Source: Finance World Weekly (ID: cjtxzk) For the post-80s and post-90s generations, Oreo has gradually transformed from the chocolate sandwich cookie associated with "twist, lick, dunk" into a fun snack to share with friends or a gift option. Oreo has completed its youthful transformation during its second localization in the Chinese market, with Tmall playing a significant role. "Twist, lick, dunk" is a memory of Oreo cookies for most post-80s and post-90s generations. The cookie giant Oreo entered the Chinese market in 1996 and took a decade to localize, after which it established a firm foothold in China through successful advertising slogans and retail experience. However, 2012 marked a slowdown in sales growth for China's biscuit market. According to Zhicheng Consulting data, China's biscuit consumption was 5.44 million tons in 2011 and 6.24 million tons in 2012, an annual increase of 800,000 tons. However, from 2012 to 2017, biscuit consumption growth slowed, with an average annual increase of only 464,000 tons. The fragmentation of young consumers' taste preferences and the increase in snack categories are important reasons for the slowdown in biscuit market growth, and they also pose the second challenge Oreo faces after entering China. In the Chinese market, where e-commerce is developed and enterprises are in a digital transformation period, Oreo is undergoing its second localization process. This sandwich cookie company is trying to reach more young Chinese people through e-commerce and hopes to use digital technology to change the traditional distribution model. Turning Point Oreo was founded in 1912 and is a traditional cookie brand. In the Chinese market, Oreo's offline sales network covers major supermarkets and small village shops. In the first 10 years after entering China, Oreo's development was not smooth. At that time, the awareness of Oreo differed between the US and Chinese markets. In the US, Oreo is a daily hunger-relief food, often consumed with afternoon tea, with high frequency; in China, Oreo is an impulse purchase, either for energy or for fun. Additionally, the Chinese market has obvious taste differentiation, and Chinese consumers' preference for sweets is not as high as that of American consumers. Oreo's growth in China was initially slow. At a critical moment, Oreo decided to make some localization adjustments, changing the traditional 12-piece packaging to 3- or 6-piece packaging, with smaller cookies and lower sweetness, better suited to Chinese tastes and dietary preferences. At the same time, "twist, lick, dunk" was broadcast on major TV stations across China, becoming one of the most widely covered advertisements of that year. The transformation was clearly effective. In 2012, Oreo's revenue in China saw a leapfrog growth. During this period, as an impulse purchase product, Oreo continued its advertising and marketing efforts. In 2011, the Oreo China team developed a birthday cake-flavored Oreo cookie. With the rise of social media like Weibo, Oreo also launched various topics on Weibo, focusing on parent-child strategies, such as "Share Childhood Moments" and "Twist Open Parent-Child Moments." In 2013, Oreo invited Feng Xiaogang to direct a micro-film titled "Oreo: Parent-Child China." During this period, Oreo's offline sales channels became more complete, covering third- and fourth-tier cities, and even county and town markets. However, as Oreo's annual marketing budget in China increased, its expansion speed in the Chinese market did not meet expectations. The development speed of the Chinese market exceeded the imagination of most foreign retail enterprises, and consumer demand showed a trend of fragmentation. Some consumers began to pay attention to calorie content or dental health; others chose Japanese or Korean snacks with better packaging. According to Northeast Securities data, Oreo's market share in China's sandwich cookie market was nearly 50% in 2013, but dropped to about 40% in 2016. For Oreo, the second turning point had arrived. Young Fans Within Oreo, the transformation had already begun. When announcing its new brand strategy in 2015, Oreo no longer adhered to its previous parent-child route, changing its slogan to "Play with Oreo" and launching personalized customization services, aiming to win back young consumers' hearts. In 2016, Mondelēz China headquarters adjusted Oreo's advertising channels. Twenty years ago, Oreo spent most of its budget on TV ads; with changes in media channels, Oreo chose more effective channels, such as e-commerce. Multiple data agencies indicate that Chinese post-90s and post-00s consumers grew up in the internet era, are digital natives, and are accustomed to e-commerce shopping. To reach young Chinese people, e-commerce is an essential channel. Taking Tmall as an example, people aged 18 to 25 are the main consumer group, accounting for nearly 40%. This group overlaps significantly with Oreo's target users. How to leverage e-commerce to attract this young consumer group became a key breakthrough point for Oreo, and cooperation with Tmall became the focus. In 2016, Oreo decided to join Tmall's Super Brand Day. During in-depth communication with Oreo, the Tmall team discovered that Oreo had significant flexible supply chain potential. The two sides jointly decided to maximize this value, by transforming the flexible supply chain and Tmall's transaction chain, allowing consumers to interact more with the Oreo brand while purchasing. Oreo's first Tmall Super Brand Day went live on May 6, 2016. During the event, Oreo launched a coloring box set with three different themed packaging designs by popular illustrators. Consumers could choose the packaging design and text arrangement online, and Oreo would produce according to consumer needs, providing customization services. The coloring box attracted a large number of young consumers immediately upon launch, and the server was on the verge of crashing, prompting Tmall to urgently add servers. Mr. He Zhifeng, Head of E-commerce for Mondelēz Greater China He Zhifeng, Head of E-commerce for Mondelēz Greater China, told Finance World Weekly that in 2016, Oreo had already clearly adjusted its target consumer group. Over the past 20 years, Oreo had been telling parent-child stories to mothers, but that year, Oreo shifted to young consumers. The coloring box was just the beginning. In 2017, Oreo launched a paper music box shaped like a record player during Tmall Super Brand Day. The music box resembled a record player; placing an Oreo cookie on it would automatically play a song. If you took a bite and placed it back, light-sensing technology would recognize the bitten cookie and play a different song. Within half a day of launch, the music box sold out. Even a year after the record player music box was launched, consumers were still leaving messages on the Mondelēz Tmall flagship store asking if it was in stock. Oreo's e-commerce team found that young consumers had a significantly improved perception of Oreo, and a group of young gamers and designers became new fans of Oreo. "If Oreo only wants to make cookies, it will always be just a cookie," He Zhifeng said. For the post-80s and post-90s generations, Oreo has gradually transformed from the chocolate sandwich cookie associated with "twist, lick, dunk" into a fun snack to share with friends or a gift option. Oreo has completed its youthful transformation during its second localization in the Chinese market. He Zhifeng now travels to Hangzhou once or twice a week. In his view, e-commerce is not just a sales channel but also a platform for brands to approach young consumers, interact with them, and conduct in-depth operations around their needs. At the end of 2018, the Oreo music box was launched in markets such as the US and Southeast Asia, winning marketing awards in the US market. Notably, before this, overseas consumers had already learned about the Oreo music box on Tmall through social networks like Facebook and Twitter, even giving rise to Chinese purchasing agents. Local Flavors In terms of flavors, Oreo is also conducting a second exploration. Oreo has launched cookie flavors including chocolate peanut butter, cinnamon bun, red velvet cake, popcorn, Danish raspberry, cherry cola, and more; in 2016, Oreo also launched Swedish fish-flavored cookies in the US market. However, not all of these flavors were introduced to the Chinese market. Facing Chinese consumers who are naturally picky about food and have distinct regional tastes, Oreo is particularly cautious. Another factor to consider is cultural factors. Chocolate peanut butter is a popular spread for bread at breakfast in the US, but it is not a familiar spread for Chinese people. Flavors like popcorn, Danish raspberry, and cherry cola also face cultural differences. In 2018, Oreo made a local new flavor attempt that successfully brought young people closer to the brand. In this attempt, Oreo launched a cookie set with eight flavors: spicy chicken wing, mustard, seaweed, mango, strawberry, vanilla, blueberry, and chocolate. Most of the eight flavors were creative extensions of regular flavors, while spicy chicken wing and mustard made significant breakthroughs. "I never thought spicy chicken wing flavor would appear in Oreo cookies," He Zhifeng recalled. The spicy chicken wing and mustard flavored Oreos quickly became internet sensations, and some food bloggers even spontaneously live-streamed taste tests. These two "whimsical" flavor suggestions came from the Mondelēz Suzhou Biscuit R&D Center. Research results showed that salty and spicy are current flavor trends among young Chinese consumers. At the same time, consumer research data from Tmall's New Product Innovation Center provided supporting evidence. After deciding on the new flavors, Oreo distributed the new products to target consumer groups through the Tmall platform to test their effectiveness. If the test response was poor, adjustments could be made immediately, reducing trial-and-error costs. Ultimately, Oreo launched these new products in just 5 months. Previously, Oreo had cases of developing new flavors based on market research, but the development cycle often took 12 to 18 months. This means that through cooperation with Tmall's New Product Innovation Center, Oreo shortened the new product launch cycle by two-thirds. It may seem like just a time reduction, but it actually represents a new production method. The shorter the time, the more the new product meets the current consumer market demand, and thus it is relatively easier to succeed—such a new product launch method can only exist in a market with developed e-commerce. After deep cooperation with Tmall, Mondelēz also made significant adjustments to its supply chain, improving the response speed from product design to production to shorten the product launch cycle, and achieving full-chain data feedback from R&D to production and sales. He Zhifeng told Finance World Weekly that Mondelēz is currently considering applying customized flavors and creative marketing to daily sales processes. However, this also means that Mondelēz China's localization task still has a long way to go. Future Space For traditional retail brands, localization is not just about flavors and youthfulness, but also channels. In China, where e-commerce is developed, Mondelēz is undergoing channel digitalization. Over the past 20 years, Mondelēz's offline retail channels in China have basically matured. Products are transported layer by layer from first-level distributors to various provinces, cities, counties, and towns across China, and local distributors then deliver products to supermarkets and small shops. Although the offline network has wide coverage, companies cannot clearly understand the conversion between layers of channels. Therefore, since 2017, Mondelēz has been committed to achieving channel digitalization, making all links visible and better understanding young consumers' offline purchase scenarios and needs. In August last year, Mondelēz and Tmall announced a cooperation on smart stores. In RT-Mart offline stores, consumers only need to scan a QR code to become Oreo members, and these membership data will automatically be stored in Tmall's data bank. "In the future, we have a lot of space to impress consumers, such as customized products and personalized services," He Zhifeng said. Now, from management to grassroots employees, from the China team to headquarters, Mondelēz adopts an open attitude towards e-commerce. The size of Mondelēz China's e-commerce team has expanded from an initial 5 people to about 30 people. He Zhifeng is confident that Mondelēz's localization path is not yet complete. In the new environment, brands will have new ways of expression. For Oreo, the new way of expression will not stop at a simple cookie, but will become a "playful" brand in the eyes of young people, moving from the original single supermarket scenario to a big data full-scenario approach. "In the future, Mondelēz will embrace e-commerce and the Chinese market even more." 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