Mondelez catching up with competitors in China’s e-commerce space: Bernstein report

By Tingmin Koe contact

- Last updated on GMT

Mondelez has a greater market share in online as compared to offline retail for its chocolate and gum products.  ©Getty Images
Mondelez has a greater market share in online as compared to offline retail for its chocolate and gum products. ©Getty Images

Related tags: Mondelez, Kraft heinz, wechat, JD.com, tmall

The US snacks and confectionary giant Mondelez is catching up with its rivals despite a late entry into China’s e-commerce space.

Mondelez, which runs digital stores on Tmall and JD, saw its e-commerce business in China grow by 90% in the first half of this year.

The firm which started to sell via China’s e-commerce platforms in 2016 is also the only Western company to enjoy success in the online sales of cookies, chocolate, and gum categories.

In fact, it seized a greater market share in online as compared to offline retail for its chocolate and gum products.

Its online market share for cookies stood at 12% - the highest among all companies that were analysed.

In addition, its online market share for gum and chocolate were 32% and 14% respectively – only behind Mars.

Titled “US Food E-commerce Part III: How are US Food companies positioned online in China”, the report from Bernstein was compiled based on data generated from Tmall.com and Euromonitor.

The report attributed Mondelez’s success to 1) shifting planning and incentive structure back to China to better link country-level performance with compensation, 2) the re-launch of Oreo brand late last year, and 3) a strong marketing push. 

In addition, it has teamed up with JD to run a promotional event, which a complete sold out in 12 hours.

“After having lost share in China in recent years largely as a result of being late to the e-commerce game, Mondelez appears to be playing catch up.”

However, the report also noted that its digital store was not well integrated in WeChat – which plays a critical role in digital marketing via the WeChat mini programs.

“We expect there to be further growth potential as Mondelez continues to adapt to more effectively compete with local players and to better accommodate the evolving local consumer demand,” ​said the report. 

Best performing product categories

Cereal, rice/pasta, and dairy products from the US are the best-performing products in China’s online space.

For instance, the e-commerce penetration of cereal, rice/pasta, and dairy were 18%, 17%, and 15%.

On the other hand, processed meat, edible oils, and ready meals enjoyed a relatively small e-commerce penetration, with the figures standing at 4%, 3%, and 1% respectively.

Kraft Heinz for dry baby food

In terms of dry baby food, Kraft Heinz was the top selling brand both online and offline. It also enjoyed the highest number of reviews online among major brands.

It enjoyed an equally strong market share in both online and offline space, at 22% and 23% respectively.  

Local Chinese brand Eastwes trailed behind, seizing an online market share of 12%.

Kraft Heinz is said to have a relatively well developed WeChat mini program as compared to Eastwes.

Its program engages parents by providing tips on baby diets and games that they can play with their children.

However, its WeChat interface can only direct customers to its store on JD, while that of Eastwes can direct customers to multiple platforms, including JD, Tmall and Mia.com.

Seasoning market: Chinese dominated

The seasoning market is largely dominated by local Chinese brands in both online and offline retail. 

Haitian topped the online and offline retail with a market share of 12% and 6% respectively.

This is followed by Lao Gan Ma, which occupied 4% and 5% of the offline and online market share.

Kraft Heinz was the only US brand that managed to earn a piece of the online and offline market share at 3% and 1% respectively.

“Based on the early results, local brands appear to dominate the seasoning market online as localised products such as soy sauce and hot pot seasoning are popular among Chinese consumers whereas the market for Western-style sauces remains small, albeit growing,”​ said the report.

“Seasoning products sold by McCormick and Kraft Heinz are much less localised, resulting in lower market shares.”

“That being said, as they better adapt to local consumer demand and as the e-commerce channel grows in the seasoning category, their relative positioning could evolve overtime, which we will continue to monitor.”

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