Campbell Soup Co., the maker of Pepperidge Farm cookies and crackers, has its eye on China’s lucrative baked goods industry with an acquisition of Denmark’s Kelsen Group. The Chinese market for cookies (known as biscuits in much of the world) is worth a staggering $24 billion, and is growing at 20% a year. Kelsen has a twenty-year headstart selling its Kjeldsens Danish butter cookies in China, and is growing even more quickly, with sales up an average of 28% in the last three years.
By buying into the existing Chinese cookie market rather than pushing one of its own brands like Pepperidge Farms, Campbell may escape the painful experience of an arch-rival. Kraft’s Oreos struggled for almost a decade in China, until the company realized that Chinese consumers had less of a sweet tooth than westerners and introduced a range of new flavors.
Kraft’s experience shows that simply introducing western snacks to China rarely works. Other western companies have learned the lesson, either buying up established brands, or spending a fortune developing new products. US chocolate maker Hershey is one of the latter—it launched a non-chocolate milk candy in China this month—its first new product developed just for a foreign market.
Chinese consumers have no trouble with foreign baby food brands, because they are petrified that their local brands are no longer safe. Campbell’s recent acquisition of the US baby food maker Plum Organics may present opportunities there. But for just about every other food category, penetrating the Chinese market is bound to be complicated—that’s just the way the cookie crumbles.