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THE MONDELEZ SERIES – Chocolate strategy

Mondelez sets global chocolate vision

By Oliver Nieburg+

10-Sep-2012
Last updated on 10-Sep-2012 at 14:13 GMT

Four power brands, three priority markets and two innovation platforms will drive growth for Mondelez’s chocolate segment, according to the firm’s category head.

Bharat Puri, senior vice president and leader of the chocolate category, recently gave a speech at Barclays Back to School Conference in Boston, Massachusetts, US, ahead of Kraft Foods’ split into a global snacks business (Mondelez International) and a North American grocery business (Kraft Foods Group) on 1 October.

Mondelez International claims it will become the market leading chocolatier when it splits from Kraft Foods next month.

Chocolate will account for 27% of the company's sales, the second largest category, behind biscuits.

Puri said that the chocolate business would focus on three markets (India, Brazil and Russia), four power brands (Cadbury Dairy Milk, Milka, Lacta, and Toblerone) and two innovation platform (bubbly and bite-sized).

Power brand focus

The four power brands

He said the firm’s flagship brands Cadbury Dairy Milk and Milka were worth over $1bn each with Lacta not far behind.

The Four power brands represent half of revenues in the category and are forecast to grow faster than global chocolate, according to Puri.

Priority markets: India, Brazil and Russia

“Developing markets will be the primary driver of our growth in chocolate,” he said.

Global Chocolate Market Share

Mondelez International 15%
Mars 15%
Nestlé 12%
Ferrero 7%
Hershey 7%
Lindt 4%

Source: Euromonitor 2011 data

Mondelez’s chocolate segment splits core geographies into three categories: Big Bet markets, New wave markets and Scale markets.

Mondelez’s Big Bet chocolate markets are India, Brazil and Russia, which represent a fifth of chocolate revenues.

“By 2020 110m households in India, Russia and Brazil will move into the middle class and as they do, we believe they‘ll step up their chocolate consumption by about three times,” said Puri.

Puri, previously Cadbury’s managing director in India, said that he hoped to foster growth in India through low-unit price offers, introducing people to premium brands such as Dairy Milk Silk and Bourneville and expanding the gifting range to include Cadbury’s celebrations.

The company’s Next Wave markets, Indonesia, South Africa, China and Ukraine, account for 4% of revenues, but are said to have growth potential which can be leveraged through Kraft’s presence in other snack categories.

The three chocolate priority markets - India, Brazil and Russia

Scale markets are developed markets such as the UK, Australia, France Canada and Germany. These markets already represent 42% of revenues, but gains can be made in the premium segment, said Puri .

Innovation: Bubbly and bite size

Mondelez also plans to make chocolate headway through innovation.

“Our bubbly platform has reinvigorated aerated tablets with its playful moulded design,” said Puri.

Kraft launched Dairy Milk Bubbly in UK in February this year and has made a 4 point share gain by outselling rivals such as Nettle’s Aero bar, said Puri.

The Bubbly bar recently launched in South Africa and Kraft has introduced aerated varieties to other power brands such as Milka Luflée in Germany and Austria and France and Lacta Bubbly in Brazil.

Mondelez plans to have bubbly products in 20 major markets by the end of next year.

Chocolate innovation platforms

Puri said Kraft had also made gains in the previously “underdeveloped” bite-sized segment after a 2009 launch with Cadbury in the UK.

The bite-sized model was followed with Milka in continental Europe, which Puri says led to a 7 point share gain in the last two years.

Mondelez experts chocolate sales to grow in mid-to-high single digits on $10bn revenues last year.

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