Unwrapping Kit Kat

From Tokyo, Japan and New Plymouth, New Zealand, this is Down to Business English, with your hosts Skip Montreux and Samantha Vega.

Samantha, quick. Without thinking too deeply, finish this sentence. Have a

have uh What do you mean? Have a what?

Well that's just it. You finished the statement.

Oh, okay. Well I don't know. Have a break? Have a kit cat?

Wow. That is amazing.

What's amazing?

That you finished the sentence with Kit Kat's advertising slogan.

No, yeah, I suppose I did.

And you were not the only one to do that.

What do you mean?

In May this year, the famed advertising agency Wonderman Thompson out of the UK. They based an entire marketing campaign on just showing the beginning of that sentence. Have a dot dot dot. On a big screen in front of the O2 Arena in London.

And then they asked passers by to finish the sentence?

That's right. Over half of the people they asked finished it by saying, Have a break. Have a Kit Kat. Hmm.

That is one powerful marketing slogan.

Very powerful. I will put a link to that video of the campaign in the show notes if anybody wants to check it out.

I didn't realize Kit Kat chocolate bars were so recognizable.

It is one of the best-selling chocolate bars in the world.

Wanna really pay attention to things like that? I'll take your word for it.

And Kit Kat has got quite the history behind it.

All I know about Kit Kat is while I was living in Japan, they made a big splash when they came out with a strawberry-flavored Kit Kat that wasn't available anywhere else in the world.

And do you know why that strawberry flavored Kit Kat was only available in Japan?

No, not particularly.

Well, you are about to find out.

Is this our business topic for today?

It is.

Then let's do it.

Yes, let's get D2B. Down to business with Unwrapping Kit Kat. How a British chocolate became a global icon. What is the history behind this chocolate bar that is beloved worldwide? Why are flavored Kit Kats only available in some regions of the world and not others? And what is the story behind Kit Kat's famous

Who manufactures Kit Kat anyway?

It depends on where you live in the world.

Ah, is there more than one manufacturer?

If you are in the US, Kit Kats are made by Hershey's. If you are in Europe or Asia, they are produced by Nestle.

How did it end up like that with two companies making Kit Kats?

Well let's go all the way back to the beginning, to the origin of the name Kit Kat itself. Want to guess how far back we have to go?

Been around for a long time, uh a hundred years.

More.

Wow!

Two hundred years?

Oh, you're getting closer. In the late seventeenth century there was a pie maker by the name of Christopher Catling, living and working in London.

Pie maker named Chris Catling.

And apparently this Christopher Catling made great pies.

What kind of pies? Apple pies?

No meat pies, as a matter of fact. And he ran his pie shop out of a hotel that just so happened to be the venue for a group of London literary thinkers and British politicians of the day.

They weren't Freemasons, were they?

No, they were not Freemasons. It was just an elite social club. The main point is when this group would meet, they always dined on Christopher Catling's pies. Everyone loved those pies and they started referring to them as Kit Cats, after the man who made them.

Of course. Kit is a nickname for Chris. And cat is a shortened form of catling.

Kit Kat. Exactly. These Kit Kat Pies were such a hit with the club members that it wasn't long until the group dubbed themselves the Kit Kat Club. And that name stuck.

Hmm, it's a catchy name. But how did we get from a seventeenth century social club to the Kit Kat Chocolate Bar we have today?

Well, fast forward to nineteen eleven, the British confectionery company Round Trees trademarked the name Kit Kat. In fact, they trademarked Kit Kat with a K and Kit Kat with a C.

Why would they do that?

Well because Round Trees like to name their products after ideas and concepts they thought were aspirational.

And Kit Kat fit that mole?

Well, the Kit Kat Club might have fit that mould. It was thought to be very influential in British high society in the nineteenth century, and to have been a member of the Kit Kat Club would have given you a bit of an elite status.

Ah, so Round Trees thought the name would help sell their candy.

Well no one knows for sure, but that is probably why they trademarked the name. Yeah.

This was in nineteen eleven, you say? Is that when the first Kit Kat came out?

No, Round Trees actually didn't use the trademark until the nineteen twenties, when they launched a line of assorted chocolates, which they called Kit Kat.

So the first time Kit Kat was used as a product name, it wasn't for the chocolate bar we know today.

No, it was for a box of assorted chocolate. But that product wasn't very successful and Round Trees phased it out in the early 1930s.

When did Roundtrees come up with the idea of the Kit Kat chocolate box?

Sometime in the early 1930s, an employee dropped a note in the company's suggestion box. He suggested that they come up with a chocolate bar a regular working man could pack into their lunchbox and take to work for a snack. Product developers really liked the idea, but instead of coming up with a new chocolate bar to put on the market, and to keep prices as low as they could for the everyday working man, they decided to dip wafers into chocolate.

Ah, and the modern Kit Kat was born.

Well, the product was born. This chocolate-dipped wafer was launched in August 1935 under the name Roundtree's Chocolate Crisp. And it was an immediate success. Demand quickly outpaced supply.

Countries had a winner on their hands.

They did. And in 1937, they renamed the product to Kit Kat Chocolate Crisps. And a couple years after that, they dropped the chocolate crisp part entirely and just went with Kit Kat.

Pretty funny how a chocolate snack designed for the working man is actually named after an elite social club.

You know, I've never thought about it that way, but I guess you're right.

Now tell me how Kit Kat ended up being made by two different companies.

Well, when KitKats were first released, they were sold exclusively in England.

Round Trees being a British company, that would make sense.

And they launched the Kit Kat in nineteen thirty five, just before the Second World War, and it stayed in England until after the war.

I can see why Kit Kat stayed in England at that time, exporting products globally, does tend to suffer during world wars.

But right after the war, in the late forties and early fifties, round trees started exporting Cape Cats to Ireland, Canada, South Africa, Australia, and your neck of the woods, New Zealand.

What about the US? That would have been an ideal market for the Kit Kat.

Kit Cats finally reached American shores in the early nineteen seventies. Roundtrees didn't want to take on the marketing and distribution in that market. So what they did was they reached an agreement with the US chocolate giant Hershey's.

Maker of the Hershey's Milk Chocolate Bars, Hershey's Kisses, and Reese's Peanut Butter Cup.

Oh peanut butter cups, my favorite. Yes, that company. Roundtree sold the manufacturing and distribution rights to Hershey's in perpetuity, meaning there was no term limit to the deal. It could go on forever.

Well, that ended up being a good deal for them in the long run. And this is why Kit Kats are manufactured by two different companies. Hershey's in the US and round trees everywhere else? Where does Nestle come into this?

Well, Nestle bought Round Trees in nineteen eighty eight and took over the Kit Kat line through that acquisition.

You know something, Skip? I just realized something.

What's that, Samantha?

Candy bar makers are all megalomaniacs, or at least very egotistical.

Yeah.

What makes you say that?

They all name their companies after themselves. Nestle is named after Henri Nestley. Hershey's after Milton Hershey, Reese's after Harry Reese, and I'm assuming Round Trees is named after its founder too.

You know, you're right. Roundtree's was indeed founded by Henry Isaac Roundtree in 1862.

There you go. That further supports my theory that they're all megalomaniacs.

Interesting theory. I'll have to do some research on that.

So Nestle acquired Round Trees in nineteen eighty eight, and they continued to let Hershey's make Kit Kats in the US because the original deal was in perpetuity.

The deal was in perpetuity and Nestle did agree to honor it, but only under one condition.

And what was that?

If Hershey's was ever bought out by another company, Nestle would take the rights back. This proved to be an excellent business strategy on Nestle's part.

What was so excellent about that?

Well, if Hershey's were to ever lose the Kit Kat line, they would lose one of their best selling chocolate bars. So Nestle's competitors in the US would be less interested in buying Hershey's, as without Kit Kat, the Hershey company was less valuable.

That seems like a pretty good deal for Nestle.

On the surface, maybe, but keep in mind that Nestle is a pretty small player in the candy bar market in the US. They only have something like 3% market share compared to Hershey's and Mars. If they took Kit Kat back. they would fare much better.

So why doesn't Nestle renege on the deal with Hershey's then?

Well, for one thing, the original deal was in perpetuity. For another thing, the executives at Nestle must have come to the conclusion that it was better to be collecting royalties from Hershey's Kit Kat sales in the U.S. than to be competing with Hershey's if they were to be bought out by another confectionery company.

I wonder what the annual Kit Kat royalties are for Nestle.

I did some research on that, but I couldn't find an exact figure. I was able to piece together that KitKats generated roughly six hundred forty million dollars in sales in the US in twenty twenty two for her.

And Nestle would have gotten a chunk of that.

Absolutely they would.

Is the US the only market that Nestle doesn't make or have control over Kit Kat?

Interestingly, when round trees entered the Japanese market around the same time they entered the US market in the early seventies, they made a similar deal with the Japanese confectionery company, Fujia. But when Nestle took over in 1988, they took the manufacturing and distribution license back.

And kit cats are big in Japan.

Well, Nestle's Japan's RD and marketing team sure have done some interesting things with the product. Soon after Nestle took over, they started to experiment with the flavors and packaging designs.

That was sometime in the nineteen nineties. As I mentioned earlier, I was living in Japan in that time and I clearly remember Kit Kat's coming out with a strawberry flavored Kit Kat.

That was their first flavor experiment, and it was such a huge success that it gave the marketing team the idea of coming up with different flavors matched to different regions of Japan that would go on sale for a limited time. Mm.

I've seen matcha or green tea Kit Kats and of course strawberry Kit Kats. Uh what other flavors are out there?

It's really amazing. Nestle Japan has released over four hundred flavors in the last twenty years.

Oh my that many, you're kidding.

I'm not. It takes them about six months from concept to store shelves to release a new flavor, and they come up with about twenty different flavors every year, each one being available for about two months.

And why is it that these flavors are not available in other markets?

It is a localization strategy. Keep in mind some of these flavors that they come up with would not work in another market. For example, Wasabi Kit Kats or a sport drink flavoured Kit Kats.

Ooh. I suppose not.

And that is the story of Kit Cats and how they went from a low-cost chocolate snack for English workers to an international candy bar loved by everyone.

What about their slogan? Have a break. Have a Kit Kat. You didn't tell us how that famous slogan came about.

Oh yes, the iconic slogan, Have a Break, Have a Kit Kat. That was created in the nineteen fifties by Donald Giles, who worked for the London-based advertising agency J. Walter Thompson. The idea behind the slogan was to associate the act of taking a break with eating a kit cat.

which fit the working class market the Kit Kat was originally aimed at.

It is one of the most well-known taglines in advertising history. It perfectly encapsulates the brand's message in a simple catchy phrase that is easy to remember.

The slogan also aligns well with the physical design of Kit Kat. Well, it's Kit Cats are segmented into fingers that can easily be broken off and eaten one at a time. The physical breaking of the kit cat emphasizes the idea of a break.

Hmm, have a break. Have a KitKat!

Yeah, there is a double meaning there. Have a break. Have a Kit Kat. Could refer to taking a break from work or breaking the Kit Kat bar into pieces. It's a very clever tagline.

Well, it certainly helped propel Kit Kat to being one of the most well-known chocolate bars in the world. Currently, Kit Kats are manufactured in 17 different countries and sold in over 70 countries.

There is no doubt it is a very popular chocolate bar.

And on that note, I think it is time for us to get D2V down to vocabulary.

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Phrases.

and expressions used by native English speakers in professional situations. What do you get with a D2B membership plan? First, bonus content in the form of exclusive members-only D2B episodes. Second, expanded D2V or down to vocabulary episodes that accompany each public episode of Down to Business English. Third, full access to the entire library of D2B audio scripts. All the way from season 1, episode 1, to our most recent D2B episode.

First on our D2V list today is the phrase to take someone's word for something. This phrase means to believe what someone is telling you without requiring more evidence or proof. In the introduction to our Kit Kat story, Samantha said that she would take my word that Kit Kats were one of the best-selling chocolate bars in the world.

As I didn't have any other source to confirm that fact, and because I basically think Skip is an honest guy, I believe that what he was telling me was true.

Thanks for that vote of confidence, Samantha. Can you give us another example using this phrase in a business context? Sure.

In a business context, let's say a supplier assures you that they can deliver a shipment by a certain date. At that point you could take their word for it, and not seek additional guarantees. Or you could ask them for some kind of discount if the shipment is late.

Hm, not many suppliers would agree to that. Hmm.

Mm, I don't know. It would depend on the situation, I suppose.

I suppose so. What is our next word?

Next on the list is the idiom to fit a mold. When something fits a mold, it conforms to a particular set of characteristics or expectations.

Like the way wet cement is poured into a mold. Once the cement dries, it has taken on the shape of that mold.

That is exactly the mental image you want to have to remember this idiom. In our Kit Kat conversation, I asked if the name Kit Kat fit the mold that Round Trees was looking for in a product name.

In other words, Samantha was asking me if the name fit the expectations or characteristics Round Trees was looking for in a product name, which it did.

Exactly. Skip, can you give us another example using Bit the Mold?

In many corporations and companies, there is often an unspoken expectation for employees to fit a mold. Whether it's in terms of work ethic, appearance, or even social skills, those who fit the mold are often more likely to get promoted and have a successful career in the organization.

That's very true.

You know, I have interviewed many teachers in my career here in Japan, and I can usually tell within the first 10 minutes or so if the fits the mold of teaching business English.

Hmm, what kind of characteristics or expectations do you have?

Well, it goes beyond just being a qualified EFL instructor. To be a successful business English teacher, you really need to have a general understanding of the global economy and business. You don't need to have an MBA or anything, but you do need to know what is going on, at least on a basic level.

Interesting. What is our next word?

Our next and our final word for D2V today is the verb to reneg. When you renege on something, you go back on a promise you have made or a contract that you have signed. In our conversation, Samantha asked me why Nestle didn't renege on their deal with Hershey's for manufacturing KitKats in the US.

In other words, I was asking why Nestle didn't go back on the contract that they had with Hershey's.

How would you use Reneg in a business context, Samantha?

In business negotiations, it's considered highly unprofessional to renege on an agreement.

Very true. Do you know a real world example?

There is the case of Boeing and Embraer,

What happened there?

In twenty nineteen, Boeing agreed to purchase an eighty percent stake in Embraer's commercial aviation business for four point two billion dollars US. However, in early 2020, Boeing terminated the deal, citing that Embraer did not satisfy certain conditions.

Boeing Renegade.

They did. Embrer, on the other hand, accused Boeing of deliberately reneging on the deal due to their own financial difficulties. You may recall Boeing's big losses from their seven hundred thirty seven Max crisis.

Oh yes, of course, that was a huge financial loss for them.

In any case, Boeing reneged and the deal fell through.

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Thank you for that report on Kit Katz Skip. I am now in the mood for a break. I'm in the mood for a kit cat.

Me too. I wonder what flavors await me at my local 7-Eleven.

Halloween, that's not far off. May Maybe Nestle has released like a pumpkin spice Kit Kat.

It's probably a little bit too early for that. I know last year they had sweet potato Kit Kats for Halloween. Maybe the same this year.

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We will be focusing on five additional words. a venue, to be aspirational, to phase out, to have a winner on your hands. And the phrase on the surface.

All very high frequency words and phrases.

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Thanks for listening everyone. See you next time.

Take care.

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