Though Western retailers and brands are still trying to figure things out in their own home countries, most with international operations are keeping a close eye on expansion into the honeypot that is China’s billions of consumers. For Nestlé, the wait is over thanks to a key partnership.
The candy, coffee and everything else maker announced Tuesday (Jan. 19) that it had finalized a deal with Alibaba to begin listing select items on both Tmall.com and Taobao.com. Nestlé’s first eCommerce wares in China will include luxury confectioneries, alongside coffee machines and accessories. According to Sebastien Szczepaniak, vice president of group sales and eBusiness, these developments will help Nestlé grow its eCommerce sales by 25 percent by the end of 2016.
“Moreover, offline purchases are increasingly influenced by what we see online, so brand building has gone beyond having good television advertising and nice packaging,” Szczepaniak said in a statement. “Our ability to build brands on any touchpoint, be it digital or analog, is vital.”
While expanding into a new region is usually a good idea for companies capable of handling the growth, Nestlé might find itself in an extremely advantageous position if current trends in China hold. Speaking to Confectionery News, Thibaud Andre, a research associate for Daxue Consulting, explained how chocoholics in China are turning away from domestic brands due to poor perceptions of food safety and ingredient quality. If Nestlé can get its Chinese operations up and running as fast as possible, there may be a storm surge of consumer demand for its imported products.
“Generally speaking, imported food companies in China are taking advantage of the Chinese mistrust towards national brands due to the previous food safety incidents in China,” Andre said. “European brands, in particular, are associated with better quality.”
Well, it seems like a good time for Nestlé to start advertising its Swiss roots to Chinese chocolatiers.