How Nestle broke into Japan

Nestle's coffee challenge in Japan -

Japan is known to have a deep-rooted tea culture. Coffee was only available at "kissaten", a Japanese teahouse. A traditional kissaten is shown below.

To make coffee a successful beverage in Japan, Nestle had to be patient and understand the new market they were breaking into. Japanese are known to respect their culture and follow traditions. A big advertisement budget and marketing were not going to convince the Japanese people to consume coffee.

Here's how Nestle went about it -

Nestle introduced coffee-flavored sweets, chocolates, and candies into the Japanese market. The reason behind this was to get the Japnese people gradually accustomed to the flavor and taste of the coffee.

Nestle knew the majority of these sweets and chocolate were going to be devoured by the younger generation. This helped to create an attachment towards the flavor of coffee among the younger generation. As this younger generation grew up they developed a taste for coffee subconsciously.

Nestle's coffee strategy was a resounding success and today Japan is the 3rd largest importer of coffee.

KitKat's story in Japan -

In Japanese, KitKat transliterated to "kitto katto". Nestle changed the name ever so slightly but this tweak made a world of a difference. Nestle used the name "kitto kastu". This phrase has a very positive connotation. It means 'never fail' or 'you will surely win'. Nestle was now able to associate KitKat with the idea of good luck. KitKat became a very popular gift especially to students for their exams.

Nestle has over 300 flavors of KitKat in Japan including Matcha green tea and the red bean flavor which are derived from Japanese culture.

Nestle understood that employees in Japan are extremely hard working and overtime is common. In 2019, Nestle started "sleep cafes" where customers can choose between a regular or decaf coffee and take a quick nap.

Nestle's market entry strategy is an excellent model for companies to learn from about breaking into a new market. A company can have a great product or offer it at a lower cost than its competitors but one of the most important factors before a company breaks into a new demographic is to learn about the potential customers and the different environment. Using this knowledge gained, the company needs to adapt its products/services, which will then appeal to the new market.


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