Emerging Market Oreos
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Have you ever heard had a craving for green tea, banana and dulce de leche, or mango and orange Oreo cookies? Well, Kraft Foods (NASDAQ: KRFT) can satisfy that craving. If you are in China you can find the green tea oreos. Banana and dulce de leche can be found in Argentina. Whatever the local taste buds, Kraft has developed an Oreo to suit. Emerging markets will account for about half of Oreo sales this year. Over the past five years emerging markets including Asia and Latin America have been the major drivers of the brand's growth. Thanks to Kraft's overseas push, overall Oreo sales grew nearly 25 percent in 2011.
Also, Kraft has tailored the cookie's marketing to better resonate among local consumers. Success outside of developed markets is important for Kraft as it prepares for a spinoff of its snacks business later this year. The new company, Mondelez International, will focus heavily on emerging markets. There are many questions left to be answered about this spinoff snack company. The first set of questions centers around the name for this company. In Latin it refers to worldwide deliciousness. In Russian it refers to something not quite so nice. The second set of questions lay in the purpose of this company. Will it remain purely a corporate company? Or will it takeover the entire snacking section of Kraft? The only thing we know for sure is that Kraft will use this new name to extend its reach even further into emerging markets.
McDonald's (NYSE: MCD) is another U.S. food company that has entered into emerging markets. What has made them most successful there is there ability to cater to the local tastes. Now, a McDonald's will still have your old favorites wherever you go. However, the menu in China or South America will have quite a few things on it that you will not recognize. McDonald's learned how to adapt in order to get the most out of new markets.
If Kraft continues along this path of entering new emerging markets, it could prove to be quite fruitful for them. Surely the name change could throw some people off. That might be Kraft's only misstep here, but it could be a big one. Emerging markets present a big opportunity for U.S. brands as long as they are willing to adapt to the local environment.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.