Nestlé takes the slow road to victory
Its a game of go, not a game of chess. Nestlé uses psychology that compounds slowly over time to embed its coffee brand, Nescafé, in the Japanese market.
Many business case studies explain how Western brands build value, but can these principles be applied across cultures? Let’s explore that question with a particularly unique cultural market: Japan. Why Japan? The country seems to have captured the world’s heart in a unique way with its culture.
Unlike the West, Japan has a deeply rooted tea culture that has persisted for centuries. Yet, despite this, Japan has become one of the world’s largest consumers of coffee.
You may be surprised to learn that Japan is now the world’s fourth-largest consumer of coffee. While it might seem natural given Japan’s position as a global market player, it’s still unexpected in a nation traditionally known for tea. I’m writing this while sipping a Starbucks, which is as popular in Tokyo as it is in New York. So how did this turnaround happen, and which brand was instrumental in creating that shift?
Today’s post focuses on Nestlé and how they were able to take a product as specific as coffee and spin it into gold in the least likely of locations. The answer lies in Nestlé’s strategic, psychologically driven approach to capturing the Japanese market, playing an intentional long game.
Some historical context
Thanks to pop culture, when you think of Japan, you might think of anime, samurai, zen gardens, robots, etc., but coffee does not appear in the top 20 list for most people. You’re more likely to associate the country with the tea ceremony—an integral part of Japanese culture for over a thousand years. So let’s first understand a bit of background that helped set the stage for coffee to have its moment.
While trends like Coffee Badging may be common globally at the moment, back then Coffee’s adoption in Japan was initially stifled by cultural resistance and restrictive government policies during the Edo period (1603-1868), when Japan’s isolationist stance limited foreign influence, including the introduction of coffee by Dutch traders in Nagasaki. Its bitter taste didn't appeal to the Japanese, and despite a brief increase in interest during the Meiji period, coffee struggled to gain popularity, particularly after being banned during World War II due to nationalistic efforts to curb Western influence. It wasn't until after the war, with the presence of American soldiers and Japan's growing Westernization, that coffee began to gain traction, especially with innovations like canned coffee and the rise of coffee houses as social hubs, which helped integrate coffee into Japan's urban culture.
In 1901 - A Japanese man named Dr. Sartori Kato, who is a chemist in Chicago, Illinois, develops the first successful method of creating a stable soluble coffee powder, or instant coffee - just add water! Kato initially develops the technique to make instant tea, and then applies it to coffee. Nestlé’s Global Positioning and the Japanese Challenge
“Culture eats Strategy for breakfast”
Before delving into Nestlé’s journey in Japan, it’s crucial to understand the company’s positioning in the global coffee market. Nestlé, a Swiss multinational, had long established itself as a leader in the coffee industry with its flagship brand, Nescafé. With a presence in nearly every country, Nestlé was known for its innovations in instant coffee (à la Nescafé brand). Their success across Europe and North America gave them the confidence to expand into Japan, a market they saw as ripe for growth given its economic boom and their interests in garnering the Asian market.
However, things did not go according to plan. Despite being a global powerhouse with expertise in coffee, the brand initially struggled to gain traction in a country where tea was not just a beverage but a cultural cornerstone. The Japanese palate, accustomed to the delicate flavors of tea, found coffee’s bitterness unappealing. Moreover, coffee was not embedded in the daily life of the average Japanese consumer, making it difficult for Nescafé to position its product as a staple.
Understanding the Japanese Consumer
Faced with these challenges, Nestlé realized that a direct approach—simply marketing coffee as they did in the West—would not work. They needed to understand the mental models and cultural nuances of the Japanese consumer. Enter Dr. Clotaire Rapaille, a psychoanalyst specializing in uncovering the unconscious associations that drive consumer behavior. Through his research, Rapaille discovered that coffee in Japan was associated with negative emotions—bitterness, discomfort, and even a sense of foreignness. Unlike in the West, where coffee was a symbol of energy and sophistication, in Japan, it was an unwelcome intruder in a culture dominated by tea.
A New Approach: The Power of Childhood Memories
Rapaille realized that for Nestlé to succeed, they needed to change these associations and create a new emotional connection between the Japanese consumer and coffee. Armed with these insights, Nestlé shifted its strategy. Instead of trying to sell coffee directly, for one of their strategies, they introduced coffee-flavored sweets targeted at children (an area in which they already had plenty of experience).
This move was rooted in classical conditioning—by pairing the unfamiliar taste of coffee with the sweetness that children loved, Nestlé began to change the perception of coffee from bitter to delightful. Over time, these positive early experiences became embedded in the memories of these young consumers.
This strategy also leveraged the principle of rosy retrospection—the tendency for people to remember past events more fondly than they experienced them at the time. As these children grew older, their memories of enjoying coffee-flavored sweets in their youth created a nostalgic and positive association with coffee itself. This emotional bond was further strengthened by the halo effect, where the positive feelings towards the one factor (sweets) spilled over into their perception of another (coffee).
The Compounding Effect of Long-Term Strategy
Nestlé’s journey in Japan highlights the power of taking a long-term view and applying the principles of psychology strategically. By understanding the mental models of their target audience, Nestlé created a product experience that resonated deeply with Japanese consumers. The use of rosy retrospection, classical conditioning, and the halo effect shows how companies can build lasting emotional connections with their customers.
Lessons in Applied Psychology
Nestlé’s journey in Japan highlights the power of taking a long-term view and applying the principles of psychology strategically. By understanding the mental models of their target audience, Nestlé created a product experience that resonated deeply with Japanese consumers. The use of rosy retrospection, classical conditioning, and the halo effect shows how companies can build lasting emotional connections with their customers.
Applying These Tactics to Your Business
So, what can other brands learn from Nestlé’s success in Japan with Nescafé? First, it’s crucial to truly understand the mental models and cultural nuances of your target audience. A one-size-fits-all approach rarely works, especially in markets with deeply ingrained traditions and preferences. Instead, take the time to research and understand what drives your customers' decisions and emotions.
Second, consider the long-term impact of your strategies. Building a brand isn't just about immediate sales; it's about creating lasting, positive associations that can compound over time. Whether through creating nostalgic experiences, leveraging emotional triggers, or subtly shifting perceptions, the key is to think beyond the short term. This doesn’t necessarily require you to invest years of building brand credit with consumers, but to acknowledge that brand credit can be a powerful factor in product adoption and can be built in creative ways.
Lastly, remember that psychology is a powerful tool in shaping consumer behavior. By applying principles like the halo effect, rosy retrospection, and classical conditioning, you can create a brand experience that not only resonates with your audience but also stands the test of time. And perhaps lead you to becoming, Big in Japan.