PepsiCo’s investment to localize its Quaker brand in China with traditional herbal medicine fortification and texture adaptations has enabled it to thrive, an analyst says.
In 2011 the Quaker brand represented 7% of China’s breakfast cereal market – placing it third, ahead of Kellogg’s.
While it has been present in China for nearly 20 years, it was re-launched in 2004; four years after PepsiCo snapped up the brand and a localization push commenced in 2010. As a result, brand revenue has surged 50% in 2010 and 2011.
“Quaker has done a good job in extending the appeal of its existing range of products in China by introducing local flavors and broadening its portfolio with products that reflect the breakfast habits of Chinese consumers,” Torsten Stocker, partner and head of Asian Consumer Goods Practice at consulting firm Monitor Group, said.
The firm has also provided clear functional benefits to consumers through ingredients rooted in traditional health concepts, Stocker told BakeryandSnacks.com.
Traditional Chinese Medicine fortification
“Quaker set up an R&D center in Shanghai in 2005 with the objective to incorporate local ingredients that are known to have therapeutic function for nourishing, boosting and strengthening internal organs,” he said.
Its range in China now includes ingredients such as red dates known for replenishing blood and Qi, wolfberry and white fungus for nourishing and healing dry coughs and clearing the lungs, he said.
The brand has incorporated these ingredients into a version of the country’s traditional rice-based porridge – congee – to appeal to the local palate, he said.
Quaker has also added lotus root starch to its oats to ensure a smoother texture as many Chinese consumers dislike the texture and taste of oatmeal, finding it coarse and bland, he said.
Its offerings in China include sweet and savory congee, with flavors including wolfberry and white fungus, red dates and milk, chicken and mushroom and Chinese tam and pork.
Tackling the ready-to-eat
PepsiCo has injected efforts into raising public awareness about the benefits of its Quaker range with lectures on health and sponsorship of key events like the World Heart Federation and the China Cholesterol Education Program, Stocker said.
Marketing efforts with free samples online and in stores has also been strong, he added.
“From what we have observed, the Quaker cereal brand is generally well-accepted. It has a brand image associated with health, high fiber, cholesterol control and consumers like the fact that it has adapted to local palates and habits,” he said.
The brand has a strong future in China both from a category perspective and the shift to health and convenience, underpinned by the rising urban middle class, he added.
“However Quaker’s current focus is on the hot cereal category only. It has no presence in the ready-to-eat (RTE) category,” Stocker said.
There are clear opportunities in the children’s breakfast cereal market in China that the brand should look at undertaking, he said. “It will be interesting to see how Quaker tackles this segment.”