Mondelez International (formerly Kraft Foods Inc.) makes what it takes to survive a global snack attack. The company's pantry of billion-dollar brands includes: Cadbury and Milka chocolates; LU, Nabisco, and Oreo biscuits; Trident gum; Tang powdered beverages; and Jacobs coffees. Mondelez International comprises the global snacking and food brands of the former Kraft Foods following the spinoff of its North America grocery operations (now Kraft Foods Group). The two companies split in a tax-free spinoff in 2012. Mondelez, with about $35 billion in annual sales, operations in more than 80 countries, and sale in about 165 countries, is the larger of the two businesses.
As its name suggests, Mondelez International has a global focus. Indeed, North America accounts for just 20% of sales. Europe is the company's single largest market, contributing 40%, while fast-growing international markets, including Latin America and the Asia-Pacific region, contribute the remainder. The company maintains eight manufacturing plants in China in Beijing, Suzhou, Shanghai, Guangzhou, and Jiangmen. Mondelez sells its products in some 165 countries.
Sales and Marketing
Mondelez sells its candy, snacks, and beverages through supermarket chains, wholesalers, supercenters, warehouse clubs, mass merchandisers, convenience stores, drug stores, and other retail food outlets. The company's 10 largest customers accounted for about 22% of sales in 2013.
Mondelez rang up $35.3 billion in sales in 2013, an increase of 1% versus 2012. Driving the modest increase were higher biscuit and chocolate sales, partially offset by a decrease in sales in the company's gum and candy, and cheese and grocery segments. Net revenue growth was driven primarily by favorable volume/mix and higher net pricing. Net income jumped 29% over the same period to $3.9 billion.
In 2013, Mondelez's Power Brands, which accounted for almost 60% of total net sales, continued to drive top line growth and grew at a rate nearly twice as fast as the total company.
The separation of the global snacking business from the North American grocery operations paved the way for each business to adopt its own strategy. Mondelez is looking to its 15 global power brands (including Chips Ahoy!, Oreo, Milka, Cadbury, Chiclets and Trident) to drive 70% of its growth. The company holds the number one position globally in biscuits (or as we say in America, cookies), chocolate, candy and powdered beverages. It's number two in gum and coffee.
The snacks maker is looking to shutter a former Kraft plant in northeast Philadelphia and invest more than $100 million in bakery facilities in Fairlawn, New Jersey, and Richmond, Virginia. Farther afield, the company announced investments in Brazil, China, India, Mexico, and Russia in 2013. Amid increasing tensions between the US and Russia over Ukraine, Mondelez announced plant to build a $110-million factory in the Novosibirsk region of Russia with the capacity to produce 50,000 tons of snacks annually. It's also building a $90 million biscuit plant in Bahrain to satisfy increasing demand for its snacks in the Middle East and Africa. Beyond Russia and Bahrain, the company is expanding its operations in other emerging markets, including Brazil, China, India, Mexico, Venezuela, Argentina, the Middle East, and Africa. To that end, Mondelez acquired the remaining interest in a biscuit operation in Morocco, making it a wholly-owned subsidiary within its EEMEA (Eastern Europe, Middle East & Africa) segment, for $119 million in 2013.
The company's hard-won battle for UK candy maker Cadbury in 2010 gave the snack business the heft to stand alone. The purchase, valued at about $18.5 million, created a "global powerhouse in snacks, confections, and quick meals, with a large portfolio of leading brands around the world." Cadbury's top brands include Dairy Milk bars, Roses chocolates, Trident gum, Halls cough drops, and the ever-popular Creme Eggs. The union of the #1 US food company and the 200-plus-year-old UK confectioner bumped Kraft up into the top spot of candy makers by revenue, unseating longtime leader Mars. The takeover also made Kraft the #2 US chewing gum maker by revenue (just behind Wrigley) and gave it access to developing overseas markets, such as Brazil, India, Mexico, Russia, South Africa, and China, where Cadbury brands have a solid presence.