Friday, September 19, 2008

McDonald Cinnamon Melts launch in Japan

Case Study: The Launch of McDonald's Cinnamon Melts in Japan

Wednesday 19th September, 2008

By Peter Hanami

Video: Cinnamon Melts in Japan

"Cinnamon Melts" debut at McDonald's Japan today which is a new product that adds to the current "Premium Roast" coffee strategy

"Cinnamon Melts" a deliciously addictive sweet dessert first launched in the USA in 2006 debut today in Japan. The new sweet dessert will add weight to the new premium roast coffee strategy adopted earlier in the year. Recent additions to the strategy include the McBakery line of three pastry products (sugar croissant, melon pan and Choco Danish). The addition of Cinnamon Melts boosts the line and makes it more robust.

The new sweet dessert is clearly aimed at making McDonald's a new destination for Japanese coffee drinkers and sweet dessert eaters who in the current economic climate are looking for value anywhere they can get it.

Before the launch we considered if the product may be altered to adjust to Japanese palates, for example: reduced sugar content and reduced calories.

I purchased a Cinnamon Melt in Tokyo this morning and by all accounts the product seems to be an exact replica that is of the USA product from our taste test, we may be corrected on this but this is our initial assessment. The taste is rich, full bodied and takes the eater on a dreamy cruise. It seems to have a more stronger flavor than a "Cinnabon". The difference between the two products, Cinnamon Melts and Cinnabon is that Cinnabon is a dry pastry, whereas Cinnamon Melt is a wet pastry that is it is served hot and has a runny sauce. The sauce seems to accentuate the taste.

When you eat a section of a Cinnamon melt and dip it in the sauce that collects at the bottom of the container the strong tasting sauce adds to the pastry content and makes the taste a very deep flavour experience.

A real surprise here with the new "Cinnamon Melt" it is full taste and a real bonus for coffee drinkers who enjoy the bitter taste of coffee with a balancing sweet dessert taste. If this theme takes off in Japan it will be a success. Also as we are coming in to the autumn season and the weather cools down, a warm product could be just what customers want when they take a break.

Will the new product impact major competitor Starbucks Japan? The new pastry adds to the premium roast coffee strategy by offering depth to the product line up, image and range. Priced at 290 yen, it is well placed to please coffee drinkers. A premium roast coffee costs 120 yen, up 20 yen with a recent price rise and when the Cinnamon Melt is added the order the total experience adds up to 410 yen.

It seems a pretty clumsy price combination but it still comes in under 500 yen which is an important consumer price point in Japan.

Starbucks Japan has new coffee offers for drinkers through with two new initiatives, namely afternoon discounts and a new range of banana based products. No new coffee initiatives (cold pre-made Starbucks branded products available in some convenience stores) yet in Japan except for the recent launch of the new sandwich range "Filone" which adds to foods that complement their coffee products.

It is a shame that the recent coffee price increase took premium roast coffee off the 100 yen menu. In one sense it is a negative in that it could lose some customers who refuse to pay the increase or it could help to take the brand out on its own as a stand-alone product with its own team (McBakery and Cinnamon Melt) which could later be re-launched as a family brand particularly when McCafe rolls out further in Japan.

In summary, the new "Cinnamon Melt" is a good addition to the existing menu, it adds a reason for new customers to visit the store, adds a new product to the menu just as the season changes and the weather cools, it rewards existing coffee drinkers, adds a full tasting "western product" to the menu, adds a brand new taste to the menu, adds a new product to the existing and well branded premium roast coffee strategy, acts as an enticement for those who watch American TV dramas and have heard of cinnamon sweets such as Cinnabon (mums and kids) and finally keeps attention on McDonald's as a coffee provider.

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