Will CBD-infused snacks help Mondelēz regain traction in its developed markets?

By Gill Hyslop contact

- Last updated on GMT

Mondelēz is exploring the addition of CBD-infused snacks to its portfolio. Pic: Mondelēz/©GettyImages/Morrison1977
Mondelēz is exploring the addition of CBD-infused snacks to its portfolio. Pic: Mondelēz/©GettyImages/Morrison1977

Related tags: Mondelez, cannabidiol, Donald trump, Oreo, FDA approval, Profit

The multinational snack maker is in the early stages of assessing how CBD could fit into its future product portfolio, according to CEO Dirk Van Put.

He said that, while the cannabidiol might not be a fit for the company’s ‘family-oriented’ brands like Oreos and Chips Ahoy cookies, it could create a new product line of CBD-infused snacks.

It is just waiting for the right regulatory environment.

“Yes, we’re getting ready, but we obviously want to stay within what is legal and play it the right way,”​ said Van de Put.

Top food trend of 2019

US President Donald Trump legalized most non-food products containing CBD when he signed the Farm Bill in December. However, the Food and Drug Administration (FDA) still prohibits adding the non-psychoactive compound to food or beverages.

The case for CBD

CBD is a phytocannabinoid derived from marijuana and hemp plants.

It is non-psychoactive, meaning that it does not cause the 'high' associated with imbibing cannabis, as it does not include the chemical compound called THC – or tetrahydrocannabinol.

CBD is purported to ease pain and manage anxiety, although there is little scientific research to support this.

Van de Put said Mondelēz is looking into these claims.

The regulator has set the first date for public hearings on May 31.

“The space is not clear,” ​said Van de Put.

“It’s a bit clearer in non-food products. In food products, I’m hoping that the FDA will bring some clarity in the coming months.”

He predicted the ingredient – touted to be the top food trend of 2019 – will hit the mainstream food market in the not-so-distant future.

Developed versus emerging markets

The move to add CBD-enhanced products to its portfolio could certainly go a long way to stabilize the snack maker’s traction in developed markets.

In its first quarter of fiscal 2019, ended March 31, Mondelēz posted a flat 0.8% growth for developed markets.

Conversely, emerging markets ticked in with an 8.4% growth.

Luca Zaramella, executive VP and chief financial officer, said the company had “delivered strong results across the board in India, China, Southeast Asia, Russia, Mexico and Africa,”​ while “Brazil returned to growth”.

Q1 FY2019 results

Net income fell to $914m from $1,04bn the year prior.

Sales fell to $6,53bn from $6,76bn for the same period a year earlier.

However, organic net revenues rose 3.7% due to balance volume/mix and pricing.

Adjusted operating income rose by $48m.

“We made improvements in service levels in the quarter,”​ said Zaramella.

“That said there is still work to be done to drive better consistency. We continue to expect progress in 2019, albeit not linear with overall modest growth for the year.”

Arnott's Biscuits

In a conference call with analysts, Van de Put also confirmed Mondelēz is still in discussions with Campbell Soup about acquiring Arnott’s.

“In the case of Arnott's, it's Australia, it's biscuit, it's quite a sizable business, it fits in that white space thinking,”​ he said.

“It's obviously a process that's still ongoing. It's probably a little bit higher than what we originally thought when we thought about acquisitions. But, at the same time, we have very clear expectations in terms of returns and in terms of leverage and we want to stay a very disciplined buyer.

“So, as long as it fits into the same framework that we set into our strategic plan, we will do so. But if it falls out of that, we will not make a deal.”

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