Everybody in the U.S. knows that eating an Oreo is an experience. You split open the cookie, slowly swallow the filling, and then submerge its chocolate remains in your milk. At Kraft they call it, “Twist. Lick. Dunk.”
When the Oreo team brought their cookie to China in 1996, they expected that familiar enthusiastic response. Instead, sales were tepid. Consumers said the taste was too sweet and no one knew to “twist, lick and dunk.”
Taking a second look at the Chinese cookie eater, Kraft decided to redefine the Oreo experience. They made the cookie less sweet, created a cylindrical/straw-like Oreo that dipped but did not divide, and developed nonwhite fillings. With the new product, they marketed a cheaper package that more people could afford and an ad campaign that introduced the dunk in the milk concept. The result? Kraft is now #1 in China.
Here is an Oreo Wafer Stix ad.
The Economic Lesson
Being a trading nation is about more than shipping products abroad. At first it was the 18th century New England merchants who facilitated trade from home. During the 19th century, businesses like I. M. Singer & Co. (sewing machines) secured foreign patents, sold exclusive selling rights to representatives abroad and established foreign manufacturing facilities. Then, the next step was the foreign subsidiary through which the multinational firm increasingly took on the identity of its home away from home.
And that returns us to the Chinese Oreo.
An Economic Question: Which multinationals produced your Adidas sneakers, your Bic pens and your Ben & Jerry’s Ice Cream?