Global Strategy, Customized Local Flavors Aid Kraft Brand in Joining Elite Group

Tang became the most famous beverage in the galaxy more than 40 years ago when it rode along with astronauts in space. Now the powdered drink mix has reached a more earthly milestone.

Kraft Foods announced today that Tang has become its 12th billion-dollar brand, with global sales nearly doubling since 2006, thanks mostly to aggressive marketing in international markets such as Brazil, Argentina, Mexico and the Philippines. Tang joins an elite roster of billion-dollar brands at Kraft, including powerhouses such as Oreo, Trident, Milka, Oscar Mayer, Maxwell House and Cadbury chocolates.

Of course, in the beverage world, the billion-dollar club is not as elite. Coca-Cola alone boasts 15 of them, ranging from Coke and Sprite to Vitaminwater; and PepsiCo owns 10, including Pepsi-Cola, Gatorade and Sierra Mist.

But for Kraft, Tang’s ascension validates the focus the food giant put on the brand overseas, including making it one of 10 “power brands” in developing markets. “With an entrepreneurial spirit, our Tang teams across the world connected virtually to harness our global powdered beverage technology and expertise,” Sanjay Khosla, Kraft’s president for developing markets, said in a statement.

The brand reached $1 billion sales in the year ended March 31, Kraft said. The brand in 2010 controlled a category-best 15.6% of the international powder concentrate market, edging out another Kraft brand called Clight, which is the international version of Crystal Light, according to Euromonitor International.

Tang initiatives include giving regional managers more freedom, while customizing flavors to local markets. Although orange is the top-selling variety, Kraft says it found success pushing flavors such as mango in the Philippines, soursop in Brazil, horchata in Mexico and pineapple in the Middle East. Such local flavors make up roughly 25% of Tang sales in developing markets.

In some countries Kraft learned that consumers wanted smaller packages, so the company introduced slimmer, more affordable sizes, such as two-liter packs sold in Mexico for below 50 cents. And the company spread the word with aggressive sampling programs. The brand’s global ad agency of record is WPP’s Ogilvy & Mather.

Kraft is “doing a decent job of taking a product that is sold in the U.S. and adapting it to local tastes and preferences to really drive growth and to drive further expansion of the brand in those newer markets,” said Erin Lash, who covers Kraft for Morningstar. “They’ve been switching from more of a centrally managed [approach] and shifting to more of a local focus to really resonate with the consumers.”

Stateside, Tang has gotten less attention — and less glory — since its high-flying days back in the 1960s, when it began rocketing into space. In 1965, Tang, then owned by General Foods, aired a TV ad within three days of the Gemini 4 splashdown. And in 1968 Tang sponsored ABC’s network coverage of America’s first manned flight around the moon, Apollo 8.

But the last time Kraft dedicated any measured media spending to Tang in the U.S. was in 2008, when it spent a paltry $129,700. Rather, Kraft’s domestic drink focus has been on Crystal Light, which had $46 million in measured media last year, and Kool-Aid, which got 26.4 million. Meantime, Kraft plans to spend aggressively on its newest drink brand, Mio, a first-of-a kind liquid water enhancer launched in the U.S. earlier this year.

Still, Kraft signaled that it might return some of the spotlight to Tang. “Based on the tremendous success Tang is enjoying in other markets, particularly in Latin America, we’re looking at what lessons we might be able to apply here in the U.S.,” spokeswoman Lisa Gibbons told Ad Age in an email.

Even without any advertising support, Tang grew slightly in the U.S. to $14 million in sales in the year ending April 17, ranking it ninth in the fruit-drink-mix category, but well behind No. 1 ranked Kool-Aid, which had $129.5 million in sales, according to SymphonyIRI data, which does not include Walmart.

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Contributing: Natalie Zmuda

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