When Switzerland-based consumer packaged goods (CPG) company Nestlé decided it wanted to break into Asia with its KitKat confectionary product, the success that followed was astounding.
“In 2017, we increased sales in Japan by 50 percent,” said Yuji Takeuchi, marketing manager for the Confectionery Business Group at Nestlé Japan. “KitKat is now the number one chocolate brand in the country, selling 4 million bars a day. This has been achieved by launching over 30 varieties of the product, tailored specifically to the unique tastes of the market. Flavors include miso, wasabi, matcha green tea, purple sweet potato and apple.”
Success like Nestlé’s makes it easy to see why new markets are attractive to brands seeking growth. Asia’s emerging markets alone represent US$4 trillion (3.53 trillion euros) in new spending and 400 million first-time consumers, Accenture Strategy reported in its 2018 study “Live the Growth Dream in Asia.”
Widen the lens to emerging markets worldwide and the appeal is even greater. As PwC’s 2017 “Consumer Packaged Goods Trends” report points out, Latin America, the Middle East and other emerging economies offer significantly more growth potential than developed markets.
Despite the clear opportunity, achieving success in these markets is far from straightforward, and brands tend to overlook one area in particular: the packaging.
“Taking existing products into new markets has long been a path for growth, but it’s not without challenges,” said Felicia Rosenzweig, a partner at UK brand and marketing consultancy Prophet. “While companies are typically prepared for the difficulties of production and distribution, packaging is just as complicated. As well as updating packaging with local ingredients and in local languages, CPG firms must evaluate which components are regulated and in what ways.”
CLEARING REGULATORY HURDLES
Jeffrey Vaca, head of quality and food safety for the Americas at Italian food manufacturer Barilla, knows packaging challenges only too well, and most of them are related to meeting different regulatory requirements in each market.
“One of the biggest hurdles we face is to make sure that every product, and its packaging and labeling, meet the regulations in each local market,” he said. “Barilla has sales in more than 100 countries. All products sold within these countries are labeled to meet local regulatory standards. This often means several localized packages for the same product.”
Similarly, Argentine confectionary manufacturer Arcor’s popular Bon o Bon candy product, sold in more than 60 countries, is repackaged for a variety of different local market requirements. In Chile, for example, local regulations mean the package has to include warnings to highlight the high fat and sugar content. In bordering Argentina, labeling is not an issue, but naming is. There it is marketed as ‘Tu Porción Justa,’ which translates as ‘Your Fair Share.’
While meeting different sets of regulations is difficult, managing multiple packaging iterations brings another layer of complexity. Agustín Acuña, account manager at Argentina-based CPG design and development agency TECKDES, says that rather than automating a process prone to human error, many firms continue to manage their packaging artwork and text as they did when serving a single market: in Word documents or on spreadsheets located on multiple network drives and individual computers.
“These documents are often replicated dozens of times throughout the CPG company – PR, legal, manufacturing – and with external agencies,” he said. “And this isn’t the biggest cause for concern. Often people manage the artwork without even seeing it. This is because many people in the chain don’t have the necessary software to view the files. When it is time to produce new artwork, no one is quite sure which version of the copy and/or graphics is correct, or even if what is currently [displayed] in the market is 100 percent accurate.”
This is where big mistakes can happen, Rosenzweig said. “Errors can result in a wide range of consequences, from failed launch to total recalls and expensive new packaging development,” she said. “That’s not to mention the potential PR headaches.”
A STRATEGY FOR SUCCESS
Rising to the challenge requires firms to abandon their spreadsheets, break down silos and get everyone working together – and cloud-based platforms that cross functional boundaries and integrate external members of the ecosystem, including design agencies and marketing firms, can be implemented quickly and affordably by online subscription.
“Pioneers are using a digital platform, which makes concurrent design possible,” Acuña said. “The collaborative cloud-based solution integrates copy management and artwork creation and enables the fast creation of new packaging designs by centrally managing the process across organizations and suppliers. This includes copy development, translation management, and artwork template creation and approval between agencies, companies and printers. Everyone in the chain can see the latest iteration of revisions and comments. There’s absolutely no chance of picking up a previous version.”
Platforms also perform integrated regulatory management for every region to which a product is shipped. “This continually evaluates packaging and ingredients for compliance and provides real-time alerts to any potential violations,” Acuña said. In an industry where speed to market and regulatory compliance are essential to success, digital platforms can make the difference between success and failure.
“Instead of creating each piece of artwork from scratch, companies can create and adapt packaging for a new geography in minutes, versus what can normally take days or even weeks,” Acuña said. “What’s more, a platform integrates artwork authoring and proofing tools to eliminate the vast majority of packaging errors which, in this industry, are the mostly likely cause of a product recall which could cost millions.”
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