From Cherry blossom green tea latte to vegetable juice, there’s been more than 300 flavours of kit-kat in Japan in the last 25 years. Is this variety really worth it for firms?
[Dayabir is currently studying a Bachelor of Mathematics and Philosophy at Monash University. As a writer/editor, and an esteemed member of ESSA’s podcast team, Dayabir has a keen interest in probability, decision theory and their intersection with economics and consumer behaviour.]
Brands around the world have been releasing an overwhelming number of new varieties or limited-edition versions of their existing products, saturating the consumer goods market with novelty. This isn’t just limited to the bizarre seasonal varieties of crisps you see in supermarket aisles or limited time shaker fries at Macca’s. It’s a broader phenomenon, driven by economic incentives, shifting consumer psychology, and the arms race for consumer attention.
Product Differentiation 101
The cornerstone economic principle behind releasing new, fresh varieties is product differentiation—a characteristic of monopolistic competition. Looking into the market for chocolates and confectionery, there are many sellers, with the likes of Ferrero, Hershey, and Nestlé, each offering products that differ only slightly. Under this market structure, we see firms seeking to carve out every niche pouch of demand they can—tweaking recipes, repackaging classics, and launching quirky flavours.
Consider Coca-Cola: their range of Diet, Vanilla, Caffeine-Free, and Zero Sugar options target slightly different consumer preferences. Generally, we expect this differentiation to allow firms to gain some market power, enabling them to charge a premium price and reduce the price elasticity of demand for their products [1]. In markets worth billions, even half a percent of market share stolen from Pepsi can translate to millions in revenue.
But looking at Kit-Kat, surely, they’ve overdone it with the flavours, right? There’s got to be some sort of upper bound to the benefits of product differentiation—diminishing marginal returns on novelty, if you will.
Choice Paralysis and Novelty Appeal
Traditional choice theory suggests that more choice always benefits consumers. But behavioural economics offers a more nuanced view. Choice paralysis suggests that when faced with too many options, consumers may become overwhelmed and defer decision-making altogether [2]. Instead of increased utility, too much variety can result in frustration, second-guessing, or worse, abandoning the purchase altogether.
This is where limited editions come into the picture: they provide variety without permanence. Their transience creates a sense of urgency. Consumers are more likely to act when they know a flavour will be gone in two weeks. It taps into FOMO, and when the next oddball flavour is rolling about, people feel nudged to try it—just in case it’s that next viral hit.
Consumers crave novelty. A new taste, colour, or design is enough to spike attention, engagement, and even loyalty. A wasabi or sake Kit-Kat may not become a staple, but it becomes a cultural talking point, a TikTok challenge, or a must-buy tourist gift. And when the novelty wears off? Well, you can just roll out the next weird one.
Gimmick or Genius?
To the consumer, this probably looks as gimmicky as it gets. For the firm though, it keeps them culturally relevant and fits remarkably well in a society built on refresh cycles and fast-moving trends. It can also help firms price discriminate more effectively, appealing to niche consumers who are willing to fork out more for something just that little bit different.
While flavour proliferation and constant innovation can create some buzz and temporarily lift sales, the strategy is expensive—both financially and operationally. Each new product variation requires design, testing, market analysis, separate manufacturing runs, and tailored marketing campaigns. This not only increases fixed costs but also makes inventory management and logistics harder to control. In cases where limited editions flop, companies are left holding unsold stock and wasted resources.
There’s also an issue of cannibalisation. If I’m choosing the Cherry Blossom Kit-Kat, in all likelihood, I’m also forgoing the original version. If the novelty doesn’t bring in new customers or expand the brand’s reach, you just end up shifting revenue within the firm’s portfolio, and not actually growing it. Additionally, brands risk exhausting consumer goodwill. Over time, audiences may begin to perceive these constant new releases as gimmicky or inauthentic, potentially undermining long-term brand loyalty.
Beyond Confectionary
This strategy isn’t confined to just chocolate bars or soft drinks. We see it across fashion, tech, and even automotive industries—industries where brand identity and visibility are everything. In fashion, the rise of micro-collections, collabs, and limited drops mirrors the Kit-Kat model of constant refreshment. Think Supreme’s weekly releases or Nike’s sneaker collaborations, where the novelty is baked into the business model. See Jade’s insightful article for more on artificial scarcity driving demand.
In sectors like automotive and tech, the equivalent is often branding through celebrity ambassadors or short-term co-branded editions. When Maserati partners with David Beckham or Sydney Sweeny with Samsung, the underlying principle is effectively the same: use novelty and cultural prestige to stand out in a crowded market. These moves draw media attention and offer momentary spikes in consumer interest—but they also carry risks. The cost of celebrity deals, reputational risk if public figures fall out of favour, – Ye, as the most recent example – and the dilution of a brand’s core identity are strategic costs.
So, Should Firms Chill out on the Flavours?
If you’re Kit-Kat, absolutely, otherwise, it really depends. The economics of flavour proliferation make sense in a hyper-competitive, attention-driven market. But companies do need to balance the benefits of differentiation against its costs.
A more sustainable strategy might be a cyclical type of limited-edition—rotating through a smaller pool of tested products, with seasonal returns (think Macca’s Mozzarella Sticks) combining familiarity with scarcity. Although much to the annoyance of their fans.
In the long-run, novelty sells. And in an age where every scroll and shelf is filled, sometimes that dodgy vegetable juice Kit-Kat is exactly what it takes to make a brand stand out—but I’ll tell you what, there’s absolutely no chance I’d ever have it again.
Footnotes
[1] Simonson, I. (1999). The Effect of Product Assortment on Buyer Preferences. Journal of Retailing.
[2] Schwatz, B. (2004). The Paradox of Choice. HarperCollins Publishers
