With strong eCommerce growth and improvements on its return on digital investment, Mondelēz International, Inc. posted better-than-expected third-quarter results. Chairman and Chief Executive Officer Dirk Van de Put said the company reported another quarter of strong top-line growth, continuing “the momentum of the first half of the year.” He noted that, a year ago, the company rolled out a strategy designed to speed up growth by focusing on the consumer, driving operational excellence and building a winning growth culture. Results indicated that the strategy is working well and progressing toward its goal to make “attractive long-term sustainable growth,” Van de Put said.
The executive noted that Mondelēz is winning in growth channels in developed and developing markets. In the United States, he said, that success means capitalizing on growth opportunities such as discount and club outlets. And in China, the company achieved new distribution milestones during the quarter, reaching 1.5 million outlets with its biscuit products and one million outlets with its gum. For eCommerce, Van de Put noted that success means a continued expansion with online platforms as well as eTailers. Mondelēz reported third-quarter eCommerce growth of 25 percent.
Local Brands and Marketing
Van de Put also drew attention to local jewels, or “local brands that are also contributing to our growth.” He pointed to three brands as examples – Jubilee Biscuit in Russia, the iconic Prince Polo in Poland and Biskuat in Indonesia – noting that they are “performing well thanks to renewed investment and focus.” A large priority for the company has been to reinvigorate its marketing approach. One manifestation of that is what Mondelēz refers to as its “new marketing playbook,” as the firm aims to drive clarity in brand positioning and consistency in execution. Van de Put noted that the new strategy has been applied to many global brands and will be extended to others in the future.
With the renewed focus, Van de Put said Mondelēz is seeing some good examples of brand equity campaigns that bolster its connection with consumers. He pointed to the U.K., where growth was particularly strong during the quarter and the newest edition of the Cadbury Dairy Milk generosity campaign is performing well.
In addition to driving growth, Van de Put said Mondelēz is still focused on operational excellence. In marketing, the company had seen solid improvements on return on digital investment, while continuing to focus on productivity and process improvements in the supply chain. Good examples, Van de Put noted, would be the firm’s digitization of procurement function and a reduction of waste in its North American network.
When it comes to local adaptions of the Mondelēz’s global brands, Van de Put said the company’s approach with the Stride gum brand in China is to personalize its marketing to Chinese consumers. He said it is “working well,” while helping the company win with Gen Z consumers through mainly digital spend. He added that Mondelēz continues to make good progress with its more agile innovation approach and its SnackFutures initiative.
Van de Put also pointed to the company’s focus on emerging trends and technologies in well-being and premium products. As an example, he said the company reached an agreement with a key supplier to explore the use of cocoa fruit by introducing parts of the fruit into the food chain that have thus far been discarded. The product using that food was developed in record time and put into the market in very limited distribution to see how it would perform.
Mondelēz is also working to ensure the well-being of its consumers by offering the right snacks, which Van de Put said can mean “different things to different consumers.” Those options range from smaller, portion-sized formats to better-for-you products, which he said are “made with authentic and simple ingredients” or with a particular functional nutrition characteristic. A good proof point, the executive said, was the company’s recent commitment in the U.K. to ensuring that all products made for parents to give to kids are less than 100 calories per serving.
Mondelēz International, Inc. reported revenues of $6.36 billion and adjusted earnings per share of 64 cents compared to analyst estimates of $6.34 billion and 60 cents for the third quarter. The company also said it is raising its organic net revenue and adjusted EPS growth outlook for the full year.