As it sets a new strategy into motion to drive growth amid its presence in markets around the world, Mondelēz International, Inc. reported fourth-quarter results that were in line with analysts’ expectations. The snack and confectionary company reported revenues of $6.8 billion and earnings of 63 cents per share.
Mondelēz Chairman and Chief Executive Dirk Van de Put said in a call with analysts on Wednesday (Jan. 30) that he shared a long-term strategy in September to refocus the company toward sustainable top-line growth, which he noted was a “natural evolution” from a more cost- and margin-oriented strategy of the prior five years. The new strategy “leverages our unique difference from other food companies,” Van de Put said, which is coupled with a strong presence around the world along with iconic brands and a leaner supply model. Those factors, van de Put said, set the company apart and put it in a unique position as a global snacking leader. (However, a recent Bernstein report suggested that Amazon’s private-label brands “could pose a meaningful threat to branded food manufacturers.”)
Van de Put also reiterated that the consumer packaged goods (CPG) company is all over the world — not just in North America — and is active in “attractive, large and growing markets.” He noted that the company has scale and a strong presence in emerging markets, in particular, which he sees as a competitive advantage as well as an asset. During the fourth quarter, he noted, emerging markets grew at 6.5 percent, and at around 6 percent for the full year. In addition, he said that more than 40 percent of that was volume-mix driven — signifying that consumers globally are consuming more treats as well as on-the-go snacks.
When it comes to product innovation, the company invested in an Oreo chocolate rollout in Mexico that Van de Put said generated “very positive feedback from our customers.” The company also opened the doors to a new research and development (R&D) center in India to bolster chocolate and beverage innovation as it also grew a “state-of-the-art facility” in Poland. He also said the company was “pleased” with its recent acquisition of Tate’s Bake Shop, which provided “another quarter of strong double-digit growth.”
The New Playbook
Van de Put also noted that the company rolled out a new playbook for marketing, which highlights a shift from a focus primarily on global brands in the past. Now, he said the company’s new strategy focuses on having a “better balance” between investments in global brands like Oreo, Milka and Belvita as well as local brands in Spain, the Nordics, France and Vietnam. “The combination … is generating stronger growth than focus on global brands alone,” Van de Put said. He also noted that the company launched initiatives to bolster eCommerce through “key partners” in China. In that region, Van de Put noted that sales were up “strong double digits.”
To help with a new customer-oriented culture based on performance, Van de Put said that the company rolled out a new mission to “empower people to snack right.” Van de Put said in the call that the company believes the strategy will “lead to higher engagement as well as new ideas on how we will fulfill our vision of being the best and biggest snacking company.” He cited the addition of Brazil to its Cocoa Life program, which he said is the company’s signature sustainability approach to chocolate, as an example of fulfilling that mission. The company also now has a commitment to make all of its packaging recyclable by 2025, he said.
And, while to snack right may have a health and wellness connotation, Van de Put said he takes the meaning one step further: He sees the strategy as recognizing that the same consumer can make different decisions at different points in the day. As a result, he wants to offer consumers the proper product for the occasion. In addition, Van de Put said Mondelēz seeks to improve the sourcing and ingredients of its products. Beyond those efforts, he noted that the company plans to introduce more health-oriented options through its current brands or launch new brands heading into the future.