China Consumer

Too juicy

Kagome’s bitter China lesson sees it reinvent its marketing strategy

Baby carrots have been getting a makeover. The best way to get American kids to eat more veggies? Tell them that they’re as cool as burgers and fries.

The baby carrot industry in the US recently launched a $25 million advertising campaign which opted for a free-and-easy message to win over the younger audience. Cue heavy metal music and a young man (with grocery cart) dodging baby-carrot bullets being fired by an alluring woman in skinny jeans.

The slogan: “Eat them like junk food.”

It’s a marketing lesson that won’t be lost on Kagome, a Japanese vegetable juice company also seeking to reposition itself to improve its lacklustre sales in China.

The company – which launched the first Japanese-made tomato juice in 1933 – is far and away the dominant player in its home market. Japanese love Kagome’s reputation for quality and innovation. Kagome has even developed its own variety of tomato, ‘kagome993’, which it claims contains three times the lycopene (the anti-cancer agent) as the ordinary fruit.

With its prestigious track record, Kagome must have entered the Chinese market with some confidence. When it debuted five years ago – with its flagship 100% tomato juice brand – it believed that “good products would sell themselves,” Kikuo Sugiyama, general manager of Kagome China, told CBN Weekly. That meant not much budget for branding or sales promotion – the company says it relied almost entirely on word of mouth to sell its products.

But sales turned out to be poor. Locals complained that Kagome’s recipe tasted like tomato sauce as Chinese consumers were not accustomed to the taste of pure fruit and vegetable juices.

That leaves Kagome today with a brand-recognition problem. After five years, it is still largely unknown in China, trailing competitors like Huiyuan by a huge distance in name recognition terms.

Realising its earlier mistake, Kagome has now revamped its strategy.

The company launched a new product line called Kerenshu in January, with packaging prominently displaying its Japanese roots. The hope is that this will mean that it is perceived to be of higher quality than competing brands from local manufacturers.

Learning from earlier errors, Kagome has also invested more time and effort in its sales and distribution network, as well as allocated more budget for raising brand awareness.

Further, to appeal to local tastes Kagome is introducing new flavours. For instance, its carrot juice in China is sweeter than the version it sells in Japan. Chinese consumers “don’t like the taste of carrot juice despite knowing it’s healthy”, says Kenny Wong, managing director at WE Marketing in Shanghai.

In fact, the Chinese like their juices sweeter in general, so Kagome has changed some of its recipes to include more fruit and less vegetables. Kerenshu’s current bestseller is a carrot juice mixed with apple and grape.

The hard work seems to have paid off. Since Kerenshu was launched in January, Kagome saw sales rise 81.5% in the first six months versus the same period in 2009.

Competition for customers is intensifying. Kagome now competes with Lohas, a pure fruit and vegetable juice launched by China’s largest state-owned food manufacturer COFCO. Lohas has been marketing its products on Happy Farm, a hugely popular online game on Kaixin001 (China’s Facebook-like social networking site, see WiC28). Players plant Lohas-branded seeds on their virtual farms, which then grow into fruit plants and can be harvested to make Lohas juice.

Although it has been growing steadily, the pure juice sector remains a small part of the juice market, accounting for less than 10% of market share, says market research firm Nielsen. As it turns out, most consumers still tend to prefer sweeter drinks with lower juice content, just because they think they taste better.


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