BOCA RATON, FLA. — Four focus areas sit at the heart of Mondelez International’s future strategic framework, Dirk Van de Put, chief executive officer, told participants during a Feb. 20 presentation at the Consumer Analyst Group of New York conference in Boca Raton.
First, the company needs to be “nimble, innovative and fast-moving.”
|Dirk Van de Put, c.e.o. of Mondelez|
Mr. Van de Put said the company must constantly modernize its portfolio and keep it relevant with changing consumer needs. To that end, the company has made many changes across the world. In North America, Mondelez has introduced non-G.M.O. and organic Triscuit crackers, while in Europe the company has added gluten-free, sugar-free and palm-free options within its regional biscuit brands.
The biggest bright spot in the innovative space, though, has been belVita, Mr. Van de Put said.
“It’s a breakfast biscuit that offers whole grains and sustained energy in a convenient on-the-go format,” he explained. “Our teams have done a fantastic job turning this brand into a global success, with more than $600 million in revenue from more than 50 countries. Here in the U.S., belVita, last year, grew mid-teens thanks to strong growth in the core, but successful extensions in Small Bites, sandwiches or protein offerings.”
Another focus area for Mondelez will center on expanding and extending the company’s power brands to accelerate growth. In the United Kingdom, Mondelez has been able to leverage the success of its Cadbury chocolate business, extending the brand’s reach into biscuits.
“About 18 months ago, we acquired the license to market Cadbury-branded biscuits globally,” Mr. Van de Put said. “This allowed us to explore delicious new products by using a combination of our chocolate and biscuit platforms. It’s been a great success. Cadbury biscuits in the U.K. have grown more than 60% in the last year. It was driven by our unique chocobakery combinations.”
Future omnichannel expansion is a third area of focus for Mondelez. Acknowledging this is not a new concept, Mr. Van de Put explained that the company is committed to building a strong e-commerce business and is well on its way to reaching $1 billion in revenues by 2020.
One way the company is expanding in this space is through unique offerings. Last year, Mondelez began offering an Oreo Music Box through the Alibaba site in China. The music box plays different songs when an Oreo cookie is placed on the turntable, and the song changes every time a bite is taken out of the cookie. The product has proved a hit with consumers, Mr. Van de Put said.
“This gifting initiative drove incremental sales and increased engagement with the brand,” he said. “Over 90% of the buyers were new users. The Oreo brand’s social index grew by 150 times on the first day, and the product has earned 500 million impressions on Alibaba alone. This year, our sellout for online gift packs for Chinese New Year with Alibaba and GD.com are up 50%, which I think demonstrates that we are learning how to win big in e-commerce as we are building our capabilities, improving our supply chain and our data analytics.”
The fourth and final focus area for Mondelez will be excellence in execution. While the company has done well in some areas — supply chain reinvention and cost reductions — it has struggled in other areas, such as customer service difficulties in North America, Mr. Van de Put said.
In terms of its supply chain reinvention program, Mondelez’s execution has been “consistently strong” and has yielded “significant benefits,” Mr. Van de Put said.
“We’ve dramatically reduced the number of s.k.u.s and focused on fewer, more strategic suppliers,” he said. “We’ve driven large cost savings and operational efficiencies, including best-in-class productivity, which has led to a significant expansion of our gross margins and an improvement of more than 60 days in our cash conversion cycle. And our Lines of the Future are delivering higher output efficiency than expected, which is giving us more capacity to support our growth. I think the supply chain reinvention program is a great example of how this company knows how to execute, taking one of the industry’s oldest and least efficient supply chains, modernizing it into a competitive advantage.”
Despite the considerable progress across the business, Mr. Van de Put indicated there remain opportunities for improvement.
“Our top line is still not where it wants to be,” he explained. “We need to adapt more quickly to the evolving needs of our consumers. We need to grow our omnichannel presence even faster. And we need to improve our consistency of execution. I want to give credit to the tremendous work of my colleagues since we launched the company five years ago. The first phase of this company included a major transformation that has made us more nimble, more cost-efficient and more focused. I am very excited to lead the next phase of our journey. We have a great opportunity to fulfill our real potential and to realize our purpose and vision: to create more moments of joy by building the best snacking company in the world.”
In the end, to unlock more value for shareholders Mr. Van de Put said Mondelez just needs to get two things right.“More than ever, we need to put the consumer at the center of everything we do, and we need to execute with excellence every day in every store,” he said. “I know it’s a lot more complicated than it sounds, but I'm convinced if we do that, we will deliver sustainable, profitable growth.”