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Mondelez will struggle to topple Mars in China and Russia – analyst

By Oliver Nieburg+

02-Oct-2012
Last updated on 02-Oct-2012 at 13:40 GMT

Mondelez's brand portfolio
Mondelez's brand portfolio

Kraft’s global snacks spin-off Mondelez will face fierce competition from the likes of Mars and Nestlé in the emerging confectionery markets of China and Russia, according to an analyst from Euromonitor International.

Kraft Foods Inc, which comprises both Mondelez and North American grocery business Kraft Foods Group, was only a fraction behind food giant Nestlé in the packaged foods segment as it listed on the New York Stock Exchange as two independent companies yesterday.

However, Ildikó Szalai, senior company analyst at Euromonitor, expects the Mondelez snack arm, which includes brands such as Cadbury, to face clashes with big rivals in the Russian and Chinese confectionery sector.

Mars’ chocolate rule in China

Mondelez has excluded China from its priority chocolate markets but the nation is among the company’s primary markets for its gum and candy segment with brands such as Trident.

“In China, Mondelez has a 1% value share in confectionery, while market leader Mars Inc commands an 18% share. Strong international players in key markets can mean high competitive barriers to further expansion,” said Szalai.

“Chocolate confectionery in China is highly consolidated, the top 3 players Mars, Nestlé and Ferrero, command a near 70% market value share in 2012,” she continued.

Candy and gum in China

Szalai said that sugar confectionery in China was nearly four times bigger than chocolate but it's growth is forecast to be three times slower over the next five years.

“While sugar confectionery is much more fragmented, the top 3 players Nestlé, Perfetti Van Melle and Want Want Group own less than 18% of the market,” she added.

Leader of Mondelez’s gum and mint category Jim Cali, said at the Barclays’ Back to School Conference last month that China was the focus for his segment with brands such as Halls and Trident.

Kraft Foods launched its first gum in China earlier this month with the Stride brand, aimed at young consumers (see HERE  ). Cali claimed the brand would avoid clashes with Mars-owned Wrigley, which was looking towards functional gums for older consumers.

Competition in Russia

According to Szalai, Russia presents another test in confectionery.

“Challenges in Russia are similar to the one in China, strong competitive barrier to further expansion by multinationals, namely Mars and Nestlé,” she said.

Mondelez ranks fourth in the Russian confectionery market with a 8.7% share. Mars tops the category on 17.8% followed by domestic player United Confections then Nestlé.

Szalai added that growth prospects for confectionery in Russia are forecast to be slower than China, with a particularly negative outlook in sugar confectionery.

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