FMCG in the Middle East: Interview: GULFOOD 2014: Mondelez's Middle East snacks ambitions
Mondelez EEMEA vice president and area director Vishal Tikku
They may be growing quickly but the Middle East's snacks and confectionery sectors present a challenge for companies looking to grow their share of sales. Vishal Tikku, vice president and area director for Mondelez International in the region, spoke to Hannah Abdulla at the Gulfood 2014 exhibition in Dubai about the company's ambitions for the region.
It is a corporate entity not yet two years old but Mondelez International's presence in the Middle East goes back a century.
"In Dubai there is a museum on Fahidi Street, which largely highlights the way people used to live," Vishal Tikku, the director of the global snacks group's operations in the Middle East, tells just-food. "In one of the exhibits, there is a can of Kraft cheese dated 1916, demonstrating we have been here a very long time. People have grown up with our products."
It is, however, fair to say Mondelez has intensified its focus on the region in the last decade. In 2000, Mondelez, then Kraft Foods Inc, set up its active office in Dubai, which manages its operations in Eastern Europe, the Middle East and Africa. The office houses 145 staff.
"We cover operations all the way from Russia to South Africa and Morocco to Pakistan out of here," says Tikku, who heads Mondelez's operations across that region, not just the Middle East. He has been with the company and based in Dubai for the last nine years. "Geographically, Dubai is well positioned - especially if you are managing the region, it is extremely well connected."
But the city's geographical connections only attract greater competion. PepsiCo, Mars Inc and Nestle are just some of the multinationals with regional offices in Dubai, highlighting the global competitors Mondelez has to contend with locally.
"The Middle East is a big export market, and it's a growing market. Growth markets in the world are not so many so it has attention from most of our key competitors," Tikku says.
Mondelez, created after the split of the then Kraft Foods Inc in two, is looking to build its business in the region's snacks and confectionery industries, sectors where Tikku says its rivals have a head start on the Cadbury and Oreo maker.
"Competition anywhere is fairly tough. The chocolate category has a lot of international brands, the same as anywhere in the world. Our efforts in the market are fairly recent - they've been here a longer length of time and have created brand shares," Tikku admits.
"Biscuits is a very fragmented market. There's no number one player - there are different number one players in different countries and the sector has more local players."
Tikku was happy with Mondelez's performance in the Middle East in 2013. "We did well," Tikku says. "We made fundamental changes in our route-to-market to get better at being a snacks company, being more available and better increasing our presence at point of sale. We spent a fair amount of money on effort to develop that capability, which we need to develop further going forward. Overall we have great expectations of the coming year," he says.
Mondelez believes its local snacks businesses will grow faster than its other two interests - powdered drinks and cheese. However, Tikku insists there is no room for complacency.
"We aren't the number one chocolate company here - we would like to be and that's where a lot of our effort is going. Similarly for biscuits, we aren't number one - we want to be, and so our growth expectation for the snacks business is greater than our other two businesses, Tang, which is part of the powdered beverage market, and our cheeses."
When asked when he believes Mondelez will be number one in the categories, Tikku responds "not soon enough". However, because of the fragmentation of the local biscuit market, he believes it will be that category where Mondelez could take the top spot faster. In chocolate, "every single global player is here, which makes it tougher, and you have to have really differentiated products to win", Tikku says.
Nevertheless, that does not mean Tikku is not confident about the firm's strategy. He says Mondelez prides itself on understanding local consumers.
"Eventually you have to understand your consumer needs and if you can supply that and fulfil that need better than your competitor you'll win. That's the core of any FMCG company and we do the same. We put a lot of effort into consumer understanding, R&D and developing products, looking at successful products around the world and integrating their successes elsewhere."
Being a multinational in a region with strong growth prospects has its benefits, Tikku believes. He calls it being able to use "the power of big and the power of small."
"We like to use our scale, our great R&D capabilities and the fantastic brands which have all been developed and are loved by people around the world. There is little reason for people here not to like them, so we need to try them and have the advantage of being able to do that. Then we need our feet on the ground, need the agility to take that to market and create that impact."
Mondelez will hope to tap into local consumer demand that, according to FMCG manufacturers present in the region, can be less sensitive to price than elsewhere in the world.
Tikku concurs. "It's an affuent part of the world. You have a good offering, consumers are willing to pay you the money for it. That doesn't happen everywhere."
In addition to Mondelez's presence in Dubai, it has plants in Dammam in Bahrain and in Pakistan in the region. In total around 1,200 staff cover the Middle East region.
But with Mondelez restructuring its supply chains and cutting overheads in a response to slower-than-expected sales, what will be the impact on its operatiosn in the Middle East?
"In the developing worlds, China, Brazil and India didn't do as well as we thought they would, which then makes it difficult for a global company relying on developing market growth to grow," Tikku says. "If you aren't growing at the pace you are expected to, there is greater pressure on your profitability."
However, he adds: "More than overheads, I think it's more about having a culture of cost consciousness. As a multinational, we are committed to build - we are working on that quite hard. It will impact on small things and will impact on big things."
For 2014, Tikku says the aim for Mondelez in the Middle East is to continue "driving growth ahead of our category, boosting profitability through efficiency as well as managing our commodities".
He says: "If you have your act together you can grow. The trick is to get your act together."
Mondelez International, Inc. (Mondelez) formerly, Kraft Foods Inc. is a food and beverage company. It manufactures and markets a wide range of snacks, confectionery, and quick meal products. The compa...
2014 was a challenging but significant year for Mondelez. The company remains strong across a broad range of regions, unlike other confectionery and snacks manufacturers. The company has also made sig...
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