft’s snack brands. as the largest food giant in the United States and the second largest food company in the world, Kraft has developed for more than 120 years, but it is such a huge empire that few materials can be retrieved in China. Different from its competitor Nestle, all products of Nestle use Nestle brand, while all products of kraft have their own brands, and few customers know that those products around them come from Kraft. This is because in 2012, kraft food became a giant acquiring many and miscellaneous categories. In order to better operate, kraft was divided into two independent listed companies. The North American grocery business followed Kraft’s name, and the international snack business became Yizi international. That is to say, the above snack brands seen in China are operated by Yizi international. Some people say that it is not enough to talk about the history of the food industry without knowing Kraft. It may be hard to imagine that classic snacks such as biscuits, nuts and chocolate bars were once popular innovative products. Kraft is an epitome of the development of the global food industry and an operation history of giant M & A and integration. In the current new consumption wave, great changes have taken place in the concept of food consumption and people. Although domestic leading companies such as three squirrels, liangpin shop, Qiaqia food and laiyifen have strong competitive advantages in different categories, channels and regions, they still have a long way to go from global food giants such as Kraft and Nestle. Kraft has been developing for a hundred years. What can we learn from it? And what trends do you see? This is the fourth in the “what can we learn from old consumers” series. Below, I will try my best to make the following questions clear: How did
, a giant of more than 100 years, create today’s snack Empire? How did a group of super items such as Oreo come into being? What is the significance of the 30-year development in China and the current development of food brands?  
Kraft didn’t just “Kraft” put the time back to 1903. At that time, James L. Kraft, the founder of Kraft Foods, had only $65, a rented carriage and a horse called paddy. With these possessions, he began a cheese wholesale business in Chicago. This small business started in a short time. In 1909, he merged with his four brothers to establish J.L. Kraft & Bros. company. In 1914, kraft and his brothers bought their first cheese factory in Stockton, Illinois. At that time, their canned processed cheese was patented. The revolutionary innovative packaging made the cheese stored longer, Kraft was able to provide canned cheese to American soldiers in World War I. After the first World War, kraft continued to expand its business scale and went public in 1924. During this period, kraft acquired other companies from time to time to expand its business; Also during this period, kraft advertised through new media such as radio and television. At that time, such advertising method was very pioneer. This is the stage of independent development of kraft, which sells cheese. In the subsequent development, kraft was acquired and integrated by larger food companies (as shown in the figure below), so that the cheese industry became an insignificant role in the later development, and the name “Kraft” has been retained. . In the whole history of mergers and acquisitions, one operator that has to be mentioned is Philip Morris (renamed Altria in 2001). It is the world’s largest tobacco company and the manufacturer of Marlboro cigarettes. Without its integration, there would be no Kraft today. How do snacks relate to tobacco? In fact, the United States began an anti tobacco campaign in the 1980s. Philip Morris gradually acquired Kraft and general food in order to reduce his dependence on the cigarette business, and merged them in 1989. Also during this period, kraft General Foods has begun to invest in the production of Maxwell, ganzhen, kraft yogurt and other products in China. Since then, Philip Morris acquired biscuit giant nabesk and merged with Kraft. It is under such a series of acquisitions that Kraft has changed from a small business selling cheese to a comprehensive snack company. In 2000, kraft became the second largest food producer in the world after nestle in Switzerland. Kraft’s development in the last century has been accompanied by the rise and maturity of the global snack industry. Biscuits, chocolates, beverages and candy have entered thousands of households from innovative products. Over the course of a century, the giant has advanced with its own strength and the tide of the times, and gradually formed today’s huge snack kingdom in the magnificent merger and acquisition. But now Kraft has nothing to do with Philip Morris, because in 2007, it spun off Kraft because of a tobacco lawsuit. After years of tossing and turning, I finally got into the tobacco business. Since then, Kraft has been independent. After tasting the greater sweetness in the snack field, the cheese business was no longer fragrant, so it changed the track and ran all the way. After independence, Kraft has successively acquired two food giants to consolidate its castle. This is later. It is worth mentioning that during the development and growth of kraft, Buffett’s Berkshire company became an important investor of Kraft. After that, Kraft’s acquisition of other brands and the merger with Heinz in 2015 are closely related to Buffett and 3G capital. The above is a brief review of Kraft’s development in the last century, but we haven’t talked about how well-known brands such as Oreo, interesting, Prince and xuanmai are under Kraft’s revenue, and what impact these have on Kraft’s brand strategic planning. This is still inseparable from Kraft’s three mergers and acquisitions since the 21st century. Let’s look at them one by one. three efficient mergers and acquisitions, the birth of $1 billion brands
I. Oreo, which has been popular for a century, is also a “fake product”. As mentioned earlier, in 2000, Philip Morris, a tobacco company, led the acquisition of nabesk, a biscuit giant, and Oreo, fun, Lezhi and other well-known biscuit brands are under this company. You know, kraft had no biscuit business before acquiring nabesk. Nabesk was founded in 1898, earlier than Kraft, which first sold cheese. By the end of the 20th century, nabesk had grown into the largest biscuit enterprise in the United States. It has been 110 years since Oreo was launched in 1912. Maybe we make complaints about the copycat goods such as Guangdong, Guangdong, Guangdong, but we may not know that Oreo itself is also a “copycat”. Its cream sandwich style is not original, but it is a new product Hydrox that was developed by Sunshine company. Oreo is more fruity and its advertising design is more concise and generous. In the process of development, it has gradually formed the classic advertising language of “twist, lick, dunk”. . Besides the innovation of the product itself, Oreo is also inseparable from nabesk’s high investment in advertising. With the advantage of marketing, Oreo came from behind to replace hydrox and become a classic product popular all over the world. Nabesk has gradually grown into a biscuit enterprise with the largest market share in the United States. In 2000, Philip Morris successfully acquired nabesk by defeating Unilever, Danone, Cadbury, Sally group and other competitors at a price of about US $18.9 billion. Nabesk’s Oreo, fun, Lezhi and other brands were also included in Yizi international in the spin off in 2012. After the acquisition of nabesk, the biscuit business accounted for 15% of Kraft’s total revenue, which made Kraft a global biscuit giant. II. Acquisition of Danone biscuit business and establishment of core business # acquisition of Danone biscuit business is the first acquisition advocated by Kraft shortly after solo flight in 2007. Today’s Danone is more of a beverage company in the eyes of the public, but before 2007, Danone’s biscuit business ranked second in the world, and its global well-known brands such as Luyi, Prince, Xianqu and Youguan were all under its banner. Therefore, kraft acquired Danone on the one hand because it lost the market of cheese, coffee and other products under the competitors such as Nestle and Unilever, so Kraft chose to focus on the biscuit market; On the other hand, after the acquisition of nabesk, Kraft’s biscuit products were mainly aimed at the high-end market. At that time, due to the high price in the process of localization in China, it was mainly distributed in supermarkets and hypermarkets in first tier cities, which could not penetrate more sinking markets; Danone just focuses on popular biscuit products. Danone products are available in second and third tier cities and even small grocery stores. Therefore, Kraft’s acquisition of Danone not only has a more complete product layout, but also solves the localization problem in China. After the acquisition of Danone biscuit business, Kraft’s industry concentration, operation efficiency and globalization have further improved, and the proportion of biscuit business revenue has also increased to 22%, becoming Kraft’s largest business. By 2011, the market share of kraft biscuit business in China will reach 40%. III. candy business not favored by Buffett in 2010, kraft acquired Cadbury, the world’s largest confectioner, which won the main brand Cadbury, chocolate and Candy Gum brands such as yikoulan, Holtz, Qingzhi and xuanmai. In fact, kraft had its own candy business before buying Cadbury. In 2004, in order to focus on the core business of biscuits, kraft sold its candy & Gum brands such as ALTOIDS, life savers, Trolli and Swiss sugar to Wrigley for $1.48 billion.
after that, the global candy market developed rapidly. At that time, the annual growth rate was about 5%. Cadbury, a British candy brand founded in 1824, gradually became the first brand to occupy the global candy market share. However, Kraft’s acquisition was not smooth sailing, but won a four month bid with potential competitors such as Hershey, bird’s nest and Ferrero, The acquisition of Cadbury was completed with about US $19.69 billion. The candy business returned to the company and became a global candy giant in one fell swoop. The acquisition of Cadbury is Kraft’s expansion mode with the least investment, the largest profit and the fastest effect. On the basis of Cadbury’s own brand, kraft can easily become the world’s largest candy manufacturer. But this acquisition is not favored by Buffett, its largest shareholder. After the acquisition, he greatly reduced Kraft’s shares. Although Cadbury’s acquisition brought Kraft good sales, logistics and market share in other countries, the impact of British and American culture made British consumers lose confidence in Cadbury, resulting in market losses and huge debt drag to kraft. At that time, kraft even sold its pizza business to Nestle to obtain the cash needed for the merger. However, in the future development, the candy business has become an important growth engine of kraft, second only to biscuits. The above are the three major M & A events of Kraft’s continuous expansion and improvement. It is not difficult to see that in Kraft’s expansion territory, a series of acquisitions is one of the most ferocious and fastest ways to realize globalization, because it can directly obtain the market share of existing brands and occupy the market; In order to enter the new market, re developing new products to compete with products that have been accepted by customers will consume time and cost. In addition to kraft, food giants such as Nestle and Unilever also have similar growth paths. Today, Kraft has built more than 11 brands with annual revenue of more than $1 billion and 88 brands with annual revenue of more than $100 million in the field of snack food. At present, the biscuit business with the highest contribution to the company’s revenue has occupied 13% of the world market share and 47% of the US market share.
in 2012, kraft was split into two independent listed companies. The North American grocery business followed Kraft’s name, and the international snack business became Yizi international. The following figure shows the revenue of Yizi international in 2021. It can be seen that biscuits are its core business, and chocolate, chewing gum, candy and cheese drinks jointly support Yizi’s revenue of 10 billion US dollars; Secondly, in the global market, Europe and the United States are the main markets of Yizi, and Asia, the Middle East and Africa also contribute 21% of the revenue. . After understanding the development history and fundamentals of kraft, let’s see how Kraft has developed in China in the past 30 years, its localization and brand marketing strategy. Kraft’s 30 years in China and marketing legend
With the reform and opening up, Kraft Foods set up joint venture in Chinese mainland in 1984 to produce beverage products. The brands of Oreo, Lezhi and fun under nabesk, Xianqu, Prince and Youguan under Danone, and lotus and yikoulan under Cadbury all entered the Chinese market in the 1980s-1990s. Since 2012, after the split, Yizi has successively launched star products in the Chinese market, such as xuanmai gum, baked grain biscuits, miaoka milk chocolate and so on. As a classic product of Yizi, Oreo has gone through 25 years since it entered the Chinese market in 1996. At present, Oreo has a market share of about 50% in China’s sandwich biscuit market and is a leading brand in the market segment; In addition, there are dazzling performances of star products such as xuanmai. From acclimatized when we first entered China to becoming the first brand in the industry, Yizi’s localization strategy has played a vital role, which is mainly reflected in three aspects: products, marketing and channels. Let’s look at them one by one. I. product localization: how does Orio hyunmai open the market from zero? In 1996, nabesk established biscuit factories in Beijing and Suzhou and introduced its most successful biscuit brand Orio into the Chinese market. After acquiring nabesk in 2000, Yizi took over its biscuit business in the Chinese market. However, Oreo did not achieve the expected success in the Chinese market. By 2005, Oreo accounted for only 3% of the Chinese market, and its sales performance was not ideal. Unlike the American market, Orio is a kind of food to supplement hunger in the daily life of American families. It can be used as a dinner or substitute meal, such as milk or coffee, for breakfast and afternoon tea. Therefore, it is generally in the form of large bags of family clothes. However, in China, Orio is a supplementary food, that is, snacks, and people prefer to choose it at will, Open bag ready to eat; At the same time, Chinese consumers are not as fond of sweets as American consumers. In the eyes of Chinese people, Oreo’s taste is too sweet and greasy. Therefore, in terms of packaging, Yizi changed the product packaging from 12 pieces to 6 pieces and 3 pieces, which is more compact; In terms of taste, Yizi has factories and R & D centers in East, West, north, South and central China to study different consumers and produce targeted products. Oreo has reduced the sugar content of biscuits according to the taste of Chinese consumers and launched special products such as green tea, fruit and ice cream in combination with the better refreshing taste of Chinese consumers, Developed more than 20 kinds of “Chinese flavor” that belong to China alone. The transformed Oreo biscuits become smaller and sweeter, which is more in line with the taste of the Chinese people. With the “twist and lick” advertising offensive, it quickly seized the Chinese people’s mind and taste buds. In 2012, Oreo became the No. 1 biscuit seller in China. On the basis of Oreo’s success, Yizi is more confident about the preferences of Chinese consumers. Take hyunmai as an example. In 2012, hyunmai officially landed in China. At that time, China’s chewing gum market was close to saturation. Green arrow and Yida under American Wrigley accounted for 70% of the market share, and haoliyou, Lotte, Mentos and other brands struggled for the remaining share. Through consumer survey, xuanmai found that Chinese consumers prefer fruit flavor to mint flavor chewing gum. Therefore, xuanmai positioned itself as a combination of “fruit candy + chewing gum”, cooperated with strong marketing, and stubbornly opened up a way for itself in the almost saturated market. It seems that Kraft has become a diversified consumer who spends a lot of time and energy to understand the tastes and innovative habits of Chinese consumers. In fact, kraft continues to lead consumers to spend a lot of time and energy on Kraft products. 2. Marketing scene occupation or take Oreo as an example. The market position of this super longevity star product in the global biscuit category is equivalent to that of Coca Cola in the global soda category. He is not the first in the world to produce black round sandwich biscuits, but it has become the representative of black round sandwich biscuits. Any kind of snack has its own life cycle, which is replaced by another product or ignored by new consumers. This is the destination of most snack foods. But Oreo has been popular for a century, affecting several generations, and still maintains gratifying sales and performance. How do you do it? “Twist, lick, bubble” is an advertising word born in the 1950s, which probably remains deeply in everyone’s mind. What is the magic of these nine words? Look at its marketing logic. On the one hand, in the era of traditional TV media, seize the consumption scene of “parent-child” to attract adults. In the first 20 years in China, Oreo spent most of his budget on TV advertising. In the era of traditional media, a family sits in front of the TV without distracting attention from information from mobile phones. You can only watch TV advertisements. This one-way and centralized communication is efficient. For example, the bombing of melatonin in CCTV prime time can not be forgotten by several generations of Chinese people. Oreo also grasped this scene, focusing on “parent-child time”, coupled with the advertising words of “twist, lick and bubble”, from a biscuit to a carrier for parents and children to share happiness. another magic is that you don’t feel how special it is when you see the advertisement, but when you get it in your hand, the nine words of brainwashing run out and unconsciously eat Oreo according to the eating method in the advertisement. Although it is nominally a snack for children, the interesting scene is not only to attract children, but also to impress adults. On the other hand, the “category bundling” is completed with milk, which gives it the attribute of high repurchase. In addition to the constant advertising language, Oreo also has a constant partner, milk. What are the characteristics of milk? It has almost become the rigid demand of many families, which can be seen everywhere at any time, but Oreo is not the rigid demand. Therefore, through “bubble bubble” and milk marketing, consumers will think of Oreo when drinking milk, so as to form a “category bundle”. In this way, re purchase will go up. However, later, with the rise of mobile Internet and the healthy diet into the snack consumption trend, the growth of China’s biscuit market began to stagnate gradually. The rise of the younger generation of consumers has changed Oreo’s product positioning, from the original parents and children of children to young groups with more purchasing power, and changed slogan to play with Oreo. Therefore, in marketing, Oreo began to focus on creativity, fashion and cross-border. In 2015, Oreo invited Sun Yang, Liu Wen and Ollie to share Oreo biscuits with exclusive expression, and invited fans to make them together; In 2019, Oreo launched Oreo yoghurt and Oreo milk tea jointly by amoshi and Xi tea, making themselves a versatile style of snacks, from “twist, lick and bubble” to “everything can be Oreo”. These changes have also led to the expansion of Yizi’s media focus from traditional media to e-commerce and other channels. However, in the current fragmented information environment, it is difficult to reproduce the marketing miracle in the era of traditional TV media. III. local priority business model: after the rise of e-commerce, Yizi has been selling and channel sinking through the traditional independent production and traditional distribution model in the world. However, since 2010, with the rise of China’s e-commerce, traditional sales channels and consumption habits have changed. At the same time, nuts and other high-end leisure snacks have entered the snack list of the public. Traditional biscuits no longer seem to be attractive. As the core business of Yizi, how biscuits break through the impact of new channels and new categories has become a difficult problem. With the development of Yizi in China for more than 30 years, China has become one of the largest consumer markets in the world. Therefore, it is very important to keep up with the rapidly changing Chinese consumer market. Therefore, since 2011, Yizi has focused on e-commerce channels. In 2015, Yizi’s sales in tmall increased three times; According to Bernstein data, Yizi won the leading share of multiple categories in China’s online channels in 2018, including biscuits with a share of about 12%, ranking first, and fudge / chocolate with a share of 32% / 14% respectively, second only to Mars. During this period, Yizi has also made major adjustments in China’s management, adopting the “local priority business model”, that is, empowering the management in terms of innovation, product portfolio and investment priorities, so that it can act quickly. “We emphasize the principle of giving priority to local brands. Global brands and local brands should be developed at the same time. We pay attention to speed, sensitivity and process simplification.” Yizi’s executives said in an interview, “if it weren’t for the local priority business model, the taste like spicy chicken wings would never be approved by the headquarters. But it is such” decentralized “management that gives enterprises shorter reflection arc, faster response speed and more accurate market insight, thus bringing vitality and affinity to the brand.” In this mode, Taiping launched the new year’s packaging, showing the ice cream flavor. Oreo’s the Imperial Palace IP combination is the local innovation attempt under this decision. In addition, Oreo also launched customized products for e-commerce and convenience store channels, such as the music gift box launched by Oreo tmall brand day and Wang Yuan’s star effect. The products were quickly sold out, which played a good brand publicity effect. “China’s consumer needs are becoming more and more complex, so when making innovation, there must be some customized elements to attract customers to buy.” Stephen Maher, former president of Yizi China, said. In line with China’s e-commerce trend, Yizi has transferred most of its business from offline to online, forming a joint force from product customization to marketing activities, thus creating a phenomenal marketing scene. At the same time, Yizi did not give up its efforts in traditional channels, listed the third and fourth tier cities as the focus of offline channel expansion, and made products better exposed by optimizing the display location and product portfolio of products. Xuanmai has achieved good growth under such a new adjustment.  
The future trend of Chinese food brands # the above briefly combs the key nodes of Kraft’s centennial development, its 30-year development in China and the marketing of Oreo and other products. The content is not detailed enough, but it can be seen that Kraft can not become a giant today without its centennial precipitation and efficient M & A integration, Positive localization is indispensable in the process of internationalization. In contrast to domestic snack brands, Qiaqia food was established in 2001, laiyifen was established in 2002, liangpin shop and three squirrels were established in 2006 and 2012 respectively, with an average development history of only 15 years. Although they have strong competitive advantages in different categories and channels, there are no leading enterprises with large market capitalization such as Yizi international and kraft Heinz in China, and the industry precipitation is not enough. Kraft’s development history is a reference system for the future direction of China’s food brands: first, brand centralization is on the road. According to AI media consulting data, the scale of China’s leisure food market reached 1156.2 billion yuan in 2021, nearly twice that of 410 billion yuan in 2010. It is expected that the growth rate will reach 7.2% and the market scale will reach 1239.1 billion yuan in 2022. Although the growth rate is fast and the scale is large, China’s snack industry started late. With the dispersion of the whole industry, many varieties and low entry threshold, it presents a “hundred schools of thought contend” competition pattern, and the industry concentration is far from enough. For example, the foreign-funded snack market is relatively dominated by the foreign-funded snack market, such as Feroz and leffer biscuits. Kraft food, founded at the beginning, is a company selling dairy products, but in the subsequent step-by-step expansion, it also set foot in biscuits, chocolate, candy, chewing gum and other snack categories, and has been in a leading position in the global market for a long time. His path is a unique three-dimensional product matrix, entering the multi category track through mergers and acquisitions and taking the lead in occupying the leading position. According to the development path of multi category and multi brand in China, Dali food is one. This enterprise was established in 1989, launched the “Daliyuan” pastry brand in 2002, and then successively launched “kebike”, “delicious”, “Heqizheng”, “Lehu” and “doubendou” and other brands, with relatively large market influence: “Daliyuan” is a leading brand in the baking field of Changbao; “Kebike” ranks among the top five domestic potato chip brands; “Delicious point” is a well-known brand in the field of biscuits in China; “Heqizheng” ranks only behind “Wang Laoji” and “jiaduobao” in the field of herbal tea;
“Lehu” is only behind “Red Bull” in functional drinks. This is a typical case of the whole industrial chain layout, continuous explosive product building ability and multi category and multi brand strategy. Among them, the continuous new explosive product building ability is the key for the company to become a leader in the industry. At present, domestic enterprises mostly try to expand categories with a single main brand. With the maturity of each sub category market in the domestic snack market, the industry concentration will gradually increase. The operation mode of yiziduo brand is worth learning from. 2. How to create a long life cycle burst of money in the 10 years of rapid development of China’s Internet, many enterprises have created a brand through traffic during the bonus period, but in the second half, the final outcome of the traffic dispute is the product dispute. To create a long life cycle pop is actually to create a “category killer”. For example, when it comes to sandwich biscuits, Oreo is the first thing many people think of. From Oreo, we can see that a successful super large single product needs to have the characteristics of long category life cycle, clear product positioning, profound marketing connotation, maintaining iterative update and so on, that is, to be deeper and more specialized in subdivided categories. Yizi owns more than ten large single products with an annual revenue of more than US $1 billion. These single products have become the main driving force for the growth of the company and let good products bring traffic for themselves. At present, domestic snack leaders have gradually penetrated into some promising long-life cycle categories, and have established strong channel advantages, but there is still room for further improvement in brand depth, cultural connotation and national popularity through strengthening marketing. III. going global} from the giants such as Kraft and Nestle, we can see that the concentration of the food industry will be higher and higher in the future. After the domestic market is saturated, going to sea and expanding Xinjiang is the common choice of the vast majority of international snack giants, and the overseas market of overseas snack giants is an important source of income. Today, more than 70% of Yizi International’s revenue comes from overseas, and Nestle’s overseas revenue accounts for more than 90%. In contrast, more than 90% of the revenue of domestic snack enterprises such as three squirrels, laiyifen and Qiaqia food comes from home, and domestic food brands have not opened the foreign market. In the process of going to sea, the layout of the whole industrial chain is particularly important. For example, Yizi international cooperates with farmers in many European countries to establish a wheat production base, which can not only ensure fresh processing of raw materials or shorter supply chain cycle, but also make direct production and processing in overseas raw materials the most convenient. The advantage of production and marketing integration is more than that. The overseas leisure food leaders led by Yizi mostly start from the production of midstream products, then vertically integrate the planting of upstream raw materials and the sales of downstream products, and finally realize the layout of the whole industrial chain, so as to achieve the controllable quality of raw materials, the improvement of bargaining power and the product pricing power of the terminal, so as to gain the initiative in the competition.

[1]《独家专访 | 亿滋国际成本优化及产品创新负责人徐庆:零食赛道异军突起,亿滋如何抵住压力引领市场?》  食品配方创新 作者:FBFI食品饮料配方创新


Foodaily每日食品携手全球顶级商业与产业合作伙伴,打造第八届Foodaily FBIC2022全球食品饮料创新大会&首届Foodaily EXPO每日食品创新博览会,并以“新食品时代——品牌生态化”为主题,通过为期3天的新消费创新试验场 ✕ 全球创新产品的舞台 ✕ 食品开发者大会 ✕ 顶级产品社交圈,贯穿食品产业链上下游,链接新消费商业全场景,向新食品时代的终局再迈进一步,一次讲透中国食品新消费的未来,360°呈现品牌生态化。2022年5月31日-6月2日在上海,我们邀您共同见证。(点击图片查看详细介绍)。



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