In the conflict with Belgian retailer Colruyt, Mondelez has got it right, says Belgian CEO Dirk Van de Put: “The discussion we have now with some retailers is based on future costs.”
Cocoa price peaks
For several weeks now, the cooperation between Mondelez and Colruyt in Belgium has been on hold, resulting in empty shelves. Van de Put says the manufacturer does have to implement rate increases.
“I do not think Colruyt knows our cost structure“, he said in an interview with Belgian newspaper De Tijd. “Energy and some raw materials may be dropping in price, but cocoa – our main raw material cost – is peaking at the highest level in six years. The price of sugar has also risen, as has that of packaging and wages. Our principle is to absorb costs where we can, but in some cases we have to pass them on. In other words, our margin is not increasing.”
Competition for consumers
The top executive therefore rejects accusations of greedflation. “That perception is alive because consumers are struggling with inflation and because retailers are always in a competitive battle for that consumer. They want to build an image that they represent the consumer. That is a marketing strategy that is understandable from their point of view. But there is no greedflation on our side.”
The discussion Mondelez is now having with some retailers is based on future costs. The results in the second quarter will be different from those of the first, says Van de Put, who points out that the multinational’s margin traditionally comes out at 16 %, if you correct for one-off costs and revenues.