Mondelēz Works to Stabilize Cocoa Supply Impact, Plays the Long Game on Growth

Aside from a few minutes of interruption from an activist shouting and being removed from the venue (and resultant audio cutoff for those of us listening online), Mondelēz International’s presentation to the Consumer Analyst Group of New York (CAGNY) this year wasn’t particularly surprising or, frankly, even all that significantly different from last year’s report.

Granted, that’s not necessarily a bad thing from a business standpoint (the presentation, of course, not the activist disruption). Mondelēz chair and CEO Dirk Van De Put noted that snacking is embedded in consumers’ daily lives. With Mondelēz playing in the snacking categories that are growing 1.4 times faster than the other snack categories, it’s no surprise that the company has generally worked to maintain and build upon that growth, particularly in the U.S. and Europe, while pushing various categories and products in emerging markets like Mexico, China, Brazil and India.

In North America, U.S. consumers still love snacking, and it shows in the biscuit/cookie category which accounts for 63% of Mondelēz’s net revenue on the continent. Challenges, however, are not absent.

Mondelēz plans for marketing investments in the new year to battle the stable to shrinking retail basket size, and it has been working to optimize its supply chain and expand affordable product options for consumers concerned about prices. The company has its sights set on expansion in club, value and convenience store channels to bolster growth, and it continues to focus on capturing “munching” occasions with more on-the-go and individualized package options.

To meet the growing group of high income consumers, Mondelēz will push more premium offerings, such as the Tate’s Bake Shop line, and create awareness among adult audiences around Oreo Thins as an evening snack.

In the U.S., Mondelēz is planning upgrades to biscuit operations and supply chain to increase capacity throughout its network in response to continued demand for the product.

In Europe, Mondelēz’s chocolate business rules the roost, and that’s where the company has had to really weather the storm in recent years with ultrahigh cocoa prices. Van De Put said the chocolate business, anchored by loyal consumers of brands like Cadbury and Milka, has been strong despite the cocoa pricing challenges. However, volumes were impacted and Mondelēz will continue to position itself to better minimize risk. The company noted that stability in cocoa enables a healthy category for all parties, not just Mondelēz.

Mondelēz will look to broaden offerings in its chocolate and choco-bakery businesses in the coming year, and also plans to “unleash Toblerone” to expand its premium chocolate lines. To reduce the risks involved in the cocoa supply chain, the company is still working on ways to improve its sourcing, and Van De Put mentioned that includes scientific research into getting more cocoa out of every bean as well as investigating alternative cocoa products.

Finally, in Mondelēz’s top four emerging markets (China, India, Brazil and Mexico), the company highlighted various approaches to growing markets there. In China, building upon the Oreo brand name and growing the company’s cakes business was the next logical step; for India, Mondelēz said it was using machine learning to help store owners with suggested orders — and that opportunity for growth in biscuits was on tap. Meanwhile, Mondelēz’s opportunities in Brazil revolved around snack cakes and pastries, while in Mexico, growing the chocolate business stood as the primary focus.