Ferrero Young eyes sweet tooth of nation's youth

In light of increasing consumption by the younger generation in China, Italian confectionary brand Ferrero has enhanced ties with Alibaba's e-commerce platform Tmall by launching a new online flagship store to better address rising demand from young consumers－a "key" consumer group to both companies' development in China.

The new Tmall flagship store, named Ferrero Young, will be launched in August to tap the Generation Z and other lower-tier city young consumers in China. The company's signature products Raffaello and Kinder Bueno will be the first batch of brands to be sold via the online store.

Gen Z generally refers to those born between 1995 and 2010.

Ferrero also plans to roll out a branded cookie specially designed for young consumers in the coming one year and a multi-flavor chocolate catering to young consumers will be available via the e-store in 20 months.

According to Peng Yue, marketing director of Tmall Food, Gen Zers have become the go-to consumers in China. In terms of raw numbers, there are up to 260 million young consumers born after 1990 in China, among whom 149 million were born in the 2000s. Meanwhile, the number of Gen Z e-commerce buyers is growing 35 percent on a yearly basis.

Digital platforms are usually the optimal choice for young consumers in China, Peng said. On top of that, they treat traditional brands sprung upon traditional distribution channels as equally as internet-bred brands. This is the major reason for the thriving Chinese internet-bred brands over the past few years, indicating the importance of digitalization for traditional brands.

Mauro De Felip, general manager of Ferrero China, said that digital transformation is one of the strategic priorities for Ferrero's development in China. Deep diving into diversified digital consumption scenes with Tmall will effectively help Ferrero formulate a more targeted and differentiated strategy aiming at consumers through cyberspace.

The new Tmall store is partly due to Ferrero's joint business partnership with Alibaba for fiscal year 2021/22, which was announced on Friday. Apart from further reaching younger consumers via the new online store, the two parties will carry out more new product research and development as well as marketing campaigns for new products. The two companies will conduct more consumer insight market research cooperation to keep up to date on consumption trends.

As Peng of Tmall further explained, the two companies will also look for opportunities in two other aspects. First, more aggressive marketing campaigns can be advanced regarding holidays such as Valentine's Day or Christmas, which can further boost Ferrero's sales.

Wedding candies are another sector that Tmall and Ferrero can explore, said Peng. As many young people have postponed their weddings last year due to the COVID-19, a significant rebound can be expected this year. While wedding planners used to take charge in wedding candies, Ferrero can tap into this sector more efficiently with Tmall, he said.