Speaking at the Deutsche Bank Global Consumer Conference this week, Van de Put said when he took over in 2017 there was an immediate opportunity to improve margins.
To achieve this, Mondelēz shed parts of its portfolio – most recently, a plan to sell its gum and mint business – and instead focused on growing its leading position in snacking by reorganizing its existing global and local brands and invest in new ones.
“We have worked hard to rebuild our global brands or strengthen our global brands. So we revamped those and invested more, and they responded very well,”said Van de Put.
The strategy has driven 4.2% revenue growth over the past four years and rediscovered its focus as the global snacking leader during the pandemic, according to Van de Put.
“During the pandemic, the consumer started to live more from home and our categories, which are mainly cookies and chocolate, took advantage of that. So our categories, which were cookies and chocolate in particular, which were around growth of 3% to 4% reached a growth of 6%”,he said.
“We clearly see a change in consumer attitude where snacking is becoming more and more important every year.”
Driving this trend, Millennials and Gen Z have become all-day snackers rather than sitting down for three separate meals each day.
Possibility of gourmet snack
And while there’s been a big move toward healthier snacking, the pandemic has also revealed widespread acceptance of indulgent snacking, an area in which Mondelēz has a lot to offer, Van de Put noted.
“What the pandemic has also highlighted is that gourmet snacks have become increasingly important. And so 83% of consumers do not think there is anything wrong with having a gourmet snack or several a day,he said. “And so I think that bodes well.”
According to Van de Put, Mondelēz is the undisputed leader in the biscuit category by revenue and is about five times the size of its next competitor with more room for growth.
“Oreo, at this point, is 60% of its business in the US and China. But we think we can grow Oreo by $1 billion every three years, it’s getting closer to a $4 billion mark of dollars”,he said.
“And in chocolate, we are number two, but with more momentum than number one. So I would dare to predict that we will become the leader in chocolate.”he said, adding that the company was adding capacity to its Milka and Cadbury brands to meet growing demand in multiple markets.
And while at-home consumption may have declined slightly with the easing of COVID-related restrictions, Van de Put predicts a more frequent return to at-home consumption given rising inflation, which positions favorably his wallet.
“I think consumption at home, where we will have a revival in that sense, because we go out less, and so I think from a consumption point of view there are certain indicators where I think we feel good and that we’re relatively well put on the whole thing,”he added.
Prices, inflation, actions against recession
As the global economy continues on its uncertain path with some economists warning of a recession, Van de Put said that historically, Mondelēz has done well during economic downturns.
“History says that during recessions our categories do pretty well, they’re constrained, they’re sort of comfort categories, kid-related, etc., etc.“
And of the many areas that consumers typically bargain for (clothing, restaurants, travel, etc.), small convenience items such as Oreos don’t typically make the list, according to Van de Put.
And despite the price-raising measures the company has had to take to combat inflation and continued supply chain pressures, consumer demand has not faltered, he noted.
“The other thing we’ve seen recently is that the pricing power is there. We’ve increased our prices, but so far our volumes haven’t suffered, rather they’ve accelerated” , he added. Van de Put said, especially in the United States, where consumers are showing great price resilience when it comes to buying their favorite snacks.
“Now, will it last? I wish I could tell you, but I don’t… But the underlying trends are that consumers are snacking more, that gluttony is on the rise, [and] they are very attached to our brands.”