According to Allen (2007), the Oreo cookies’ history originated back in 1912, when the New York candy factory released its first party. Since then, all Americans adore these tasty cookies. Oreo became their favorite and almost a symbol of the U.S. confectionery industry. In Europe, it has gained its popularity in the early 21st century, when it began producing in Spain (Allen, 2007, p. 64).
This well-known brand’s target audience consists of adolescents and children. The colorful wrappers and bright commercials have focused on the primary consumer. According to Chasser (2010), Oreo is the most beloved and best-selling biscuit brand of the 21st century; the annual revenue from its global sales exceeds 1,5 billion U.S. dollars. Oreo Cookie is one of the twelve billionaires’ brands. About 25 million Oreo pieces are sold every day in 100 countries around the world; it is more than 9 billion per year. Since the first “favorite cookie milk” introduction in 1912, adults and children have eaten more than 490 billion pieces of Oreo.
For those who are in a hurry, Kraft offers to celebrate the holiday at home with Oreo cake, weighing 297 g, from the limited release of the cookies’ anniversary. The upper cake’s part made in the Oreo’s circle form and decorated with the embossed, including the candle image and the inscription “Oreo 100”. The top consists of a white cream filling and a chocolate-colored chips. Holiday novelty resembles a small cake for a birthday party (Chasser, 2010, p. 99).
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According to Allen (2007), the Nabisco Company’s history (the Oreo Cookie’s creator), began in 1898 with the merging of several companies producing baked goods in the National Biscuit Co (NaBisCo). In 1902, Nabisco developed a Barnum’s Animal cookies in the animal figures’ forms, which were selling in small boxes with a pen.
In 1912, Nabisco created a brand new cookie – two chocolate biscuits with embossed wreath picture and a filling between them. The new cookie’s triumphant design was finalized in 1924; two pairs of doves were added in the picture. It was made for couples, who could show their romantic feelings, giving a symbolic desert.
The current cookies’ picture, which everybody knows, is a circle surmounted by a cross with the word “Oreo”, which is one of the Nabisco logo’s variants that made its debut only in 1952. In addition, the word “Oreo” is easy to read and pronounce, and it sounds nice, which is important for attracting consumers’ preferences (Allen, 2007, p. 127).
According to Shimp (2011), since the first production line and for 50 years long, Oreo unchanged practically, but the brand’s range, expanding, went beyond the usual consumer’s segment. There were added Oreo desserts: Oreo Cookie Pie Crust and Oreo Brownies. At the present time, these desserts can be found under the Oreo Pie Crust, Oreo Base Cake, Oreo Wafers, and Oreo Crème Icing Variegate names.
In different countries, Oreo is sold not only with the local tastes, such as the dulche de leche (a thick caramel sauce) and ice cream with the green tea, but of different sizes and shapes. In China, the Oreo cookies made in the tubes’ form, length of the index finger, which is so easy to dip into the milk (Shimp, 2011, p. 205).
Oreo to China
For new market’s conquering, it is necessary to study the local tastes carefully. According to Chasser (2010), in the last year, the share of the brand Oreo cookies has grown by more than 30% in the Chinese market. Kraft Oreo has been supplied to the Celestial Empire since 1996, but until recently, it sold poorly. So what happened? Buyers have not changed, but the product has been changed.
For the Chinese people, the cookies, that were made by the traditional American recipe, were too sweet, and the price of the one package was too high (73 cents per 14 pieces). In 2005, the corporation began to produce a special Oreo to China. The package size and the amount of sugar added to the cookies were reduced in Kraft. The result is 7,3% of the Chinese market in 2009 (Chasser, 2010, p. 161).
According to Shimp (2011), if the cookies in America are the nightmare for parents, who care about the healthy nutrition of their children, in China, where people do not survive because of a bad nutrition and a low-income, the cookies are in a great demand. Kraft led to the Chinese market another product – the Jai-Gai cookies, which were published in the best sellers because, as stated on the package, a pack that costs 1,5 yuan, contains calcium, which is equivalent to the three glasses of milk (at the end of 2009, milk in Chinese stores costed an average of 3 yuan per liter).
Kraft controls 22% of the Chinese market biscuits worth 1,6 billion U.S. dollars; it is almost three times more than its nearest rival (the Taiwan Tingyi). China is a market that has taught people to focus, to expand the range, and to invent something new (Shimp, 2011, p. 245).
China is the most important country for the Kraft emerging markets division, and Khosla has built a new product development system, headed by the Chinese. A new Kraft research center in Suzhou Technopark (near Shanghai) is working on a future hit sales to China. For example, now they are engaged in brand Oreo (wafers and biscuits are manufactured under this brand’s name) and Tang – the drink with an orange flavor, which was popular in the United States during the first flight into the open space.
The turning point came for Tang, when the Chinese consumers’ requests were examined more closely by Kraft Company. The local working group found that Chinese children are boring to drink plain water, and their mothers encourage them to drink enough fluid. It is possible to earn money on this situation. And China is not the tea’s homeland; many people prefer to drink Tang hot, and not cold. The brand’s advertising campaign was built on it. The new marketing strategy brings double-digit annual sales growth.
According to Chasser (2010), Kraft Foods has invested in its Asia-Pacific region promotion at about 200 million U.S. dollars. But Sanjay Khosla particularly emphasizes the merits of the local team, which managed to establish good business management. Local knowledge allows them understand the differences between the regions for the benefit of the company.
There are also nuances in consumer preferences flavor, the texture of the product, and a package size. In Shanghai, consumers are choosing large packs, and in Beijing, people prefer small clearly (Chasser, 2010, p. 179).
According to Shimp (2011), the developing countries in a whole, including China and Southeast Asia, account for about 20% of the Kraft Foods’ proceeds. In the third quarter of 2009, the Kraft’s sales grew by 8% over the same period in 2008 in these markets, whereas in Europe and North America, declined slightly.
Expanding Oreo in India
The decision to launch Oreo under the Cadbury’s brand in India was taken because the Cadbury has a strong awareness in the region. Such a strategy uses a combination of the global experience and the Kraft Foods’ scale; and Cadbury’s strong performance in India, of course. If the corporation can buy the Cadbury candy manufacturer, it would require a steady increase in revenue to pay back the transaction. It seems that Sanjay Khosla knows where to find it.
It is possible that Oreo can be launched under the Cadbury brand in another country. But the Cadbury brand will never be used for the Oreo in the United States, United Kingdom or regions where the Kraft is an original brand (as strong, as Cadbury). Running is a part of a long-term Kraft’s strategy to expand its product portfolio in India.
Kraft Foods bought Cadbury in January 2010 for 19,7 billion U.S. dollars. This company has spared neither money nor power. Everything was done in order to remain the best in the confectionery field and give joy to their favorite customers (Shimp, 2011, p. 231).