Mondelez International assumes a “normal year”, with profit and turnover growth as usual. Nevertheless, the corona pandemic has a lasting impact on how people snack, predicts CEO Dirk Van de Put.
Mature markets grow again
Mondelez, the producer of Oreo, Philadelphia and Lu among other brands, saw its comparable turnover increase by 6% in the first quarter, thanks to the lockdown. In the next quarter from April to June the increase dropped to 0.5%. Dirk Van de Put, the Belgian at the head of Mondelez International, therefore concludes that the full year will look quite normal, with a traditional turnover growth of at least 3% and a profit increase of between 4 and 6%.
However, fundamental changes hide behind these figures, says the top executive in an interview with Trends. For example, the relationship between mature markets and developing countries was reversed during the corona crisis: where developing countries before the crisis accounted for roughly 5 to 7% growth, there is now a standstill or even a decline. Developed markets, on the other hand, are sometimes growing by as much as 8%.
But the European figures are hit by the difficulties in the out-of-home channel. The travel segment has been added to European turnover and Mondelez is also targeting out-of-home consumption slightly more on this continent, leading to a negative result in the second quarter. Since then, growth has picked up again, according to Van de Put.
New approach to online
People probably won’t keep snacking more, according to the CEO. However, the trend towards e-commerce is permanent: online sales at Mondelez doubled from 3% to 6% at the end of the second quarter. In order to still be able to enjoy impulse sales in that market, the company wants to focus on online advertising – also directly on the e-commerce platforms. The biscuit producer also realises that different formats and a much wider range of products are needed for online success. However, this makes production and distribution much more complex and expensive.
“In China, all our warehouses can already ship the products directly to the consumer. Alibaba even asks us to be able to do this within two hours, but the margins are still acceptable because motorcyclists can deliver any product on-site,” says Van de Put.
In order to save costs in that context, the Milka-maker wants to reduce the number of references by 25%. No brands will disappear from the portfolio, only product references that do not sell well: together they account for 2% of the group’s turnover. Mondelez is also considering savings in office space, so that costs would reach a balance in the fourth quarter.
