CHICAGO — Mondelez International, Inc. has placed its gum business under strategic review. The company intends to return the business back to pre-COVID levels and then decide its future.
Mondelez’s gum brands were struggling before the pandemic, but COVID-19 has been particularly hard on the category. Nationwide stay-at-home orders limited on-the-go consumption opportunities, a primary sales channel.
“… The No. 1 priority we have at this point in time is to fix the business and allowing the business to return back close to 2019 levels,” said Luca Zaramella, chief financial officer, during a June 2 presentation at the virtual Sanford C. Bernstein Strategic Decisions Conference. “It is 5% of total revenue from a profit standpoint given the reduction in size that we have faced in 2020.
“But as we said, we have to fix the business and then potentially assess whether there are other avenues for us to create more value for Mondelez shareholders.”
Brands included in Mondelez’s gum portfolio include Bubblicious, Dentyne, Stride and Trident. The company’s gum and candy business saw double-digit sales declines during the first quarter of fiscal 2021, ended March 31. Other brands included in the gum and candy portfolio are Halls, Sour Patch and Swedish Fish. It is not clear if the candy brands are under review as well.
Mondelez has been aggressive in reshaping its portfolio. Acquisitions made this year include Chipita SA, Grenade, Gourmet Food Holdings Pty Ltd. and Hu Master Holdings, Inc. Mr. Zaramella said the acquisitions have allowed Mondelez to enter category adjacencies and create new opportunities for growth.
At the same time, Mondelez is reducing its position in the coffee category. The company has sold some shares in Keurig Dr Pepper, Inc. and JDE Peet’s.
“… While it has to be absolutely clear that I’m happy and we are happy with the outcomes and prospects of both KDP and JDE, our expectation, though, is that over time, we want to use those coffee assets to convert into snacking — accretive EPS snacking assets,” Mr. Zaramella said.