Global food and beverage giant Nestle is strengthening its longstanding relationship with Alibaba Group with a digital marketing campaign in China that aims to capitalize on Alibaba’s integrated online marketplaces and media platforms.
The Swiss company yesterday kicked off the six-month campaign by launching 67 products on Tmall.com, Alibaba’s leading B2C online shopping site, that have never been available in China before, including Nido milk powder from the Netherlands, Nestle Damak chocolate from Turkey, Nescafe Gold from France, and Nestle and Wyeth infant nutrition products from Switzerland, the U.K. and Germany. The three-day Super Brand Day promotion features discounts on a total of 154 products from 30 Nestle brands.
Other marketing activities Nestle has planned in the months ahead will showcase its brands to Chinese customers countrywide via what Alibaba calls its “e-commerce media ecosystem,” a growing digital marketing network encompassing social, mobile and web-based media outlets.
For example, Nestle marketing will be featured prominently on popular video programs on Alibaba Group’s Youku Tudou video streaming site, one of China’s top online video platforms. The campaign includes a Nestle video that can be viewed on virtual reality headsets, marking the first time Youku Tudou has worked with a brand partner on a virtual reality campaign in China. Starting in August, Nestle also plans to feature its products on Alibaba’s Tmall Country Pavilions.
Alibaba Group CEO Daniel Zhang said his company is combining digital media with data on consumer behavior to enable multinationals like Nestle to undergo a “digital transformation,” building their brands and managing customer relationships in innovative new ways. “We will continue to expand on our partnerships and infrastructure to deliver access to the widest selection of the best products from around the world to consumers,” Zhang said in a statement, “whether they live in Beijing or a rural village in the farthest edges of the country.”
Nestle is basing its upcoming China campaign on its 150th anniversary. The company launched its first Tmall virtual store in 2008 and has 14 flagship outlets on the platform.
Faced with disappointing growth in China recently, Nestle is focusing on e-commerce to help jumpstart sales, according to a Bloomberg story. Nestle’s e-commerce business is growing at triple-digit rates in China and is more profitable than sales in physical stores, according to Bloomberg.
“E-commerce is becoming an important growth driver for Nestle’s business in China,” which has become the company’s second-largest market worldwide, said Nestle Executive Vice President Wan Ling Martello, head of Asia, Oceania and sub-Saharan Africa operations.
“Consumers here are very discerning and adapting to technology faster than almost anywhere else in the world,” she said in a statement. “There is no better place than China to start the story of the next 150 years.”
Prior to the campaign launch yesterday, Martello answered some questions posed by Alizila via e-mail. Here’s what she had to say:
How long has Nestle been selling in China?
Nestle’s business activities in China started over 100 years ago when the company registered the Eagle Sweetened Condensed Milk brand in Hong Kong in 1874. It turned out to be Hong Kong’s first registered trademark. Large-scale investment started in the 1980s after China adopted the open-door policy. Nestle built its first milk district in Shuangcheng of Heilongjiang Province in 1987 and the first dairy factory, also in Shuangcheng, became operational in 1990.
How fast have sales been growing?
Nestle has a very diverse product offering in China, from infant and senior nutrition to confectionery, from congee to bottled water, from coffee to culinary. Apart from the Nestle brand, our products are also sold under several other popular brands in China such as Yinlu, Hsu Fu Chi, Totole and Wyeth.
Some categories grow faster than others but in general the business is growing. China is now the second-largest market of the Nestle Group.
When did Nestle begin selling directly to consumers through e-commerce?
Nestle is not new to e-commerce. For example Nespresso, our premium portion coffee brand, has been selling mainly through e-commerce, both in China and before that globally for many years. We’ve been embracing e-commerce at its nascent stage. Already, more than half of the sales of Nestle China in pet care, and 30% of the sales in coffee and infant nutrition respectively, were generated through e-commerce. E-commerce is becoming an important growth driver for Nestle’s business in China.
What does e-commerce offer in terms of building brand awareness that traditional sales models do not?
The challenge for brands is to sustain communication and engagement with consumers in emerging markets. E-commerce effectively closes geographical and time gaps between brands and consumers. As such, our partnership with Alibaba will allow Nestle to develop an innovative business model, as it not only provides online sales solutions but also builds up an ecosystem where brands can intrinsically combine branding, marketing, sales and customer care together. Likewise, we will leverage our strong Chinese and international brands to support Alibaba’s global expansion.
China’s largest cities are more mature retailing markets than smaller ones. What is Nestle doing to introduce its products in smaller cities and rural areas?
Nestle China already has a distribution network that can effectively reach lower-tier cities. Our partnership with Alibaba will enable us to go even deeper thanks to its coverage. It allows us to bring the best of the Nestle world to consumers who were disadvantaged in market access due to their remote and inconvenient locations.
