Nestlé offers overseas products to Chinese consumers through new partnership with Alibaba
Damak and Baci are among the 154 products from Nestlé’s 30 brands that were promoted on Alibaba’s Tmall this week through a campaign called “Superbrand,” as Nestlé sees China’s growing e-commerce as an opportunity.
“This was the first time the entire local range had been promoted,” Nestlé said in a statement, “67 of which were introduced to Chinese consumers for the first time from overseas.”
Over the next six months, Nestlé will also be holding “country fairs” online to highlight its products from different countries, starting with an Australian country fair in August, according to company’s spokesperson, Chris Hogg.
Technology is a growth driver
Upon celebrating the company’s 150-year anniversary last week, executive vice president of Nestlé Asia, Wan Ling Martello, announced the partnership with Alibaba at Beijing’s Bird’s Nest stadium. She said consumers in China are adapting to technology faster than almost anywhere else in the world.
“The real growth driver is technology, as logistic and labor costs [for brick-and-mortar stores] are going up,” Martello said.
Over 75% of Chinese consumers use internet for browsing and purchasing, and about 80% of shoppers give reviews online, according to Martello.
Nestlé’s increasing online presence in China has led its e-commerce sales to double in 2015, with its chocolate business growing by 289% compared to the previous year.
“Not only does [Nestlé’s online presence] help increase penetration into larger cities, it helps them gain wider potential distribution into prefecture level cities and towns, as well as market directly to rural consumers,” Mintel’s director of research Asia Pacific, Matthew Crabbe, told ConfectioneryNews.
Strong competition within online market
Crabbe said Alibaba’s Tmall makes sense as a partner for Nestlé, as Tmall had an estimated 62% share of the business-to-customer online retail market by the end of 2015.
“That strong share of online shopping volume, plus Alibaba's increasing spread of physical distribution channels all mean Alibaba is able to offer Nestlé greater depth of coverage than most other online portals,” he added.
Alibaba recently took a 20% stake in Suning, which has 1,600 stores across China.
Crabbe believes the overall Chinese online retail market will continue to see slowing growth, despite the recent rapid growth in grocery online retail. This will create much stronger competition among food companies.
Nestlé’s competitor, Mondelēz, also partnered with Alibaba earlier this year, hoping to generate over $1bn of e-commerce revenues by 2020, this site previously reported.
“It is therefore imperative for brands to gain market share online, as well as in stores, in order to better compete when market maturity leads to a more competitive environment,” Crabbe said.