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Chocolate tourism: Nestlé to open second KitKat factory in Japan

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By Oliver Nieburg+

12-Jul-2017
Last updated on 13-Jul-2017 at 08:41 GMT2017-07-13T08:41:44Z

Nestlé Japan says local flavors are proving popular domestically and among visitors to the country. Photo: Nestlé
Nestlé Japan says local flavors are proving popular domestically and among visitors to the country. Photo: Nestlé

Nestlé plans to open a second KitKat factory in Japan to satisfy demand for local flavors such as green tea and wasabi among tourists.

The newly-built plant in Himeji adds production capacity beyond the firm’s chocolate factory in Kasumigaura in eastern Japan, which has produced KitKat in Japan for the domestic market since 1991.

The Himeji plant will meet increased demand at KitKat boutique stores and in e-commerce from local consumers and tourists, said Nestlé.

Existing factory at capacity

Takuya Hiramatsu, corporate affairs at Nestlé Japan, told ConfectioneryNews: “Sales for KitKat in Japan is growing every year. 2016 full year sales are about 1.5 times bigger than 2010 full year.

“The capacity is almost full, so we now will build a KitKat factory for the first time in 26 years and start operating from August 1, 2017.”

The Himeji plant will produce seven premium products under the KitKat Chocolatory range.

 

The Himeji plant will produce seven KitKat SKUs. Photo: Nestlé

Nestlé launched KitKat Chocolatory – the world’s first premium KitKat product in 2014. The range is sold across seven KitKat boutique stores in Japan.

Nestlé said the Himeji factory will cater to future demand for KitKat and allow it to create line extensions.

Premiumizing KitKat

KitKat is Japan’s leading chocolate brand, according to Nestlé. The company says the brand’s popularity is growing not only among domestic consumers, but also with tourists to Japan looking to try novel flavors.

Nestlé produces 30 varieties of KitKat for the Japanese market including green tea, wasabi, purple potato and strawberry cheesecake flavors.

Nestlé had brought KitKat into the premium space in Japan with its seven boutique stores and SKUs such as Sublime. Photo: Nestlé

It has also previously produced local and seasonal flavors such as soy sauce and miso.

“Premiumization is one of Nestlé’s global key growth pillars,” said Hiramatsu. “For Japan, this is particularly relevant as we are operating in a highly saturated market environment.”

Domestic firm Meiji led the chocolate confectionery market in Japan last year with just a 12% retail value share in 2016, according to Euromonitor International data.

The small market share for the leading player differs to other markets such as China, where the leading player, Mars, accounts for around 40% of retail value sales.

Japanese consumer preferences

Hiramatsu said Japanese consumers are more sensitive to sweetness, so KitKat in Japan is less sweet than in other markets.

Nestlé also sells SKU KitKat “Sweetness for adults” (Otona no amasa) as a less sweet option for adult consumers, in dark chocolate and green tea.

Hiramatsu added Japanese consumers are concerned about getting chocolate on their hands and prefer smaller bite-sized options, so Nestlé has produced a smaller version of KitKat for the market.

Many Japanese consumers also prefer to try a large variety of flavors little by little, he continued.

Euromonitor predicts the Japanese chocolate confectionery market will register a +4% compound annual growth rate in retail value sales to reach ¥682bn ($6bn) in 2021.

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