'We can solve the consumer's dilemma': Mondelēz CEO dishes on innovation, local brands and consumer focus at CAGNY Conference

20-Feb-2019 - Last updated on 21-Feb-2019 at 14:38 GMT

'The localized Oreo approach is working well around the world,' said Mondeléz chairman and CEO Dirk Van de Put. Pic: Aleksandra Baranova / Getty Images

In pursuing emerging markets, cross-category collaborations and a 'local-first' model, Mondelēz has maintained, and in some cases expanded, its stature as a global industry leader – led by the likes of Cadbury, Milka and Oreo.

Chairman and CEO Dirk Van de Put outlined the company’s multi-tiered growth strategy at the annual Consumer Analyst Group of New York (CAGNY) Conference in Boca Raton, FL.

With number-one or number-two brands in chocolate, biscuits, candy and gum, Mondelēz remains the leading packaged snacks company – controlling 45% of the global market, said Van de Put in his presentation to investors.

“While snacking as a behavior is growing, consumers feel a certain degree of tension as they do so. On one hand, they want to snack because it fits into their lifestyles. On the other, they want to eat right. We can solve the consumer’s dilemma,” he said.

The new consumer-focused approach doubles down on customers in all their contemporary fickle glory. “Consumers do not think in categories,” continued Van de Put, instead looking for a variety of snacks to satisfy cravings and even replace meals throughout the day.

“Consumers are changing the way they make decisions and the way they shop,” he added, so Mondelēz has changed its messaging while experimenting with new products.

Global meets local, especially in emerging markets

In addition to legacy brands in high-growth categories, nine of which generate $11b in revenue, Mondelēz has also curated a ‘rich portfolio’ of brands relevant to local audiences around the world. These 65 ‘local jewels,’ as Van de Put describes them, range from $100m to $1b brands and together account for nearly half of the company’s total revenue.

In India, the fastest-growing market for Mondelēz according to the presentation, the company’s brands saw double-digital net revenue growth in 2018 led by ‘agile innovation’ and all-occasion marketing focused on what Van de Put calls a ‘generosity purpose.’

He mentioned Malaysia, South Africa and Egypt as success stories, too.

In China, where sales had stagnated in recent years, Mondelēz adapted products to suit the Chinese palate, rebooted brand communication and upgraded packaging with an eye toward convenience and online channels. The result: double-digit growth in 2018, said Van de Put.

Specifically, he touted Oreo’s success as a cross-category star: the chocolate biscuit and cream has found its way into yogurt, ice cream and chocolate bars.

“The localized Oreo approach is working well around the world,” he said.

Adding to the storied brand’s continued success in the US, Mondelēz launched Oreo Thins last year to satiate consumer preference for smaller portions with fewer calories as part of its ‘playful connections’ marketing.

The SKU surpassed $181m in US sales, cracking the top 10 in the cookie category, according to Chicago market research firm IRI. Five other Mondelēz brands also landed in that list, including the classic Oreo and the Double Stuf.

Meanwhile, Cadbury continues to dominate UK chocolate sales, per IRI. There, Mondelēz turned to that same generosity campaign used in India to promote products as a ‘taste of the nation,’ intended to attract younger consumers and parents of young children to indulge in packages of 100k or less.

Manufacturing, 'test-and-learn' a key part of innovation

“We know that in order to succeed in long term, we have to change the way we innovate,” Van de Put emphasized.

Mondelēz has closed four plants in Brazil and opened two modern factories that produce multiple categories in the same space. It has also closed or divested 50 plants, according to CFO Luca Zaramella, who spoke after Van de Put.

Zaramella calls them ‘factories of the future’ – “enhanced to increase efficiencies and deliver higher output.”

In the near future, Mondelēz will reinvest $2.9bn in cash flow straight into growth initiatives, Zaramella added.

The Deerfield, IL-based company has also opened 11 innovation centers and 40 ‘test-and-learn’ plants worldwide in pursuit of a rapid-response approach to “launch small-scale innovations faster.”

China’s Oreo Rainbow, noted Van de Put, came to market in ‘record time’ thanks to this strategy.

The launch of the Snack Futures platform, which promotes a trio of “wellbeing, premium and digitally enabled snack solutions," he said, will spur innovation through a series of “inventing, reinventing and external venturing under the same roof."