Mondelēz to lean on healthy snacks and digital media to expand margins

By Hal Conick

- Last updated on GMT

Mondelēz says half of its profits will come in the well-being space by 2020
Mondelēz says half of its profits will come in the well-being space by 2020

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Mondelēz International hopes to “significantly expand margins” through healthier versions of its products, product innovation and more reliance on digital media.

Mark Clouse, Mondelēz’s executive vice president and chief growth officer, said at the Barclays Global Consumer Staples Conference last week the company will be looking to meet consumer trends by offering healthier versions of its snacks and confectionery treats. He said the company will look to make 50% of its profits in the well-being space by 2020.

Lower calories… but not for everything

Mondelez 2020 goals
Mondelēz 2020 aims. Source: Mondelēz presentation at Mondelez International to Present at Barclays Global Consumer Staples Conference

“In terms of our existing portfolio, there’s really no silver bullet when it comes to enhancing our wellbeing profile,”​ he said. “It must be a holistic plan where we reduce certain ingredients, like sodium and saturated fat, strengthen other ingredients, such as whole grains, while working to simplify ingredients overall.”

“Consumers want ingredients they recognize. If it’s on our ingredients list, consumers should be able to find it in their kitchen.”

By 2020, Clouse said the company will reduce saturated fat and sodium in its products by 10%, increase whole grains by 25% and reduce artificial colors and flavors across the board. Mondelēz will also look to make brands “lighter’ and increase transparency across the company.

Wellbeing foods are growing at twice the rate of regular business, he said, something Mondelēz definitely wants to take advantage of by tweaking its offerings. However, not everything will be for the health-centric crowd.

“I’d like to clarify one important element,”​ he said. “We’re not turning everything into health food. Indeed, there’s a proper place for treats in a balance diet.”

well-being platforms
Some of Mondelēz's well-being platforms. Source: Company presentation at Barclays Global Consumer Staples Conference

Growing the online presence

Taking advantage of and expanding Mondelēz’s large internet presence will be integral to helping the company expand its reach to both developed and emerging markets, Clouse said.

“From a global perspective, we’re shifting more of our spending to digital​,” Clouse said. “Digital generally cost less than traditional media but has twice the [return on investment]. We expect digital media to represent 30% of total media spend, double where we were last year.”

Clouse said the company has been a “true leader” in social media over the last two years, seeing great results from sometimes-controversial campaigns that spark conversation.

mondelez market share
Mondelēz market shares. Source: Mondelēz presentation at Barclays Global Consumer Staples Conference

Innovative packaging and snacks

oreo pack formats
Oreo pack formats. Source:Mondelēz presentation at Barclays Global Consumer Staples Conference

The company also expects to see growth from smaller pack sizes and healthier products, Clouse said. He cited smaller packages at Oreo with a lower price point and “gifting tins” in China as two initiatives Mondelēz hopes will broaden the company’s audience base in emerging markets.

For other markets, such as the US, family sized packs have already reached $150m in sales and are expected to grow to $250m by next year.

Mondelēz also wants to enter new markets more quickly and efficiently, bringing new products to market quicker than before. Clouse cited the company’s newer chocolate tablet offerings that mix confectionery and cookies, such as Milka with Oreo, and said this is already a $500m business for them. He expects it to soon exceed $1bn.

Mondelēz ‘s chosen growth drivers fall in line with what market research firm Technavio​ sees happening in the confectionery industry. Earlier this year, the company said social media presence, product innovation and lower-calorie offerings will help lead the charge in the industry toward an annual 1.64% growth to reach $37.77bn by 2019.

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