Mondelēz predicts solid growth in 2021 as it gradually revs up in-house product innovation
In North America, the company posted an 8.6% increase in net revenue for the full year, and a 4.5% in Q4 2020.
"This is a strong set of results, a clear demonstration of the strength of our organization and the success of our growth strategy, even during severe external challenges," Mondelēz CEO Dirk Van de Put, said on the company's earnings call.
At the very onset of the pandemic facing lockdowns and supply chain disruptions, Mondelēz swiftly changed its focus and capital expenditure on company projects with the highest return potential.
This move translated into "simplifying" its business to focus on legacy snacking brands and significantly reducing the company's innovation projects, noted Van de Put on a previous earnings call last year.
Cautious innovation projects
With innovation and new product launches mostly on pause for the majority of 2020, the company has dipped its toes back into innovation with a few new brand launches such as its Millie Gram mushroom nut butter brand, said Van de Put.
"We want to continue to increase our exposure to health and wellness...you will see a very balanced approach of gradually introducing more health and wellness products from our side," he said, adding that the company has a number of in-house "breakthrough-type" products and brands being tested in "very, very small" markets which will take some time to develop.
"That goes much further than sort of cleaning up your ingredient or improving your ingredient panel," said Van de Put.
As part of its current and future growth strategy to establish a strong foothold in the health & wellness space, Mondelēz has started eyeing more acquisition deals including its recent purchase of Hu Products, a brand of vegan, paleo chocolate and grain-free crackers.
Following a minority investment in Hu Products in 2019, Mondelēz acquired full ownership of the company earlier this month.
"Overall, the business is growing high-double digits and there is a clear opportunity to scale the business using our distribution and capabilities. Hu is a great brand and a great fit in our portfolio bringing us interesting opportunities in the key well-being/premium areas," said Van de Put.
2021 outlook
The global snacking company expects to hit 3+% organic net revenue growth for the year (dependent on retaining share gains and continuing to invest behind working media and marketing and sales capabilities to support its brands), noted Mondelēz CFO Luca Zaramella.
However, given that Q1 2020 was the strongest quarter for the company last year as it experienced unprecedented demand across its portfolio, Zaramella warned of headwinds in Q1 2021.
"We do expect a lower growth rate in Q1 2021," he said. "Despite our expectation that COVID costs will subside in 2021 and our emerged stronger initiatives will deliver the majority of their benefits, we will reinvest the upside to sustain our share gains and to weather a more recessionary environment."
