Kraft, the makers of Oreos found this out the hard way when it introduced its cookies outside the US. Kraft struggled for years in China, for instance, and considered leaving five years ago. The cookie “was spectacularly underperforming,” says Sanjay Khosla, Kraft’s president of developing markets. One problem: Kraft offered Chinese consumers the same type of Oreos that it sold in the United States. “There was a belief that what was good for the U.S. was good for the world,” Khosla says.
After surveys showed that Chinese consumers found Oreos too sweet, Kraft put James Andrade, a psychopharmacologist and vice president of research and development in the Asia Pacific region, to work coming up with a new formula to better suit local tastes. In India, Kraft encountered the opposite problem: The American-style cookie was too bitter, Indians told researchers. Adjusting for local preferences “isn’t a matter of just removing one ingredient,” says Andrade. “It’s about making sure you balance the flavors. You almost have to reconstruct the product.”
Andrade’s recent task was developing a mango and orange Oreo cookie. “People in this part of the world have strong feelings about what a mango tastes like,” explains Andrade. “You can have many variations on vanilla, but people are quite discriminating with mango.”
Whether it’s green tea Oreos in China, a chocolate and peanut variety in Indonesia, or banana and dulce de leche Oreos in Argentina, a lot rides on Kraft’s efforts to develop alternatives to the iconic cookie-and-cream combination. The 100-year-old sandwich cookie, a $2 billion brand, is going global in a big way. Emerging markets will account for about half of Oreo sales this year; over the past five years, emerging markets including Asia and Latin America have been the major drivers of the brand’s growth. Thanks to the overseas push, overall Oreo sales grew nearly 25 percent in 2011.
Kraft has tailored the cookie’s marketing to better resonate among local consumers. In one Chinese commercial, a child gives a lesson in dunking (cookies, not basketballs) to former Houston Rockets star Yao Ming. In a South Korean ad, a baby clutches an Oreo while nursing at its mother’s breast. Kraft says that spot was made by its ad agency only for an awards program. But since its leak online, it’s gone viral.
Success outside mature developed markets is important for Kraft as it prepares for a spin-off of its snacks business later this year. Given unexciting prospects in the United States, the new company, which will be called Mondelez International, will focus heavily on emerging markets.