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Mondelez eyes Saudi expansion with new JV

By Oliver Nieburg+

21-Jan-2013
Last updated on 22-Jan-2013 at 10:14 GMT

Cadbury owner Mondelez International has entered a joint venture to expand distribution in Saudi Arabia, which it calls an “important and strategic market” in the region.

The confectionery giant has partnered with the Olayan Group, and Khalifa Algosaibi Group to increase distribution in the market through the newly inaugurated Mondelēz Arabia for Trading LLC.

The joint venture will based in Dhahran and the partners eventually plan to set up 11 branches across major cities in the market.

‘Strategic market’

John Stephenson, director of sales for Mondelēz International GCC, said: "This is a major step for Mondelēz International that demonstrates our long-term commitment to KSA [Kingdom of Saudi Arabia], a very important and strategic market for us in the Middle East and Africa.

“The KSA offers significant growth opportunity with strong GDP expansion. We intend to grow with it by investing in product innovation, sales techniques, new-sales systems, and by developing a talented workforce.”

Salah Algosaibi, executive director of Khalifa Algosaibi Holding Company, said: “This partnership really demonstrates that Mondelēz International sees great value in KSA as an important market with a growing population.”

The new joint venture will provide around 300 jobs.

Mondelez operations in KSA

Last year, Mondelez upped production at its Dammam biscuit plant, which it also operates in a joint venture with The Olayan.

The plant, which produces Oreos, employees 170 people and has a capacity of 25,000 tons of biscuits.

Kraft spin-off Mondelez has been in the Saudi market for around 100 years with brands including Tang, and Cadbury Dairy Milk.

Per capita chocolate consumption

Saudi Arabia  - 1.6 Kg
Egypt – 0.6 Kg
Israel – 3.4 Kg
Germany – 8 Kg

Chocolate sales boom

Recent analysis from Leatherhead Food research pinpointed oil-rich Saudi Arabia as one of the largest confectionery markets in the Middle East and said it held potential because around 70% of its population was 30 or under.

In its latest industry update, Leatherhead valued the confectionery market at $545m in 2011, up 40% from 2007.

It noted that chocolate sales were booming, with volume sales up 42% in the past five years.

Per capita chocolate consumption is low compared to Western standards, but is higher than many countries in the Middle East, it said.

Mars leads the Saudi chocolate market with a 45% share, while Nestlé is also present with KitKat and Milkybar.

Leatherhead said that Ferrero and Lindt & Sprüngli were also in the market and were benefiting from a trend towards higher-quality European chocolate.

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