In today’s challenging business environment, a “back-to-basics” approach and brand reinforcement will be key areas of focus, Kraft tells Asia Food Journal.
Dated: 1 May 2008
AFJ: Kraft recently launched Carte Noire in Singapore, your premium coffee label in France. What does this say about consumption trends in East Asia?
The total coffee market in Asia is showing exciting growth. The market in South-east Asia has seen double digit value growth over the last few years. The much larger North Asian markets such as Japan and Korea also demonstrate that long term signifi cant further growth is likely to come. The trend is both out of home (stimulated by coffee shops such as Starbucks) and with a positive knock-on effect to home consumption.
Consumers in Singapore continue to be exposed to higher quality coffees. In Singapore, our recent launch of Carte Noire, France’s leading brand of coffee, gives consumers another choice of coffee they can brew at home.
AFJ: This is expected to be the year of runaway raw material costs. What sort of strategies will Kraft adopt to cope with this?
Rising commodity costs remain a challenge but are not unique to us. Our strategies are on building brands, accelerating innovation and making investments pay off. We’re also taking price increases as appropriate.
We’ve adopted a “back to basics” strategy which focuses and builds on what’s working. What’s working is our investments in product quality, marketing and innovation on our key brands that lead to better price realization.
AFJ: Elaborate what brand building and “back-to-basics” mean for Kraft.
We’ve leveraged on what’s working in a variety of different ways. One example is to take a global concept and connect it locally with consumers. For example, we took Oreo, our best-selling cookie in the US, and made it less sweet to fi t consumers in China. We then turned it into wafers and rolls to further connect with the way they consume their snacks. Oreo is now the no.1 biscuit brand in China and China is the no.2 Oreo market in the world after the US.
AFJ: Besides costs, sustainability and consumer’s changing needs are some today's foremost trends. How does Kraft’s product innovation reflect its strategy in different markets?
Our consumers, customers and stakeholders have evolving needs and concerns. Listening and responding to them is key to helping our business grow. In the area of health and wellness, we have been introducing new products and improving existing ones to respond to different health and wellness concerns. In Asia, consumers are concerned about getting enough vitamins and minerals, and we respond by providing products that meet these needs. Our Tang Fruitrition, for example, is fortified with vitamins A, B, C and calcium.
In the US, where there is a growing obesity concern, we introduced and are expanding Sensible Solution products that include 100-calorie snacks (such as cookies and crackers, bars, puddings) to help people eat less with smaller portions, LiveActive cheese which promotes digestive health, and South Beach Living meals and snacks that are better-for-you products that also taste great.
In the area of sustainability, we have identified many areas that can most benefit our business as well as the environment, the local community and other stakeholders. For example, we are redesigning the baking process of our biscuits to reduce energy consumption and associated input costs. This will not only reduce costs but also enhance our brand reputation. Our consumer research tells us that consumers care about energy and recognize its relationship to the environment.
AFJ: What are some of the specialized needs and dietary trends in Asia and how is Kraft responding to this?
We respond to the different health and wellness concerns of consumers all around the world by introducing new products and improving existing ones. For Asia, in addition to our fortified Tang Fruitrition, we have other fortified products such as Eden cheese with vitamins A, B, iron, iodine and calcium. Our Kraft Singles cheeses are also enriched with vitamin D and calcium.
At the end of the day, Kraft wants to sustain and enhance the growth of our business in a responsible way. This will serve to benefit our consumers, customers, the community where we live and work, the environment and other stakeholders. Equally important, this “doing well by doing good” approach makes good business sense in the long term.
AFJ: Kraft is planning to sell cheese produced from cows that are not treated with the synthetic hormone recombinant bovine somatotropin, also known as rBST or rBGH. How does this align with your overall approach in a consumer driven market?
In the US, we plan to produce our reduced-fat cheeses—Kraft’s natural cheese made with two-percent milk and Kraft’s two-percent milk singles—using milk from cows not treated with rBST, also referred to as rBGH. This is part of our growth strategy to continue to ensure that our brands are relevant to our consumers.
It is important to note that natural and organic food is part of the diverse portfolio we provide to consumers around the world. The consumer is our ultimate boss and they have diverse tastes and wants. With Kraft Foods being one of the largest food and beverage companies in the world, we need to understand such varied consumer preferences. Our portfolio is well positioned to meet those needs, from snacks and the desire for premium foods, to convenience and health and wellness.
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