To keep the flow on the constantly evolving Chinese market, Western companies have to stay aware of any market change. They first have to adapt to the specific Chinese digital market and e-platforms, and then know how to use them in a way to stay in the centre stage. That is why our SMART-team helps you study the latest big companies trends’ on the Chinese market, to see what to do or not, to follow the flow.
Nestlé as one of the biggest nutrition, health and wellness groups in the world, is trying to surf on the Chinese consumption wave by being present on the most important e-commerce Chinese market after a slowdown in their growth. Let’s see how they managed to immerse themselves in China with the coffee market example and the latest promotion news on Alibaba e-commerce platform.
Why has Nestlé had better success in China?
- In 2015 China was the second best consumer market after the USA, with a growth of 6.4 billion dollars.
- According to Mckinsey, the Chinese e-commerce sales will be more than the USA and Europe combined from 2018.
- 40% of Chinese consumers are buying their groceries online where only 10% of Americans are participating in e-commerce for groceries.
Nestlé is already famous in China, with a good adaptation in its food industry with infant beverages, mineral water, and soluble coffee. But because of the tough competition, and the slowness of following the e-commerce trend they have lost some of their advantages to their competitors until now. As China is becoming the biggest world market, especially in internet sales, Nestlé wants to have its part of the cake. They found the way to cope with that delay by delivering a new campaign on China’s most famous e-commerce platform: Tmall, in which food is the most popular category it sells, see below.
How did Nestlé become well known in China?
First, the policy was to buy some Chinese Brands to establish their value in the grocery shopping market to extend their influence. They purchased 60% shares from Yinlu, the Chinese beverage leader, and Xu Fuji the Chinese leading candy enterprise.The CEO of Nestlé China said “The most important is to gain market share. We grow faster than our competitors in all segments. Besides, we have a very broad product portfolio that ensures long-term growth.”
The population is scared of the frequent food scandals of domestic brands, which makes Chinese having more trust in foreign ones, especially for infant milk formula. That is why Nestlé likes to remind consumers that their Switzerland origins include beautiful, natural, and healthy products.
Nestlé digital power on the Chinese market
The 700 million internet users in China are really into new technologies, 90% of them use their mobile phone to search for information or buy products and food.
“Nestlé’s e-commerce business is growing at triple-digit rates in China and is more profitable than sales in physical stores” according to Bloomberg.
To become well know, Nestlé had to use different digital tools. We will look in-depth with one good example of Nestlé’s coffee brand.
Through the Coffee brand : Nescafé
Nestlé helped the Chinese get used to some western habits like drinking coffee instead of tea and eating yogurt or milk products. The coffee market is growing at 14% per year in China and 2% worldwide, and China is starting to differentiate the coffee quality and becoming more exigent. Nescafé is becoming the new grand-cru beverage for China!
Due to its attractive and adapted social media contents, the instant coffee leader on the Chinese market became Nescafé with 72% market share. It targets professional and business urban workers, who are the growing middle class. They desire to adopt the Western leisure lifestyle to show their social success, with a certain quality of living shared on their Weibo and their WeChat moments. Nestlé provides examples on their own account with quality content such as games or beautiful pictures, and DIY recipes which mixes coffee with fruit flavours, ice cream and a lot of milk, just as the Chinese like it.
After Starbucks did a great job in China introducing coffee and the coffee shop lifestyle to the Chinese, Nescafé tries to show citizens that it is also great and chic to drink coffee at home making your own style DIY coffee or with the advance Nespresso machine and its unique coffee capsules. They use the hot KOL 胡歌 Hu Ge actor and singer, on an H5 WeChat to represent a wealthy consumer drinking his coffee at home in a casual but trendy way, with a video, some gifs, and pictures.
Nestlé and Alibaba launched an e-commerce push
A Bloomberg survey revealed that Nestlé’s growth in China has slowed in the past few years as the company didn’t react quickly enough to trends like e-commerce and healthier eating.
To react to that, a new strategy has been found by making a big promotion on Alibaba’s Tmall platform. They start a unique digital offer in celebration of Nestlé’s Swiss heritage and passion for nutrition over the last 150 years. The campaign started at the beginning of June and will run for 6 months. Promotional prices are offered, and 67 Nestlé brands from around the world are available to Chinese consumers for the first time.
Alibaba Group CEO Daniel Zhang said “Our company is combining digital media with data on consumer behavior to enable multinationals like Nestlé to undergo a “digital transformation”, building their brands and managing customer relationships in innovative new ways. “
Nestlé exploits all the tools and options provided by Alibaba, like the ability to use users data to provide a personalized shopping experience. And therefore to show targeted advertising on social networks, online magazines, and phones.
If you want to see another example of Nestlé’s digital creation campaign here
Brand and companies can make a partnership with Alibaba by launching their own Tmall channel to show the authenticity of their product to the Chinese tech-savvy consumers who like to buy anything on the internet, but with fear of counterfeit.
Nestlé founded the move to have their brand highlights again, after a good beginning on the fast changing Chinese market, they had to make a partnership with Alibaba, one of the Chinese big e-commerce platform, to become a player in the real game again against a number of other competitors and e-commerce resellers.