KitKat is the world’s number three chocolate brand and accounts for over 40% of sales in Nestlé’s $7bn chocolate division, making it the firm’s top confectionery seller ahead of Brazilian brand Garoto.
New wave markets for Kit Kat
"We've got quite a broad base to grow," Stewart Dryburgh, global head of KitKat and chocolate countlines told ConfectioneryNews during a recent visit to Nestlé’s headquarters in Vevey.
"China's definitely one that we've got our eye on, but then there's a whole raft of other emerging markets that you could talk about where we've not yet built a significant presence, where there are big populations and the chocolate consumption habit is starting to grow."
He gave Indonesia, Vietnam, Pakistan and Nigeria as good examples as well as Latin American countries such as Argentina and Mexico.
- Produced under license in the US by Hershey
- Nestlé to source 100% sustainable cocoa from its Cocoa Plan for KitKat by Q1 2016
- The brand is manufactured in 13 countries: UK, Canada, Russia, Germany, Bulgaria, Turkey, Dubai, South Africa, India, Malaysia, Japan and Australia
He said that KitKat had a minimal presence in all these countries, adding that many international brands had yet to make their presence felt in these markets.
"We see quite a rosy future in terms of opportunities out there. I'm sure our competitors are looking at exactly the same and that's what makes the game so very exciting,” said Dryburgh.
‘It’s based on our ability to win’
Sandra Martinez, head of Nestlé's confectionery SBU, said emerging chocolate markets were growing twice as fast as developed countries.
She explained how Nestlé’s chooses its target expansion markets. "It's based on our ability to win in the win spaces or in any market in general. But mostly importantly, it's about what we're able to offer differently that the consumer will value,” she said.
Japan’s green tea KitKat for others markets?
Nestlé opened its first KitKat boutiques in Japan in January last year to showcase innovative flavors such as wasabi, green tea and baked KitKat.
"KitKat green tea is one of the bestselling SKUs, especially for foreigners in Japan....it's sold on the healthy notion of green tea, but also the taste,” said Martinez .
“We launched KitKat green tea in Malaysia - fantastic results. We're looking at what can be done and how we can expand those kinds of concepts. I believe there are some flavors that are on trend and could have global appeal,” she continued.
But Dryburgh was unsure whether these typically Asian flavors could work in Western markets. "The team there is tapping into very specific local needs,” he said. “Whether wasabi flavored KitKat would work elsewhere in the world, I'm not so sure it's necessarily going to be an immediate winner." But he said the novel varieties created in Japan were helping to evolve the brand.
KitKat unexposed to China pressures
He said the KitKat brand had grown strongly in both developed and emerging markets in the last six months, including in the US through Nestlé's licensee Hershey.
According to Dryburgh, some chocolate brands faced pressure from an economic slowdown in China, but KitKat has only a minimal presence in the emerging market.
The KiKat head said the brand had registered growth in one of Nestlé top confectionery market Brazil since its 2011 launch in the market.