Mondelez International, Inc.’s core chocolate and biscuits categories accounted for a combined 79% of company sales in 2021, up from 59% a decade ago. Executives at the company want that number to reach 90% within the next two to five years.
“From our perspective, if our business would be only biscuits and chocolate, we would see a much stronger top line and we would see a much stronger bottom line,” said Dirk Van de Put, chairman and chief executive officer, in a Sept. 8 presentation at the Barclays Global Consumer Staples Conference in Boston. “That’s where we have to gradually move toward.”
That movement will take place through a balance between acquisitions and divestments, continuing a strategy that already has seen the addition of nine businesses representing $2.8 billion in sales since 2018. Tate’s Bake Shop, Gourmet Food Holdings, Hu and Ricolino are just some of the businesses acquired by Mondelez in recent years.
The company isn’t in a rush to sell the 20% of its portfolio that falls outside of the two core categories, though.
“It’s not like the categories that aren’t core for us are doing particularly bad and we feel that we need to exit right away,” Mr. Van de Put said. “We see it more as a balancing act.”
Areas of focus for the chocolate category include stimulating seasonal gifting throughout the year by linking chocolate with holidays across different cultures. The company is underrepresented in both dark chocolate and premium chocolate and is investing to grow its share of those segments.
Opportunities also exist for Mondelez to leverage its core categories to improve its baked snack business, which includes cakes and pastries. Mr. Van de Put described cakes and pastries as a “highly fragmented category” without a clear global leader and a close adjacency to the company’s biscuits capabilities.
Consumers can expect to see more pastries, cakes and baked snacks bearing brand names like Oreo and Cadbury.
“There’s very little branding together with that fragmentation, and the overall sophistication of the product is not very high,” Mr. Van de Put said. “We see a big opportunity for consolidation, for leveraging our brands to upgrade the quality of the products and really create an extension of the biscuit shelf.”
Within that space is a more affordable segment that Mondelez is tapping into with Chipita, a brand of filled croissants and cake bars acquired earlier this year. The business, which offers products under the 7Days, Chipicao and Fineti brands, generated sales of approximately $580 million in 2020. It already is helping the company gain wider distribution into lower-income households across multiple regions.
Mr. Van de Put valued the cakes and pastries market at $75 billion. A smaller category that falls under the baked snacks umbrella is health bars, which he valued at $16 billion. Half of that market is in the United States, home to Emeryville, Calif.-based Clif Bar & Co., which Mondelez acquired in August for $2.9 billion.
“This is a category that slowed down because of the pandemic but is going to accelerate again in the coming years,” Mr. Van de Put said. “We believe there are international expansion and above-average growth possibilities there.”
By Sam Danley
Source: foodbusinessnews.net
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