Mondelez International has taken its breakfast biscuit concept, Belvita, to China in a bid to capture the attention of the young, time-poor consumer on the hunt for convenience. But with different tastes and habits at breakfast, can the Chinese consumer be convinced to take on Belvita as an alternative? Hannah Abdulla explores.
Mondelez International last month announced it was launching its Belvita breakfast biscuit line in China in a bid to capture growing demand for “modern eating habits” in the mornings.
Launched in 2010 and with a presence in 54 markets across Europe, Australia, Brazil and North America, Belvita raked in US$600m in revenues last year.
The breakfast biscuit market per se is not new in China. Data on the Chinese breakfast biscuit market is hard to come by since the products are grouped into the wider biscuit category but there are companies operating in the segment. Jiashili is one, whose breakfast biscuit portfolio spans around 30 products, catering to different tastes such as salted breakfast biscuits, sweet breakfast biscuits and even sugar-free breakfast biscuits. Beijing Meidan Food Co. is another company selling the products.
However, the availability of breakfast biscuits could work in Mondelez’s favour, argues Joy Huang, research manager at Euromonitor International. “Chinese consumers are educated to eat breakfast biscuits with milk or juice. Hence, the concept itself is not hard to understand,” she says.
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At first glance, demographic trends in China could favour the category. The country continues to urbanise and, despite the recent headlines about slowing economic growth, its middle class continues to grow.
“If you look at the changes going on in China, with more people living in cities, working long hours and commuting, breakfast is probably the day-part that’s changing the fastest and the biscuit concept – at a very different price and functionality point than bars in developed markets – seems to fit that nicely,” says Jonathan Feeney, analyst at Athlos Research.
However, despite the breakfast biscuits available to Chinese consumers, eating biscuits at breakfast is not a widely practised activity among the Chinese, Huang reflects. She says preferred Chinese breakfasts are “soft and moist” – Baozi steam-filled buns, for example, or Congee rice porridge. Biscuits are not favoured due to their dry, “not-so-tasty” profile and so the concept might need to be given some time before it has greater acceptance.
Competition for Belvita will not just be limited to existing breakfast biscuits or even alternative options for that time of the day on sale in retail outlets. Foodservice players are increasingly eyeing the Chinese commuter.
“Fast food chains are taking the breakfast market more seriously in recent years. Price is also very acceptable, which could be as low as CNY6 (US$0.94) per breakfast set that includes a burger and a cup of coffee. And it’s not just fast food chains, even full service chains like Pizza Hut also offer breakfast. The foodservice industry could compete strongly in the breakfast market,” Huang says.
That is not to say the Belvita launch is doomed to fail but it could serve Mondelez well to consider how the products could cater to local needs so it can be taken seriously as a breakfast option.
Flavours could be one area to think about. Last September when Weetabix owner Bright Food launched a range of Alpen cereal bars to the market, the range included a green tea flavour to make it more relevant to local consumers.
More broadly, biscuits is one area in which Mondelez has a reasonable amount of know-how with its Ritz, Tuc and Oreo biscuits all available in China. Alexia Howard, analyst at Bernstein Research points to Oreo as an example, noting in China, it grew from US$30m in 2007 to half a billion dollars today.
With Oreo, Mondelez launched the product for China in a green tea ice cream flavour as well as double fruit variants such as Orange and Mango or Raspberry and Blueberry Creme. Then there was the launch of Oreo Thins, designed to cater to more adult tastes, and so successful in China, the company planned its global roll-out earlier this year.
“That acceleration was achieved after the exact Oreo taste profile was tailored to local Chinese preferences,” asserts Howard.
Differentiation is key, particularly for a Chinese consumer exposed to an increasing number of brands from the west. Feeney argues Chinese shoppers have been exposed to “hundreds of new Western food brands in the past five years” and, he claims, they “don’t draw many distinctions among them – at least not the distinctions that European and American consumers do”.
“We think the geographic expansion of European and American brands in most of the Western Hemisphere has given companies a false sense of security about China generally – it really is different. Highly nuanced brand connotations are more available to consumers that have a lot in common historically and culturally. These tend to be lost on the Chinese consumer who thinks of western brands more generically and may prove a lot less receptive to the umpteenth iteration of a category – particularly considering the income levels involved here that approximate those of a blue collar Midwestern US or British city.”
But while the Chinese consumer may still be struggling with drawing the differences between two breakfast biscuit offerings from two entirely different western brands, the print of a western company’s name on the box is worth its weight in gold.
Chinese consumers’ trust for western products is on the up thanks to perceptions of stricter quality control, especially after the country’s local manufacturers have been tied to a number of food safety scandals. These scandals are only set to get larger as people urbanise more quickly, ahead of improvements in cold chain, food safety standards and employee hygiene, Feeney’s Athlos Research argues.
Then of course is the exposure today’s Chinese consumer has to western products, which has been particularly helped by global tourism. “A population of approximately 100 million internationally are bringing western tastes back with them far faster in terms of adoption than did their Japanese and Korean peers of yesteryear, so tastes are changing at a greater clip and in a time compressed fashion,” a report from Athlos Research reads.
Feeney adds increasingly diverse tastes among Chinese consumers could offset some of the other challenges faced by “any western company” such as crowded supermarket shelves making it tougher for manufacturers to stand out, and some of the distribution challenges which make it harder to penetrate inner cities.
He says: “We think [Belvita] has as good chance as any. It’s a unique take on an occasion where a lot of consumers are making different kinds of choices than ten years ago and from a company that knows the market well.”
