The new CEO of Mondelez International said the snacks giant needs to “grab some of the growth” being seen in demand for healthier products.
Quizzed at the Consumer Analyst Group of New York investment conference in Boca Raton yesterday (20 February) on whether Mondelez’s portfolio was too heavily stacked towards sweet snacks, recently-installed chief executive officer Dirk Van de Put acknowledged some of the range – which includes the Cadbury, Milka and Belvita brands – may be seen to be at the lower end of the scale when it comes to growth.
“There are clearly categories growing faster in snacking. We want to do something about that going forward and we are expecting, organically and inorganically to grab some of that growth,” he said. “At the same time there are opportunities to make the current categories grow faster.”
Van de Put pointed out demand for premium chocolate and indulgence products is “booming”.
Mondelez told CAGNY it would publish its 2018 business plan later this year and is completing a comprehensive strategic business review designed to deliver sustainable shareholder value.
Van de Put, who joined Mondelez last autumn from McCain Foods, outlined several areas of focus that will be important as the Oreo maker develops its future strategy, including putting consumers first, leveraging its “power brands” and solidifying its omni-channel presence.
“We’re taking a fresh approach, challenging existing thinking and exploring new ideas and ways to win,” he said. “More than ever, the consumer needs to be at the centre of what we do. Today’s consumers eat differently, shop differently and seek different experiences. Since consumers are changing fast, we have to be more nimble, innovative and forward-looking than ever before.”
Van de Put also said Mondelez is taking steps to improve its supply chain in North America where execution has been “uneven”. Mondelez’s sales fell in North America in 2017, in part due to the cyber attack that hit its business but the company has admitted that part of the business has not met expectations.
The company also reaffirmed its 2018 outlook, which includes organic net revenue growth of 1% to 2% an adjusted operating income margin of approximately 17%.
Commenting on the presentation, analyst Pablo Zuanic of Susquehanna International Group (SIG), said: “Mondelez may take a bit longer to deliver owing to mixed trends in the snacks portfolio, in our view. We did not think there was a lot of new material in this presentation.”
Another analyst in attendance, Alexia Howard of Sanford Bernstein, reflected on Mondelez’s comments on e-commerce and on its supply chain in North America.
“On omni-channel expansion, the company grew net revenue by more than 40% in e-commerce channels in 2017. The company expects e-commerce to be on track to be a US$1bn business by 2020. We remain positive on the company’s progress made in e-commerce as believe that e-commerce, especially in China, represents a highly incremental growth opportunity for Mondelez as more people purchase snacks online,” Howard said.
“Another focus is on execution in North America. The company admitted that supply chain execution has been uneven and it will take a few quarters to regain consistency. Mondelez has reduced SKUs and simplified its supplier base. The company believes that there are still opportunities to continue to make progress in supply chain reinvention.”