Wednesday, 23 August 2017

 

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Mondelēz International is planning to focus more on the volume growth in the market, for the next years. The company is also looking into margins improvements, according to a recent announcement.

The company is targeting a growing market share in two categories: chocolate and biscuits, says the executive vice president and president Mondelēz Europe, Hubert Weber, with the occasion of Global Consumer Conference.

The company plans to use opportunities offered by the business landscape, to cover areas that are not currently filled. The company reports 19.5% operating income margins in Europe in the first quarter of 2017, “pretty much at the top of the FMCG. We have taken big chunks out of the efficiency and the overheads of the manufacturing size. Margins growth will come more from a mix perspective than in the last three years,” Weber mentions.

He adds that one of the opportunities for the company is in the capabilities that it has in the biscuit and soft cakes. “We have started three years ago to very actively combine the great assets of chocolate brands and tastes with biscuits and soft cakes. That is a space in the overall snacking landscape that nobody is covering firmly – there are big opportunities of quality offers and advantageous margins; we’ve created within three years around USD300m business here in Europe, growing double digit,” Weber adds.

The official from Mondelēz says that bringing the Cadbury license on the biscuit size will enable the company to expand the choco-bakery footprint with a big profit growth potential, in all Cadbury countries.

Opportunities for Europe and Russia

Weber considers that Europe has fast growth opportunities for brand platforms and capabilities. In Russia, the company could profit from the shift of the retail landscape, he adds.

“In the last two-three years, the Russian market has shown a shift like I’ve never seen before – from the traditional trade environment to modern trade and discounting,” says Weber.

As for other parts of Europe, Weber pointed out the opportunity of the discounter retailers, such as Lidl and Aldi.

“Discount retailers really put a new facet into the market, especially in the countries where those have a big market share, like Germany, where they reach 40% of the market. “If you don’t work with them, you are not really in Germany,” Mondelēz Europe president adds.

He says the company will do business with the discounter in the United States, as Lidl and Aldi expand their activity there.

“In European countries, they reach market shares between 10 and 40%. For many years, we had good business with Lidl and Aldi and they are a part of our distribution strategy, they fit nicely in the balance between consumer reach and profitability,” he says, adding that he is confident regarding the retailers’ expansion in the US, considering their business experience from Europe.

Weber also added that, in the last three years, Mondelēz worked to get to an operating income margin profit and increased operating margins by more than 500 basis points.

Significant steps were taken to structure and restructure the portfolio which was sampling the top line growth to certain extend. “Over the last three quarters, we have been growing volume mix in Europe by 2%. In Europe, we’ve recently taken steps of diverting our national brands that didn’t have an opportunity to grow internationally,” he adds.

A part of the restructured portfolio was the focus on premium products and seasonal gifting products.

“In the last three years, we worked on a very efficient structure and preparing ourselves for the future – to a liner portfolio. We invested more in driving margins of our creative portfolio segments: seasonal and gifting propositions in the chocolate space, as well as choco-bakery, which is a fusion of biscuits and chocolate,” Weber says.

Mondelēz Europe reported a net revenue of USD2,365m in the first quarter of 2017.

In 2016, Mondelēz International announced an agreement to purchase the license that enables the company to manufacture market and sell Cadbury-branded biscuits around the world, including in the UK, France, Ireland, North America and Saudi Arabia.

Related articles: 

Mondelez International Opens R&D Hub in Poland 

Mondelēz International Expands Barni Kids Wholesome Platform 

Mondelēz International Introduces Véa

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