In their first partnership with a food brand, Alibaba has announced a wide ranging agreement with Mondelez International – who own popular snack brands Oreo, Tang, Tuc, Belvita, Choclairs, and Maxwell Coffee.

The partnership will go well beyond a simple Tmall store, Mondelez will work in partnership with Tmall on both e-commerce extension and specific campaigns on the B2C site.  Over a longer time period, it is expected that Mondelez will also gain access to Allibaba and Tmall’s substantial logistic network.

In May, Mondelez will launch a specific DIY campaign on Tmall –  Colorfilled.   An earlier version was successful in the U.S.  As part of the campaign, consumers can DIY the patterns and colors of Oreo packaging.

In the context of a spontaneous DIY trend in China – ranging from home decoration, to home designed fashions, to creation of unique online avatars – Mondelez will look to create a more personalized relationship with their consumers.

Mondelez, which ‘spilt off’ from Kraft Foods in 2012, for the full details of the corporate re-organization, see this ‘simple summary’.  However, the important point, is that Kraft is probably more ‘top of mind’ for Chinese consumers, especially mothers, as Kraft brands were part of the initial FMCG wave that hit China in the 00s – this is when instant coffee and in-home snacks became household items.

It is only very recently that snacks have become recognizably Western in format of in China  – this has been a slow cultural metamorphosis of the Chinese family shopping trolley – as seeds and traditional street snacks were replaced by packaged snacks such as biscuits.

Why is this a good marriage partner for Mondelez?

This feels like a SMART move for Mondelez for a number of reasons

Reason One  

At a practical level, FMCG is a battle of distribution.  Plans by Tmall to extend their consumer reach to smaller cities and villages (Tier 4 and beyond) are a big help, if leveraged.   As a foreign brand, Mondelez will be in a position to create a ‘Trojan Horse’ strategy through Tmall – gaining a new level of access to the new FMCG heartland in China.

Also Tmall provides Mondelez with a ready-made user base of shoppers.  Mondelez as the first food brand to have this level of collaboration with Alibaba – will have ‘first mover’ advantage.

Reason Two 

Mondelez’s formation/re-formation, meant that Chinese consumers’ engagement with Kraft Food brands was ‘confused’ – the equity developed by Kraft was not fully developed as a overarching brand house before it was re-organized through Mondelez.  Tmall provides a framework to present Mondelez as a coherent brand house – a unifying philosophy that can be consistently presented to Chinese families.

In a particularly fragmented FMCG category in China – big houses such as P&G and Unilever have not yet created this virtuous ‘halo effect’ which they have successfully in other developing markets such as India.  Mondelez, through Tmall, now has the chance to do this in China.

Mondelez is still finding its feet in the market, but the latest marriage to Tmall makes a lot of sense.

For more on market entry in China  – download our “Ten Commandments on China Market Entry”.