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May 1, 2015

Mondelez ahead of market in China thanks to Oreo, gum

Mondelez International has said it is "encouraged" by its progress in China after another quarter of sales growth, led by Oreo and gum brand Stride.

Mondelez International has said it is "encouraged" by its progress in China after another quarter of sales growth, led by Oreo and gum brand Stride.

The company's sales in China were up in the "high single digits" in the first quarter of 2015, a notable performance in a market where some peers have struggled in recent months. Hershey, for example, saw sales pressured in China as a result of the government crackdown on gifting and macro-economic factors in the country.

Speaking to analysts after Mondelez reported its first-quarter results, chairman and CEO Irene Rosenfeld said the company had seen a "strong performance" from Oreo and Stride. Mondelez is looking to build on its results in gum in China with a planning a second production line in the country, which will lead to the launch of the Trident brand in the country.

"We continue to be encouraged by our progress, this is the third consecutive quarter of high single-digit growth there. Our team is executing well, and we're selectively investing to continue and hopefully accelerate our momentum," said Irene Rosenfeld, CEO of Mondelez International.

Robert Moskow, analyst at Credit Suisse, questioned what had led to Mondelez "bucking the trend in China".

"I think actually we're not bucking the trend we actually live that trend," said Rosenfeld. "If you recall about a year and a half ago we ran into challenges as we saw demands slowing down quite rapidly and our inventories were not keeping pace with that. So as we talked about it we implemented a number of management tools and measurement tools to ensure that we had a good handle on sell in and sell out and that serving is exceptionally well so I think in many respects we were ahead of that curve and we've now got back behind us."

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She also discussed the growth opportunities in biscuits. Oreo, she said, had performed particularly well. In fact, Oreo Thins, launched last year in China, had performed so well, Rosenfeld said consumers would start to see it "make its way around the world".

"I'm particularly pleased though with the resurgence of the biscuit business which is a critically-important business for us. Oreo had a very strong quarter and is a strong contributor to the overall business performance… I think we've got a much better balance between sell in and sell out the team is executing well and I'm extremely pleased with their performance. So we're cautiously optimistic but the continued performance of the biscuit category is important to us."

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